The term 'Accounts Receivable' or A/R denotes the money owed to physicians, hospitals or nursing centers for services rendered and billed. This money could be owed by patients, payers and/or other guarantors.
Every health care provider has to manage the A/Rs effectively and efficiently to get paid appropriately and on time to avoid snags in the cash flow. This also determines the financial strength of the health care provider. A non-managed A/R could spell a disaster in disguise destroying a successful practice.
The A/R team is responsible for collections (co-pays and deductibles). In case of rejections, it analyzes denied claims, partial payments and/or non payments. After further corrections, verifications and charge entry the A/R team re-submits the claim and communicates with the payer for faster approvals and payments.
Certain issues can cause A/Rs to pile up delaying payments. Though some can be prevented with corrective measures, some are unavoidable. They are:
- Clarify patient eligibility and co-pays: Confirm the demographics of the patient as soon as he/she walks in for a service from a physician. A simple error in any demographics or in the details of the insurance provider can delay the A/R cycle.
- No process in place/insurer requirements: It is imperative to follow-up on the claim rejections and denials while identifying their reasons. If it is showing a trend, it is important to recognize and fix it to prevent further rejections and claim denials. It could simply be a particular procedure not being followed, or unawareness of the insurers change in the structuring of identification numbers, or even a mistake by billers and coders. Apt training on the insurers' procedures could solve the problem along with executing changes in medical billing and claims software.
- Payer allowances: Each procedure has a charge which is billed to the patient. However, some payers pay a percentage of that charge or have a preset fee schedule for all procedures. Having a healthcare revenue cycle software can help in tracking allowances, billing, payments received, and additional historical data to estimate the A/Rs with accurateness.
- Credit balances: Sometimes, a patient has more than one insurer. In such cases, credit piles up in A/Rs as higher payments are made than owed causing wrong estimations in revenues and budget projections. However, in some instances lesser payments are taken for services rendered. In the first case, it leads to a chaos as the additional credit has to be subsequently refunded.
Other reasons for account receivable pile ups are delayed billing, flexible payment plans or lack of IPA information. Hiring a billing specialist or a medical billing company can avoid delays and mistakes, enhance payments and increase cash flow thereby allowing the physician to concentrate on patient care.
FAQs
1. What is an AR pile-up in medical billing?
An AR (Accounts Receivable) pile-up happens when unpaid claims accumulate. It directly impacts your cash flow and revenue cycle.
2. Why are AR pile-ups dangerous for healthcare practices?
They delay payments and increase write-offs. Over time, they can cripple financial stability.
3. What causes AR to pile up?
Common causes include claim denials, billing errors, and lack of follow-up. Inadequate systems can worsen the issue.
4. How can providers reduce AR days?
By tracking aging reports, prioritizing follow-ups, and correcting billing errors quickly. Proactive management is essential.
5. Can outsourcing AR management help?
Yes, expert medical billing teams can recover old AR and prevent new pile-ups. This improves revenue flow and practice health.