It’s an unfortunate reality: The older the medical bill, the harder it is to collect the balance owed. So if your aging accounts receivable (A/R)—specifically A/R greater than 120 days—is on the rise, you’ve got a valid reason to be concerned. We’re talking about money left on the table with a high probability of it staying there.
Generally speaking, if 20% of your A/R is greater than 120 days past due, you’re doing relatively ok according to industry standards. Then again, is waiting 120 days to get paid what’s best for your business? Probably not. Talk about cashflow problems! The median for total A/R over 120 days in multi-specialty practices is 13.54%. If your percentage of A/R over 120 days is growing, it’s time to take a deeper look at what is (or isn’t) happening in your medical practice and take proactive steps to improve processes.
As you evaluate financial performance in your medical practice—specifically your aging A/R greater than 120 days—here are six questions to consider:
Even when your overall days in A/R is good, a more stratified look at your data could paint a different picture. More specifically, there could be elevated numbers in the older aging bucket (i.e., >120 days) that might be flying under the radar. Many of these older accounts, if resolved, could give your medical practice’s bottom line a much-needed boost. Some may even be extremely high-dollar accounts.
This is an important question to ask because it will help you prioritize efforts in your medical practice and formulate a plan to yield the biggest return on investment.
Without tracking reimbursement and denials efficiently, you definitely won’t move the needle on aging A/R. Best practice is to work all denials immediately, so aging A/R doesn’t go anywhere near 120 days past due.
As time goes on, it’s easy to let unpaid claims fall off your radar—especially when payers don’t respond. However, there might be a simple, quick fix on the payer’s side that could remedy the problem. Following up on inquiries is paramount.
For example, does a certain payer frequently require additional documentation for a specific surgical procedure before paying, resulting in average payment turnaround times of six months? Consider approaching this payer directly to identify opportunities to collaborate and avoid future problems. There may be mutually beneficial ways to streamline efforts and reduce the administrative burden (e.g., always submitting certain documentation with the claim).
Think about how much your days in A/R would drastically improve if you could collect all or a portion of what patients owe before you render any services. Do you provide cost estimates? Leverage scripts that support pre-service collections? Provide staff with comprehensive training on how to verify each patient’s unique coverage and eligibility? These are all important front-end steps that can reduce aging A/R over 120 days.
If a patient’s balance has been unpaid for 120 days or more, one of two things is probably happening: Patients either don’t understand their bill or they’re simply unable to pay it. Leveraging your patient call center can help. Highly skilled, empathic, articulate, and accessible patient call center representatives can communicate frequently with patients who have outstanding balances and answer questions to clear up confusion so patients are more likely to pay.
Instead of chasing aging A/R over 120 days, it might make more sense to allocate resources elsewhere. For example, you might want to consider a write-off due to contractual obligations, coverage limitations, or patient financial hardships. However, be sure to create an internal medical practice policy that identifies the specific circumstances for which you’ll write off balances owed in compliance with legal and ethical guidelines.
Medical practices may find their aging A/R over 120 days on the rise due to increasingly stringent payer policies and continued patient financial hardships. The good news is that there are ways to prevent A/R from creeping into this bucket and decreasing the likelihood of getting paid. Following best practices internally—or partnering with an outsource vendor that does the same—will help your business thrive in the long run.
Our revenue cycle and patient call center professionals operate as an extension of your team, Here’s how it works:
Step 1: Schedule a meeting to discuss your scope of work and current challenges.
Step 2: Global assembles, trains, and manages a team of highly skilled professionals to work on your project only.
Step 3: In an average of 30 days, your team is fully ramped up and operating at your designated benchmarks and KPIs.
