I know this all to well. I have been in the medical billing/collection field for over 15 years, now I am trying my hand at being a business owner, in a totally different field. But i am also back in college for my BS in Healthcare Administration. We will see where life takes me.
Conquering your Accounts Receivable: for the Healthcare Practice
Providers: This article helps you determine if your AR is unhealthy and gives an actionable set of guidelines to help conquer it and ensure it doesn't come back.
Conquering your Accounts Receivable:
What is it? Accounts Receivables (AR) are outstanding or unpaid claims for services you, or your staff, have performed. Everyone who bills has an AR, it may be large or small, young or old, or you might have no idea whatsoever. Because every carrier or patient takes a different amount of time to pay a claim or statement, your AR will flex and flow slightly throughout the year. However, a large AR represents real dollars that are owed to your business and, unfortunately, the longer they age the fewer will actually be paid.
What is the value of fixing it? You, the owner/provider, and your staff are busy attending to your first priority, your patients; that’s why a healthy AR can suddenly balloon into a mess even when a practice is thriving. Once that happens, the ability of your staff to isolate what accounts need to be seen to in a direct and timely manner is nearly impossible without you losing money in the process. The older a claim is the harder it is to resolve, not only with an insurance company, but with a patient as well. Policies lapse, patients move, the number of days a provider has to dispute a denial will pass. A large AR simply creates chaos for you, for your staff, and your patients. Many excellent healthcare providers lose patients over chronic billing confusion. In fact, it’s the number one reason for noncompliance of medical treatment.
Clearing overdue AR will increase the effectiveness of your billing department. Staying right on top of each and every claim is the best way to decrease the overall number of initial denials. Insurance carriers systematically deny a certain number of claims, arbitrarily or by design, and it is up to you to dispute them. If you don’t, they will deny more and more, it’s an easy way to keep your money in their pocket. However, the percentage of these denials is nearly zero when you and your staff have proven you’ll fight for every single claim.
Even more importantly, an AR spike can be a useful indicator of systemic breakdowns in your practice before they become a real problem. For instance, a new staff member has been inputting patient data incorrectly or a provider has been given a list of Medicare codes instead of commercial ones by mistake for a few weeks. These things happen all the time and the only way to truly protect your bottom line is to pay attention to increases large and small. This makes you proactive instead of reactive, a great place to be.
How do I know if it’s bad? If you don’t know right now what your overall AR is and exactly how old is it, you can bet it’s not good. Some providers see this massive dollar value accruing in their AR each month and mistakenly believe that money can still be collected, so they put it off for another day. Because of timely filing, reconsideration, and appeals deadlines, each day a segment of money that’s represented on your books is no longer valid. One day it’s $5,000. The next it’s gone. And there is very little you can do about it. Your practice should be collecting at least 95% of your billings within the first 90 days. So, take a look. Pull up your AR reports or have your billing person do it for you. How much of that total dollar value is inside 90 days? How much is out?
How do I know that every charge is followed through to the greatest extent? There is only one answer to this question: You have to be involved. The responsibility of billing, follow-up, and customer service falls on your staff and perhaps an office manager, but it’s you that is responsible for making sure your business stays healthy and you’re protecting it against loss and theft. An elevated AR puts you at risk for unethical employees and scammers that prey on the healthcare industry because they know how to exploit its complexity. An embezzler that looks like an office manager or a biller who writes off balances rather than following up on a notoriously difficult claim, without straightforward checks and balances, how long would it take you to know? You have to approve and have an explanation for every single non-contractual adjustment on your books with documentation of appeals and sufficient justification and accountability. You have to have a firm enough handle on the AR as well as transparent reporting that allows you to see spikes and dips that will alert you.
Why can’t I put it off? Let me set the stage for a practice I worked with a couple of years ago: The provider had been in business for over ten years and it had been highly successful. They made enough money that they paid the bills and the provider handsomely. For each of the ten years, the office had been accepting Medicare patients, but had never managed to get paid on them. Any of them. The provider simply wrote off the Medicare balance each year instead of getting to the bottom of why they weren’t getting paid. Why did he do that? Well, it wasn’t for lack of effort. Each billing person that had come to work for him had also tried to address the problem. However, there were so many small systemic and training issues that had intertwined, they were a knot that was nearly impossible to untie. One problem only uncovered another and another. The provider didn’t have the heart to turn away his patients, but he also didn’t have the knowledge of Medicare intricacies to guide his staff to resolution. The staff decided that if the money wasn’t important to him, it wasn’t important to them either. $600,000 dollars outstanding later… the AR had ceased to mean anything to anyone. It was a fictional number. Even though the monthly collections for the practice looked good, they were closer to 70% of what he should have been seeing. What would you do with an extra 30% in collections each month, more time in the day, and a happier staff?
Goals: Realistic, Measurable, and Achievable & Accountable When getting your AR on track its imperative that you be realistic with your staff and your goals. Sit down and empower your staff and your fellow providers because I’m betting your AR didn’t shoot up overnight and it’s going to take some time and digging to fix it. With practice-wide goals and specific timelines that everyone is on board with, you will point your team in the right direction for success.
Declare a period of amnesty. When mistakes arise, and there will be mistakes, make this a learning experience, not a finger pointing one.
Next, do the numbers. How much is outstanding? How old is it? What carriers are problematic and have the highest outstanding dollars? What are your carriers’ filing guidelines? From there you have a pretty good starting point as to how you should prioritize and how much manpower you need. Figure out how many accounts your staff can address in a day and make sure you support them in achieving their goal with enough time and resources to do it. My experience is that one account can take anywhere from 15 minutes to 2 hours to unravel when a person really knows the systems.
Address the claims you can get paid on first.
Appeal every denial. Did you know that although insurance carriers arbitrarily deny those claims we spoke of earlier, they also often approve your appeal, even if the denial was technically correct. In my personal experience the pay up to 25% of the time.
Stop the bleeding. Keep a list of the types of denials you find and issues that arise throughout your project. Make sure that these are resolved once and for all so you never have to go back and do it again. These items are open until it has been tested and proven that they are resolved. Simple!
Know when to ask for help. As they say: More important that knowing what you know, is knowing what you don’t. Bring in a medical consultant, an AR guru who can streamline your project, keep your goals on track, and provide real-time hands-on advanced training to your staff. This one thing is worth more than gold in the long and short run. It can keep your staff from wasting time by offering them the support of an experienced mentor. It will maximize the overall collections of your AR by strategizing your timeline and priorities. You get: a higher rate of collections, a grip on your accounts receivable, faster paying claims, accurate accounts, a more knowledgeable and invested staff, and most importantly: Happier patients.
Learn more about the author, Cari Snow.
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- account receivables
- accounts receivable
- accounts recievable
- outstanding accounts
- patient accounts