Strategies for Healthcare Providers
Introduction
Accounts receivable (AR) is the money owed to healthcare providers for services that have been rendered to patients or their insurance companies. Managing AR is crucial for healthcare providers to maintain cash flow and financial stability. Delayed payments or unpaid bills can lead to revenue leakage and financial hardship for healthcare providers. The first strategy for improving accounts receivable is to collect accurate patient information. Healthcare providers should ensure that they obtain complete and accurate patient information, including insurance coverage details, at the time of service. Collecting accurate patient information can help healthcare providers avoid billing errors that can lead to delayed payments and longer AR cycles.
The second strategy is to submit claims promptly. Healthcare providers should submit claims as soon as possible to reduce the number of days in AR. This ensures that insurance companies receive the claims in a timely manner and can process payments quickly. Delayed submission of claims can lead to longer AR cycles and revenue leakage. Prompt submission of claims can also reduce the workload on billing staff, allowing them to focus on resolving any outstanding billing issues. The third strategy is to track and monitor AR reports regularly. Healthcare providers should track and monitor their AR reports to identify and resolve any outstanding issues. This enables providers to have an accurate understanding of their AR and promptly address any billing discrepancies. Healthcare providers can also use AR reports to identify trends and patterns in their billing processes and make necessary improvements.
The fourth strategy is to use automated billing and collections systems. Healthcare providers can streamline their billing processes, reduce errors, and speed up the collections process by using automated billing and collections systems. This can lead to shorter AR cycles and faster payments. Automated systems can also help healthcare providers track and manage their AR more effectively.
Understanding Accounts Receivable in Healthcare
An AR account in healthcare refers to the outstanding reimbursement owed to providers for treatments and services rendered. Providers must stay on top of efforts to collect reimbursement for their AR account, as the longer an AR goes unpaid, the less likely they are to receive payment. After 120 days, clinicians can only expect to receive ten cents per dollar owed. It is crucial to classify AR in terms of age, which typically ranges from 1-120 days. Failure to collect reimbursement lengthens the AR cycle and risks revenue leakage.
The importance of reducing the number of days that accounts receivable (AR) stay unpaid for healthcare providers. The longer an AR goes unpaid, the less likely healthcare providers are to receive payment. Therefore, it is crucial for providers to actively manage their revenue cycle and address any inefficiencies to recover what would otherwise be lost revenue. In this article, we will discuss strategies for healthcare providers to lower days in accounts receivable.
Accounts receivable (AR) is a crucial aspect of revenue management for healthcare providers. Delayed payments or unpaid bills can cause financial instability and revenue leakage. In this article, we will discuss five strategies for improving accounts receivable in healthcare.
- Collect Accurate Patient Information
The first strategy for improving AR is to collect accurate patient information. Healthcare providers should ensure that they obtain complete and accurate patient information, including insurance coverage details, at the time of service. Collecting accurate patient information can help healthcare providers avoid billing errors that can lead to delayed payments and longer AR cycles. Patients’ insurance coverage should be verified before providing any services.
- Submit Claims Promptly
The second strategy is to submit claims promptly. Healthcare providers should submit claims as soon as possible to reduce the number of days in AR. This ensures that insurance companies receive the claims in a timely manner and can process payments quickly. Delayed submission of claims can lead to longer AR cycles and revenue leakage. Prompt submission of claims can also reduce the workload on billing staff, allowing them to focus on resolving any outstanding billing issues.
- Track and Monitor AR Reports
The third strategy is to track and monitor AR reports regularly. Healthcare providers should track and monitor their AR reports to identify and resolve any outstanding issues. This enables providers to have an accurate understanding of their AR and promptly address any billing discrepancies. Healthcare providers can also use AR reports to identify trends and patterns in their billing processes and make necessary improvements. Regular monitoring of AR reports can help healthcare providers take proactive measures to address any issues that arise.
- Use Automated Billing and Collections Systems
The fourth strategy is to use automated billing and collections systems. Healthcare providers can streamline their billing processes, reduce errors, and speed up the collections process by using automated billing and collections systems. This can lead to shorter AR cycles and faster payments. Automated systems can also help healthcare providers track and manage their AR more effectively, reducing the workload on billing staff and improving overall efficiency.
- Outsource Revenue Cycle Management (RCM) Services
The fifth strategy is to outsource revenue cycle management (RCM) services to a third-party provider. If healthcare providers are struggling to manage their revenue cycle effectively, outsourcing RCM services to a third-party provider can be an effective solution. RCM companies can help healthcare providers manage the entire revenue cycle, from claim submission to reimbursement collection, freeing up healthcare providers to focus on providing quality care. Outsourcing RCM services can also reduce costs associated with hiring and training billing staff and implementing billing and collections systems.
How to Calculate Accounts Receivable
Calculating accounts receivable (A/R) is essential for healthcare providers to measure the effectiveness of their revenue cycle management. This article explains how to calculate accounts receivable accurately and provides insights on interpreting the results.
To calculate accounts receivable, healthcare providers need to follow these steps:
- Compute the average daily charges for a set number of months by adding up the charges posted for that period, and dividing by the total number of days in those months.
- Divide the total accounts receivable by the average daily charges.
- The result is the average days in accounts receivable.
- For example, if a healthcare provider looks back at the last three months, they can consider that a starting point for ongoing measurement on a quarterly basis. Comparing those three months to the three or six months that precede them can help them understand if that baseline is consistent with their performance over time.
- Interpreting Results A/R within 30 days is the ideal standard. If a healthcare provider is averaging over 60 days in accounts receivable, they should investigate immediately. Some common causes for delayed payments could be payers stalling on payments, denials spiking around particular procedures, or errors in claims requiring resubmissions.
- If the A/R is around ~45 days or less, healthcare providers can start monitoring and understanding their billings better by bucketing and aging their receivables. This means grouping their outstanding claims by how long they have been outstanding, such as 1-30 days, 31-60 days, 61-90 days, and so on.
Understanding Payer Schedules Every payer operates on its own schedule. Healthcare providers can correlate payments coming out with bills coming in to gain an understanding of when an insurer reimburses them. This could be within a 30- or 60-day window, providing healthcare providers with more knowledge on when a given bill has reached its “late payment” threshold and it’s time to contact the payer.
So, calculating accounts receivable is crucial for healthcare providers to measure the effectiveness of their revenue cycle management. By following the steps mentioned above, healthcare providers can determine their average days in accounts receivable accurately. It’s also essential to investigate immediately if the A/R is averaging over 60 days and monitor and understand the billings better by bucketing and aging receivables if the A/R is around ~45 days or less. Understanding payer schedules can also provide healthcare providers with more knowledge on when to contact payers for late payments.
Conclusion:
Healthcare providers can improve their accounts receivable by collecting accurate patient information, submitting claims promptly, tracking and monitoring AR reports regularly, using automated billing and collections systems, and outsourcing RCM services. Effective management of AR is critical for maintaining financial stability and providing quality care to patients. By implementing these strategies, healthcare providers can streamline their revenue cycle and improve their overall financial performance. The article concludes by emphasizing the importance of lowering days in accounts receivable for healthcare providers. By implementing strategies such as collecting accurate patient information, submitting claims promptly, tracking and monitoring AR reports, using automated billing and collections systems, and outsourcing RCM services, healthcare providers can reduce their AR cycles and recover lost revenue.
Conclusion Active management of the revenue cycle is crucial for improving accounts receivable in healthcare. Providers must optimize administration, run AR reports, track claims, and outsource reimbursement collection if necessary. By implementing these strategies, healthcare providers can recover lost revenue and ensure financial stability.