A continuously aging accounts receivable (A/R) may signal bad news: You’re not collecting revenue in a timely manner or at all. Thirty or 45 days is average. However, when it takes 60, 90, or even 120 days or more to collect, that’s when things become problematic. Namely, your cashflow takes a hit.
Fortunately, there are steps you can take to follow up on aging A/R before it spirals out of control. These steps are important year-round and particularly during the first few months of the calendar year. Why? That’s when medical practices often see an increase in A/R after patients receive "squeeze in" services at the end of the year prior to the annual healthcare deductible reset. Having a plan in mind to tackle A/R proactively is critical.
Consider these 10 strategies:
1.) Ask yourself: How bad is the problem?
You’ll need to know two things: Your total accounts receivable and your average daily charges. To calculate your average daily charge, add up the charges you posted during the last six months. Then divide that number by the number of days in those months.To calculate your average days in A/R, divide the total accounts receivable by the average daily charge. You can calculate this number by payer, account, and more. Leveraging technology to create reports and dashboards in real time can be a game changer in terms of spotting trends and reducing the time to pay.
2.) Collect payment at the time of service.
To do this, you need to estimate the patient financial responsibility before services are rendered. If possible, collect this amount prior to rendering services.
3.) Offer early payment incentives.
Prompt pay discounts are one way to encourage patients to pay in a timely manner, thereby reducing aging A/R.
4.) Seek coding, billing help from professionals.
If you don’t have in-house expertise to manage your aging A/R effectively, it may make sense to outsource the function. This is particularly true when there’s inconsistent staffing due to turnover and staffing shortages. High turnover and medical coder and medical biller vacancies can easily lead to A/R bottlenecks. Working with an outsource partner can help. In addition, if you work with an offshore partner, you may be able to leverage time zone differences to your advantage while simultaneously covering U.S. holidays and after-hours calls.
5.) Send clean claims as soon as possible.
Quick payments require quick claim submissions—ideally within 24-48 hours. It’s equally as important to follow up immediately on any rejected claims. Correct and resubmit them as soon as possible based on timely filing and dollar amount.
6.) Establish a defined process for denial management.
Who will follow up on denials or address claims that are underpaid? It may be helpful to identify payer-specific specialists. What denials or underpayments, if any, will you prioritize?
7.) Collaborate with problematic payers.
Which of your payers has the largest amount of billed A/R over 90 days from the date of service? Is there anything you can do internally to speed the process? What about on the payer side? Collaborate to identify and address the root causes of aged accounts.
8.) Share lessons learned.
If you’re part of a larger network of practices, it may be helpful to aggregate data into a system-wide dashboard. You can also share best practice strategies for addressing aging A/R. What works for one practice may likely work for another.
9.) Run regular audits.
The goal is to identify troublesome patterns within your reimbursement cycle that can lead to delays in getting paid—and then take steps to mitigate risk. For example, is there a problem with obtaining accurate patient demographic information? If so, prioritizing patient eligibility is paramount.
10.) Educate patients.
One of the most effective ways to manage aging A/R? Invest in professional experts to handle inbound and outbound calls to educate patients about their financial responsibilities and process payments. Professionals can inform patients about remaining balances, process medical payments, discuss payment plans, and field billing questions.
Founded in 1999, Global Healthcare Resource has been a leader in revenue cycle management solutions and proudly employs 6,000+ HIPAA compliant coders, billing professionals and patient call center agents. Global operates as an extension of your office to improve productivity and increase ROI.