How Do You Make Sure That Your Healthcare Accounts Receivable Stays Healthy?

by | Published on Aug 25, 2021 | Medical Billing

Accounts Receivable
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Healthcare Accounts Receivable (AR) is the money owed to a medical practice for services provided and billed. Days in AR are the average number of days it takes for a practice to collect payments that are due. Healthcare receivables management is all about reducing Days in AR. An integral element of medical billing services, comprehensive A/R management is the quickest way to boost the financial health of a medical practice.

The American Medical Association has pointed out the economic impact of COVID-19 on health care is continuing to reveal itself through reductions in patient volume and revenue and in higher practice costs. As the pandemic stretches on, physician practices need to take urgent steps to improve their financial health quickly and stay viable. Proper A/R management is an essential step in this direction.

So how do you make sure that your healthcare AR stays healthy? What are the strategies that a medical billing company can help you implement to achieve this goal?

An efficient A/R process is one that makes it possible to get as much money into the practice as quickly as possible and ensures that you get paid for your services. If your collections are getting delayed and overdue payments are piling up, you first need to look into look into the possible reasons for this. Here are the common reasons for improper cash flow in a medical practice:

  • Insurance claims denial
  • Unwanted and costly write-offs
  • Rise in patient responsibility and decline in patient collection

All of these issues increase Days in AR – the number of days an invoice is outstanding before it’s collected. Days in A/R is calculated by dividing the total accounts receivable by the average daily charges for your practice. Tracking Days in AR is important because it helps you understand how long it takes, on average, to collect payments so that you can take steps to improve collections and your revenue cycle. The American Academy of Family Physicians (AAFP) recommends that Days in A/R should stay below 50 days at minimum, though 30 to 40 days is preferable. A recent Medical Economics article reminds us that according to the U.S. Department of Commerce, the prospects of practices collecting on delinquent accounts depreciates ½ percent per day past 90 days.

Managing Accounts Receivable

Following these best practices can ensure that your A/R stays healthy:

  • Verify Patients’ Insurance Benefits before the Appointment: Understanding the patient’s current insurance information is an important step in the A/R management process as it helps identify the patient’s responsibility. Providers of insurance verification and authorization services obtain and verify details such as insurance, demographic and contact information. This will provide you with a clear idea about:
    • patient collection changes
    • how much of the expected treatment cost the insurance will cover, and
    • how much the patient will be responsible for paying

    Patients can be asked to update their records or provide the necessary information on your practice’s online portal or appointment scheduling tool before the appointment is confirmed. Your insurance verification specialist can then confirm the patient’s insurance coverage with the payer and clarify payer rules. Insurance eligibility verification will help identify if the patient has any outstanding balances that need to be settled at their office visit.

  • Inform Patients about their Responsibilities and Follow-up with them after the Office Visit: Make sure that patients understand their responsibilities – what they owe the insurance company and your practice. The best way to do this is to develop and implement a clear-cut policy that spells out your payment expectations. Payment policy essentials should include:
    • When payment is due (such as the date of service)
    • Who is responsible for payment (patients who don’t have coverage would have to pay the entire amount of the bill, while those with coverage would be responsible for any amount not covered by their insurance)
    • How co-pays and deductibles will be handled – patients would need to pay copays and/or their responsibility at check-in
    • Forms of payment accepted by your practice
    • Fee implications, interest/service charges, discounts and refund for overpayments, old debt collection, and collection fees.

    After the appointment, you need to follow-up with patients about payment by sending statements that include the dates when payment is due, mode of payment and contact information for billing questions. Continually track accounts and develop a strategic plan for patients who pay in a timely manner. To maximize collections, check patient aging reports on a regular basis and reach out to patients who have outstanding balances. Offer multiple options for payment. Consider creating a payment plan for patients with larger dues. This patient-friendly approach is a great way to improve Days in A/R, increase collections, minimize write-offs and build trust in your practice.

  • Monitor and Deal with Payers: Monitoring and managing payments from third-party payers is essential when it comes to managing the financial health of your practice. To ensure you are receiving expected payments in a timely manner, you would need to identify and address problems and trends that are slowing down the reimbursement process. Medical billing companies help practices track payer reimbursements by developing a monthly report with A/R cycles for different time periods (days). Studying the report would help you understand how much a payer owes you, how much of that money has not been collected, and if that amount is increasing. They also track denials – what claims are being denied and the reasons for this.

Outsourcing healthcare receivables management to an experienced medical billing company is the ideal option to maximize collections and profitability quickly in these challenging times. Established service providers have insurance verification specialists and medical coding and billing specialists who will ensure proper claim submission, follow up on payments and implement an efficient AR operation that ensure that physicians get paid for services rendered as quickly as possible.

Meghann Drella

Meghann Drella possesses a profound understanding of ICD-10-CM and CPT requirements and procedures, actively participating in continuing education to stay abreast of any industry changes.

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