Revenue delay generates major problems with cash flow in a healthcare operation. Since medical accounts receivable often involve a high volume of accounts, many practices experience delays with revenue. However, there are ways to improve your accounts receivable in healthcare. Below is a closer look at accounts receivable for medical practices, the challenges involved with AR, and steps to take to deter AR delays.
What is A/R in Medical Billing?
Once a patient or the patient’s insurance provider is billed for services, the money owed to the practice is referred to as accounts receivable (A/R). A/R can be measured in a few different ways by the practice. One, a practice usually keeps up with “Days in A/R” by dividing A/R totals by the average practice daily charges. Two, accounts are usually classified by their age, such as:
- 1 to 30 days since billed
- 31 to 60 days since billed
- 61 to 90 days since billed
- 91 to 120 days since billed
The longer an account goes unpaid for services rendered, the more likely it is that an account will never be paid. Therefore, ARs do not necessarily count as revenue even though there is obviously money owed. Research indicates that a provider can expect roughly 10 cents per owed dollar with any account beyond 120 days old. Unfortunately, when ARs are not handled in a timely manner, this overburdens financial departments, increases workload, and even leads to unnecessary costs and revenue leakage for the practice.
7 Steps to Improve Your Accounts Receivable in Healthcare and Boost Cash Flow
1. Maintain Open Patient Communication About Financials
Providers that have clearly defined terms about payments are less likely to face delays with AR. In a lot of cages, you can reduce the number of delinquent or delayed payments just by making sure payment expectations are clear for the patient before services are ever rendered. Drafting a payment responsibility document for new patients to sign at a first appointment offers a clear idea of what is expected as far as payments go.
2. Practice Frequent Follow-Ups on Outstanding Accounts
Late payments are a fact with medical accounts receivable. However, it is important that outstanding, unpaid accounts are adequately managed. Among all companies, 1.5 percent is written off as bad debt, and 93 percent deal with late payments. The longer outstanding accounts are left idle, the less likely they are to be paid. Make sure patients are being notified frequently with phone calls and letters, and seek more aggressive collection actions when necessary.
3. Consistently Run A/R Reports
The overall goal is to keep A/R days low because this is most effective for revenue cycle management. This requires AR to be closely tracked. It is helpful to carefully analyze AR data from month to month to highlight disturbing trends or ongoing issues with collecting payments. These reports should examine things like:
- Average AR cycles
- Delays between services rendered and invoicing
- Aged accounts
- Collection rates
4. Collect Payments for Co-Pays and Services in the Office
Requiring patients to pay co-pays or bills in the office cuts back on accounts receivable for medical practices. Some practices even require deposits or percentages up-front for certain procedures or treatments instead of requesting the full amount after treatment is provided. This process may not cut down on the number of accounts, but it can cut down the monies owed. What is paid upfront is revenue, which supports cash flow for the provider.
5. Outsource Medical Billing Services If Necessary
Accurate and efficient medical billing is imperative to keep AR days as low as possible. Something as simple as a claim error delays payments from payers by weeks, if not months. If the in-house medical billing is not as efficient as it should be, consider outsourcing medical billing services.
6. Increase the Frequency of Billing Cycles
The quicker payers are billed for services, the sooner those outstanding balances can be paid. However, a lot of providers only send out bills once monthly, and this alone can generate delays with accounts receivable. To quicken processes, it doesn’t hurt to consider increasing the frequency of billing. For example, you could mail or submit patient or insurance invoices weekly.
7. Consider A/R Workflow Automation
A/R workflow automation frees up time by handling some of the more burdensome tasks associated with A/R. A lot of programs make automated A/R more possible. For example. PrognoCIS revenue cycle management (RCM) solutions handle things like benefits verifications, submitting claims, and creating A/R reports. This type of automation makes invoicing and payment collection a more timely process but also reduces problems with overlooked A/R accounts or claims denials.
Improve Your Accounts Receivable in Healthcare with a Little Help
With a few integrated tactics and help from the right resources, medical accounts receivable does a better job of supporting the financials of the operation. If you need help with medical billing claims services or want to know more about revenue cycle management software, reach out to PrognoCIS to find out more about our solutions.
Also Read – Accounts Receivable Question and Answers