Is your practice’s cash flow suffering as a result of a large number of A/R? If this is the case, you are not alone; many practices have income delays for the same reason. In this section, we will look at some of the most typical difficulties and solutions in handling AR recovery
Before we get to the remedies, here’s a quick rundown of accounts receivable and common errors. You can also get tips from medical billing companies.
What exactly is A/R in medical billing?
Accounts receivable (A/R) is the money owed by a patient or insurance company after your clinic invoices them for services.
Typically, practices compute “days in A/R” by dividing the overall A/R amount by the practice’s average daily costs. If your practice is in A/R for 30 days, you have not been paid for 30 days of labor.
Common A/R Issues
Medical practices have high A/R for the same reason: patients and insurance companies aren’t paying their bills. A patient bill that has been unpaid for more than 90 days is worth less than half of its original amount – some estimates claim only 20 percent. Here are the most common causes of high A/R.
Insurance Claim Rejection
The most common cause of high A/R in claim denial. Except for the patient’s copay or deductible, the majority of payments are made directly by the insurance company. Cash flow can be disrupted or even stopped if a claim is denied.
Insurance companies frequently deny claims for the following five reasons: missing/incorrect information, duplicate submissions, uncovered procedure, coding errors, and late filing. They also have a habit of looking for reasons whenever they can…lost records, lost claims, missing information…the list is literally endless. The more difficult it is for you to get paid, the more likely you are to abandon the follow-up work. This is why meticulous A/R work is so valuable.
Unwarranted Write-offs
Some write-offs are required. Others result in a high A/R. If your practice does not have a written procedure for write-offs, you probably have too many.
After a certain amount of time has passed, practices frequently write off non-payment account balances and denied claims without exploring alternative payment options. Even if the balances are low, the write-offs add up to a higher net loss.
This is why it is critical that your billing team establish an approval process for adjustments. If there is no convincing reason, claims should not be adjusted. As a general rule, you don’t want to see write-offs for reasons other than exceeding the maximum allowable, and even then, you want to make sure your rates are being applied correctly.
Bad Debts
With rising deductibles and out-of-pocket expenses, many patients are unable to pay their bills, resulting in bad debt. According to one study, 68% of patients with balances of $500 or less did not pay the full amount.
Plastic surgery has one of the highest out-of-pocket averages: $1,566, putting the patient in a more responsible position than many other specialties.
Collection Culture
Because their goal is to help patients, medical practices frequently avoid collection culture. They place a higher value on excellent customer service and bedside manner than on collecting unpaid balances. A practice, however, must get the payment in order to continue operating. Many practices lack the tools necessary to collect unpaid balances in a timely and efficient manner. Implementing a collection culture can improve patient satisfaction if done correctly.
. The patient is aware of the monies owed, and your clinic now has extra funds available to improve the patient experience.
We advocate including the expectation in your financial policy and following a procedure (submit your deceased accounts periodically!) as well as the instructions. The possibility of a poor internet review sometimes scares practitioners away from using collections agencies in this day and age. Remember, this is your cash.
Improve A/R and Improve Cash Flow
A high A/R impedes cash flow and, as a result, the operation of your practice. Here are eight things you can do to improve your A/R
Execute A/R Reports
Run A/R reports every month to keep track of A/R trends and changes. These reports should include dated receivables so that you may monitor the status of older bills. To discover billing schedule difficulties, run these reports from the service date rather than the billing date. – If you take two weeks off, your costs for that month will be lower, as will the ratio of new to aged claims.
– Your A/R will differ if you have a large volume of Workers’ Compensation claims vs BlueCross or Medicare.
– If you have a lesser caseload and are a surgeon, a single claim caught up for records can put X% of your monthly A/R out 30 business days.
If you have a self-pay/cosmetic/fee-for-service component to your clinic, you’re definitely accepting a lot of prepayments. Don’t forget to take these from your A/R reports because the credits on your accounts can affect the A/R and drastically distort the statistics.
Follow-up on Outstanding A/R
Patients with outstanding balances should be notified on a regular basis. If they continue to ignore these reminders, have your office call them. Phone calls are more difficult to ignore than letters. If your patient ignores both, you may need to use the more aggressive collection tools of a collection agency.
Boost billing cycles
Medical offices frequently mail bills once a month, which has an impact on cash flow. Mail patient charges once a week and insurance bills twice a week. The sooner a bill reaches its intended recipient, the sooner it can be paid.
Examine Claims Thoroughly
Gather your team and review your claims for accuracy and completeness. Claim mistakes increase A/R. Proofread your submissions before submitting them. To catch clerical and simple coding errors, most software programs and clearinghouses have “claim scrubbing” tools. Check that your billing staff is auditing beyond these basic issues. though.
Check Insurance
Before a new patient arrives, make sure they are cover by their insurance for the treatment. Once you’ve confirmed their eligibility, calculate how much they’ll owe based on their copays and deductibles. Notify them ahead of time so that they know what to expect.
Examine Write-offs
Examine each potential write-off before sending it through. Determine which situations, based on dollar amount, medical procedure, and so on, necessitate approval. Before writing off an unpaid balance, make sure you’ve exhausted all other payment options.
In-Office Payment Collection
Make it a requirement for each patient to pay their copay before leaving the office. This will reduce aged receivables and bad debt. Require your employees to submit a report of copays collected so that you can quickly identify delinquent payments.
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