Accounts receivable management plays a key role in having stable financial health for your practice. Accounts receivable is nothing but the amount owe to you by insurance companies and patients. As the number of days increases to collect this amount, the chances of collecting this amount also decrease. Accounts receivable are classified in a number of days i.e., 0-30 days, 31-60 days, 61-90, 91-120, 121, and above. You will be surprised to know that only 20% of the amount got collected if your AR is over 90 days bucket. Your team’s inefficiency to collect outstanding amounts could lead to not collecting at all. In this blog, we shared some of the common reasons why accounts receivable increases over time and also discussed how you can reduce them.
Common Accounts Receivable Issues
Not Appealing Denied Claim
If your medical billing and coding team is not enough experienced and is not equipped with specialty specific knowledge, your lots of claims will get denied. The worst part is most the practices won’t track their denials, resulting in loss of money. When an insurance company denies your claim, they will provide a denial reason for that claim. Your billing team should operate in a systematic way where they should track every claim, identify denial reason, analyze denial, and appeal denied claim on a timely basis. When you are not sure, you can always pick the phone and call the insurance company and try to understand the denial reason as well as ask for help in addressing this denial. If you are properly tracking denials and appealing them on time, you will be able to collect a maximum portion of your accounts receivable portion.
Not Verifying Patient Benefits
The eligibility and benefits verification process have a lot of importance in accounts receivable management. When you verify eligibility and benefits for your patients, you get a complete idea about how much insurance will pay, what would be patient portion, and if any prior authorization is needed. With eligibility and benefits verification, your team can share financial estimates with your patients, your patients will be well aware of their insurance coverage and they will pay their portion at the time of service only. You can discuss alternate financial arrangements with patients if their insurance is not covering the procedure. No one wants uncommunicated patient statements after a medical procedure is done.
Collection Culture
Medical practices often shy away from collecting patient portions at the time of visit because they feel their purpose is to help patients. They feel customer service and collection are two different departments which require a different approaches. You will be able to provide excellent customer service only if your patients are well informed. They should be aware of procedures to be done, financials involved, their insurance coverage, and their own contribution. The patient understands all money owed, and your practice has more money available to improve the patient experience. Many practices lack the tools to collect unpaid balances in an efficient, timely manner. Done correctly, instituting a collection culture can increase patient satisfaction.
Reducing Accounts Receivable
As discussed, accounts receivable is not a separate function, it’s a crucial part of the medical billing process. You will be able to reduce the accounts receivable portion if you include the following steps in your medical billing functions:
- Examine claims: Examine all your claims for accuracy and completeness before submitting them. Claims errors increase accounts receivables. Most billing insurances have ‘claim scrubbing’ tools to identify basic coding and billing errors.
- Collect all claims data: Collect all the data required for submitting the claim. This will include patient data and insurance data. Upload insurance card front and back scanned copies, all patient demographics documents, and if applicable copies of secondary insurances.
- Collect in office: Insist that each patient submit their co-pay before leaving the office. This will decrease aged receivables and decrease bad debt. Require that your staff submit a report of co-pays collected so that you can identify delinquent payments quickly. Many practices are also estimating benefits ahead of surgery and requesting a deposit of the full estimate or a percentage therein.
- Increase billing cycles: Most practice sends patients statements once a month which could lead to delayed payments. Try to send patient statements once a week to collect more quickly. Also, provide easy payment options so that your patients can make payments in the comfort of their homes or offices. Your front desk staff must be aware of all patient statements sent and should be able to answer all patient queries.
- Outstanding accounts: Special attention should be given to outstanding accounts. Your front desk staff may not be aware of outstanding amounts and might only collect co-pay for that visit only. Patients with outstanding balances should be sent frequent notices. If they continue to neglect these reminders, have your office follow up by phone. Phone calls are more difficult to ignore than letters.
- Examine write-offs: Carefully review every write-off. You should have a strategy to decide a write-off. Consistent rules must be set to decide when to collect any amount or when to write it off. Determine which situations by dollar amount, medical procedure, etc. require approval. Make sure to exhaust all options before writing off an unpaid balance.
- Track AR reports: Constantly track your accounts receivable reports and discuss with your team how to collect more on weekly basis. Accounts receivable reports as per days, procedures, payers, and patients should be maintained and different strategies should be discussed to collect them.
- Outsource billing: Hire a medical billing company to reduce stress and manage your accounts receivable. Outsourced billing companies code and examine your claims for error, follow-up with denials, and increase your cash flow.
Efficiently collecting accounts receivable directly enhances your revenue cycle management. Efficient accounts receivable management is not about collecting more, it’s about a systematic approach towards collection. An experienced medical billing companies can assist you to have this systematic approach. To know how we can assist you in decreasing your accounts receivable and having an efficient billing process, contact us at info@medicalbillersandcoders.com/ 888-357-3226.
FAQs
1. What are the common reasons for increasing accounts receivable in medical practices?
Accounts receivable often increase due to denied claims, lack of eligibility and benefits verification, inefficient collection processes, and delays in sending patient statements. Addressing these issues can significantly reduce AR and improve cash flow.
2. How does eligibility and benefits verification help in managing accounts receivable?
Eligibility and benefits verification ensures that practices know the insurance coverage, patient responsibility, and any prior authorization requirements before services are rendered. This helps avoid claim denials and ensures patients are informed about their financial obligations upfront, leading to quicker payments.
3. Why is it important to track and appeal denied claims?
Denied claims contribute significantly to increasing accounts receivable. Tracking denials, analyzing the reasons, and appealing them promptly can help recover a substantial portion of the outstanding amounts. A systematic approach to denial management is crucial for AR reduction.
4. How can patient collection culture reduce accounts receivable?
Encouraging upfront collection of patient co-pays and financial estimates reduces aged receivables. Providing clear communication about procedures, insurance coverage, and patient responsibilities ensures patients are informed, resulting in fewer unpaid balances and improved patient satisfaction.
5. When should a medical practice consider outsourcing billing to manage accounts receivable?
Practices struggling with high AR, frequent claim denials, or inefficient billing processes should consider outsourcing. Professional billing companies handle coding, claim submission, denial management, and AR tracking, enabling practices to focus on patient care while improving cash flow and reducing stress.
