As the healthcare industry undergoes constant changes due to government or insurance companies' regulations and guidelines, there are numerous obstacles which they face on a daily basis in their medical billing and coding processes. It is apparent that cash is the basis of revenue of any business; hence the revenue cycle management needs to be streamlined and improved for maintaining exceptional financial health. And this financial health can be readily sustained by keeping the accounts receivables (AR) to a minimum.
A/R is the amount due to the practitioner/healthcare center for services rendered and billed by the physicians. This payment could be due from insurance companies, patients or other guarantors. All practices must ensure timely and accurately managed A/R, as an increase in A/R implies a dent on cash flows from either of the sources and is troublesome for the physicians and their practice. An efficient billing process can ensure low A/R's.
A/R should be calculated as: Add up all the charges posted for the last six months and divide it by the total number of days in those six months, to get the average daily charge. Now, divide the total accounts receivable with the average daily charge to get the days in A/R. The benchmark for a well performing A/R billing department is usually less than 30 days, 40-50 days is the average and more than 60 is the case where the billing department needs to revisit their A/R processes. Monitoring through weekly/monthly report generation is mandatory to measuring the performance and working effectively on the aspects required.
Ensure that all personal and insurance information is immediately entered in the system, once the patient visits the hospital the first time. Verifying this insurance eligibility is the first step to managing A/R's. Check the insurance plan, co-pays/deductibles applicable to the patient. Also, do not grow the patient's balance for payment at the next visit. Explain all the liabilities (co-pays/deductibles) to the patient at the time of service. Ensure that all payments are made as and when the bill is sent to the patient. Posting a payment policy on the website, payment of outstanding balances at the earliest and analysis of collection reports on a weekly basis can go a long way in reducing A/Rs.
Next, physicians must document all services rendered to ensure all charges are captured for coding to be done precisely. As accuracy in coding is maintained, patients tend to receive and pay bills on time, speeding up the billing cycle, consequently lowering A/Rs. Another option to reduce A/Rs is the online payment option, along with the ability of using credit/debit cards. Set up payment plans for those where the bills could be exceedingly high and work around a time and amount due collection process plan. This reduces errors as the payments are managed electronically and these systems generate A/R reports which are then easier to handle. Offering discounts on full cash pay ensures payment is made on time and bills are avoided.
To view and assess the financial health, ensure that the A/R does not exceed 1.5 times the monthly charges. Calculate the current A/R (0-30 days) as a percentage of the total A/R. Do this calculation for 30-60 days too. If Medicare insurance exists, it is considered an issue as Medicare pays within 14 days of the bill sent to them; in some cases as per the law it takes more than three weeks. Beyond 60 days is applicable in some states (private insurance) or consisting only of workers' compensation. Ensure clean claims are sent and there is a follow up plan for unpaid claims beyond 30 days.
Maintaining Electronic Health Records (EHRs) is one of the most efficient ways to gain higher reimbursements through accurate claims, lesser denials and rebilling. Re-assess the time and responsibility of the staff as per their competency.
A/R is the core of the medical practice's health. Outsourcing could be a great way to keep A/R's to a minimum, along with reducing frustration amongst staff, patients and physicians. Medical Billing and coding companies manage A/R's and aid in increasing revenues by submitting clean claims and decreasing denials and rejections. They increase collections ratio, work on critical claims first, run reports on accounts past 21 days due, organize A/R's as per number of days, value and date of service. They keep the A/R's to an average of 25 days, and take all the necessary action to optimize revenue collections and improve profitability.