An account receivable is the exceptional reimbursement owed to providers for issued services and treatments regardless of whether the financial responsibility falls to the patient or their insurance provider. Quality Healthcare Accounts Receivable Management is the main requirement for keeping medical practice’s monthly cash flow active and evergreen. Failure to manage the AR Follow up can result in revenue drawbacks and disrupt business continuity. Regular Accounts Receivable management avoids AR ageing claims older than 60 days and aids in maintaining steady and profitable financial goals. Managing due payments and balances on time is critical to prevent financial losses due to revenue loss. Maintaining consistent cash flow from the insurance company and patient within the TAT from the date of claim submission is necessary to prevent AR accumulation from impacting the practice’s financial goal.
Accounts Receivable Management
Account Receivable refers to the cost of a particular service provided for a patient by any medical coding services or provider billed during medical billing. A strong account receivable (AR) process is critical for organizations in every sector, including healthcare. Whether a company is small or large, it is critical to maintaining the most effective way of collecting account receivables while not straining the revenue cycle. The invoice is generated after the service has been done. It is then forwarded to the patient or insurance companies for payment posting. The staff team must closely monitor these account receivables to guarantee on-time payments. Accounts Receivable Management refers to determining denied or unpaid claims, resubmitting precise claims, lowering the AR period, and eliminating older account receivables. Account receivable services include planning insurance, write-off, bad debt reports, and ratio analysis. It also includes an examination of insurance contracts to ensure that healthcare providers are properly reimbursed. This blog will teach you how to analyze and manage accounts receivable.
What Is The Goal Of Accounts Receivable Management?
The main objective of accounts receivable management in healthcare is to maximize cash flow into the medical or dental practice by reducing the collection period and associated costs. Well-managed offices establish standard procedures for handling their AR from beginning to end – from when a patient arranges a new appointment to when they collect their final payment. They educate their employees about the process, effectively communicate with their patients, and track their progress over time.
AR days in medical billing are one of the key performance indicators that drive the achievement of any hospital or medical facility. The period it takes to accept payments on a claim is measured in AR days. According to hospital standards, AR days for facilities can vary between 30 and 70 days. Most experts agree that if an average AR day measurement is greater than 50, it demonstrates the problem in medical billing or collection procedures. One of the most difficult challenges for any healthcare organization is keeping a stable cash flow. In general, “Account Receivable” (AR) is a term that refers to the amount of money owed by a customer to the company. Similarly, AR in the healthcare sector relates to a patient’s account balance due for payment within a year.
Medical A/R Follow-up in Three Stages
The majority of medical billing professionals conduct A/R follow-up in a very systematic way, which is usually done in three stages:
Stage 1: Initial Assessment
This stage entails identifying and analyzing the claims listed on the A/R ageing report. The team examines the provider’s policy to determine which claims must be adjusted.
Stage 2: Evaluation and Prioritization
This phase begins when claims are recognized as unrecoverable, or the carrier fails to pay according to the agreed rate with the healthcare professional.
Stage 3: Gathering
Claims determined to be within the carrier’s filing limit are re-filed after checking all required billing information, such as claims processing address and compliance with other medical billing regulations. After posting payment information for outstanding claims, patient bills are produced under client guidelines, and patients are contacted for payment.
Importance Of Account Receivables In Healthcare
Hospitals rarely pay close attention to statistics and facts. They are more concerned with providing their patients with the highest quality of care. When AR days increase, it may indicate that cash flow is reducing. That means less money for hiring and paying employees, less capital for expansion, and less ability to invest in cutting-edge technology and tools. To summarize, a high AR day average can impact the hospital’s ability to treat patients.
Consistent Revenue Stream
Account receivable payments from patients or their insurance companies are one of the most important sources of revenue for a healthcare facility, such as a hospital. If a hospital manages its accounts receivable system properly, it will obtain the revenue required to remain open and cure more patients. Hiring an efficient medical billing expert specializing in A/R follow-ups will ensure that your practice, clinic, or larger healthcare facility is successful and ready to treat more patients.
Recovery Of Overdue Payments
A/R follow-up assists all healthcare facilities, physicians, nursing homes, and other organizations in restoring overdue payments without difficulty. It is easier for healthcare professionals to receive timely payments when a team is continuously involved in the claim follow-up procedure.
