Are your billers trained in collecting receivables? Does your practice collect insurance and patient balances efficiently? These are some of the important questions every physician should have an answer to.
- According to a research conducted by the Medical Group Management Association, better performing practices generate more revenue, create operational efficiencies, ensure provider productivity and collect receivables quickly compared to their peers
It is important to review the AR on a regular basis to ensure the practice is collecting payment for services that were billed in a timely manner. From the net collection rate and gross collection rate to AR turnover and average days receivable, every single factor needs to be reviewed.
Many physicians across the US are struggling with pending AR and billing challenges. According to experts, physicians are always frustrated with their pending AR because the staff responsible for managing AR at the practice doesn’t know how to use the relevant benchmarks for measuring performance. Experts believe that monitoring the overall performance of AR efforts isn’t difficult and doing it on a monthly basis can really help the physicians prepare for potential collection problems.
How to Calculate Days in AR?
The calculation is pretty simple; do the following steps to get the answer:
- Consider the last three month period, take gross charges for each month and add them together
- In the same period, look at the ending balance in your AR for the last month and divide the total gross charges with the ending receivables balance.
- The number you get is your average days receivables outstanding metric.
For instance, the revenue in a primary care practice is mainly derived from office work, so the average receivable outstanding metric should be approximately 30 days or less. The metric for surgical practices would range between 30 – 40 days. However, practices will be in a serious financial problem if it exceeds to 50 days.
Monitoring the Efficiency of your Billing Department
Even if your cash flow seems satisfactory, AR management is one of the most important aspects of medical billing that needs to be taken care. Taking the necessary steps towards AR management can also help in monitoring the performance of your billing department. You will get to know if your in-house billers are capturing and billing all the services you performed.
Outsourcing Billing for Reducing AR Days
Many practices have started outsourcing their medical billing needs to a third party. Companies like MedicalBillersandCoders.com are helping physicians collect maximum revenue. A dedicated team of experts use the latest technology to file timely claims and procure maximum reimbursement from insurance companies. They have a team of skilled and certified coders and billers who are trained in handling payment uncertainties post ICD-10. Since experts handle the revenue cycle, providers get sufficient time to focus on patient care and documentation accuracy.
So, if your patient visits are stable but revenue isn’t growing, it is a clear sign you need to do something about your accounts receivable. Billing companies can also conduct medical billing and AR audits to uncover opportunities for enhancing financial performance. They assist practices in implementing measures for improving cash flow, enhance productivity and superior internal control.