Minimize Time For Outstanding Accounts
Reduce the amount of time that outstanding accounts are allowed to remain outstanding: The primary goal of A/R management is to reduce the number of days that accounts are allowed to remain outstanding. The team monitors unpaid accounts, determines the appropriate action required to ensure payment, and integrates payment procedures. Though certain federal and state mandates influence how quickly claims are processed, your medical billing experts may shorten or lengthen the time between charging a patient’s account and when the balance is paid. They also look for accounts with outstanding charges, discuss the most effective strategy for ensuring payment, and start implementing it until payment is secured.
Enhance Reimbursement Optimization
Another important function of a medical biller’s A/R follow-up service is that it can improve your chances of receiving full reimbursement for your medical services. Some insurance companies deny claims because of inconsistencies in the documents submitted with the claim. Medical billers can dedicate themselves to a follow-up by notifying the insurer directly and asking the specific reason for denial. If it was due to insufficient data on the claim, a corrected claim can be filled out and sent again, resulting in the A/R being paid.
Follow Up Promptly
Following up on accounts receivable is critical to maintaining a consistent cash flow. An effective accounts receivable management system ensures that all claims are monitored and that a plan of action is implemented as soon as possible if the claims are not paid within the 30-day time frame. They help to avoid outstanding debts or missed payments by doing so.
Maintaining An Excellent Patient-Provider Relationship
The best approach to receiving on-time payments without complications is to have a good patient-provider relationship. When self-pay is introduced, medical billing companies are forced to rely more on patients to collect payments than on insurance companies. Before providing medical care, the AR management team ensures that the patient is informed of out-of-pocket costs. And, if there are any pending charges, they work to reduce the delays by effectively following up with patients via emails or phone calls.
Claims management is critical to the accounts receivable procedure. The AR management identifies the underlying cause for the denial and rapidly works on determining the root cause of rejection, addresses the problem and re-files the claim with the help of their specialized and skilled team. They also investigate the trends of these denials to avoid future denials.
Conducting Frequent Audits And Reporting
One of the best practices for account receivables management is conducting an audit regularly. That allows you to identify areas that need improvement, identify problems, and assess the risks associated. Following such audits, findings are produced and submitted, which explain remaining debt, help keep claim denials at bay and ensure timely payment collection. The team then submits the audit reports. These are ageing AR reports, outstanding payment reports, and others. These reports guarantee that no future claims are denied and that payments are made on time.
How Can An Account Receivables Backlog Affect Your Practice’s Revenue?
Not all practices have work measures to keep Accounts Receivable to a minimum or clear them daily. This practice of neglecting AR claims and delaying rework on them results in an accumulation of AR ageing buckets missed on the claim submission TAT with minimal chance of reimbursement for collection possibilities. Recognizing that this is the revenue owed by your company to cover other expenses such as staff salaries and business-related expenses, and neglecting it month after month, can become insensitive and unmanageable at some point.
How To Deal With AR Backlogs?
- Evaluate and classify AR backlog based on ageing buckets.
- Start work on the older claims to ensure maximum reimbursement.
- Simultaneously, continue working on clearing the daily denials to prevent further stacks of backlogs.
- Engage a separate team or personnel to work on AR management and cash flow.
- Outsource to an AR Specialist for stress-free and profitable assistance.
Why Should You Outsource Accounts Receivable Services?
Outstanding claims and late collections frequently add to the administrative burdens imposed on healthcare organizations. Furthermore, federal regulations have become increasingly severe. That puts additional strain on healthcare organizations to follow up on denied or appealed claims. The most common reason for medical claim denials is inaccurate or irrelevant medical coding. Outsourcing healthcare accounts receivable services to us can assist your healthcare organization manage its receivables more successfully. We will not only assist you in saving money on operations, but we will also help you improve your cash flow. We can follow up on your pending claims, examine the reasons for claim denials, monitor outstanding receivable balances by the customer at the due date, initiate collections, and provide periodic reports. Indeed, medical billing companies are constantly faced with enormous responsibilities, making AR management a significant challenge. With our skilled team’s years of experience and expertise, I-Med Claims will rescue you from this constant struggle and ensure that your AR is handled efficiently. We accelerate payment collection, enabling you to maintain a healthy revenue cycle. We ensure timely follow-up with insurance payers and patients. Maintaining denials to a minimum allows you to maximize your reimbursements. We ensure that you can relax as we guide you through the difficult process of AR management.