Accounts receivable in medical billing refers to the amount of money owed to a healthcare provider by patients or insurance companies for services rendered. It is an important metric for healthcare providers, as it reflects the amount of money that is outstanding and not yet collected.
Aging account receivables can greatly impact a practice’s financial health. In this article, we’ll review the best practices for effective AR management, how to track aging accounts receivables, and how to increase overall collections for your practice.
Aging Accounts Receivable Report
An aging account receivable report is a measure of the receivable performance related to the amount of time it takes to collect payment on patient balances. This report can give an overall summary of the average number of days outstanding claims are left unpaid. The aging accounts receivable report is a crucial tool in revenue cycle management for a medical practice.
Outstanding receivables for medical care are typically measured in 30, 60, 90 or 180 day categories. Once insurance claims have been paid by insurance payers and the balance is assigned to the patient, these accounts will go into an aging receivables report. Once overdue payments reach the 180 day mark, they are often written off as bad debt.
8 Tips To Improve Your Accounts Receivable Processes
Improving accounts receivable in medical billing requires a comprehensive approach that focuses on the entire revenue cycle. Here are some steps you can take to improve your accounts receivable:
1. Verify Patient Information
Accurate and up-to-date patient information is crucial for medical billing. When billing, ensure that you have the correct patient information, including demographic details, insurance information, and contact numbers.
This can help reduce claim rejections and denials, which can ultimately lead to lower accounts receivable. There are numerous tools available that can help you confirm insurance plan information and status for patients.
2. Request Payment At Time Of Service
One of the top ways to encourage timely payment on patient accounts is to request patient payments at the time medical services are rendered. Most insurances will charge a copay or coinsurance that can be pre-calculated by medical billing specialists.
Capturing these payments as the charges are incurred will reduce the number of medical accounts in your aging receivables report. This practice will also reduce the amount of time your billers need to spend on follow up.
3. Practice Timely Billing
Timely billing is important to ensure that patients pay on time. Bills should be sent out promptly, on the same day as the service is provided or at regular billing cycles. This can help improve cash flow and reduce the time it takes to receive payment.
You can use software or electronic systems to help you generate and send bills quickly and efficiently. Make sure any unpaid balance that is the financial responsibility of the patient is billed out out on a regular basis.
4. Follow Up On Unpaid Claims
Claim denials should be followed up on regularly to ensure that they are processed in a timely manner. You should monitor claim status and re-submit claims that have been rejected or denied.
This can help ensure that claims are processed and paid in a timely manner. Timely follow-up is a key focus for reducing the overall number of outstanding accounts for a practice.
5. Monitor Payment Trends
Analyzing payment trends can help you identify payment patterns and issues that may be impacting your accounts receivable. For example, if a particular insurance company consistently denies your claims, you may need to change your billing practices to address the issue.
There are many helpful tools and software that can help you analyze payment trends and identify issues. Vetting these tools prior to purchase is important for determining how useful they would be for your specific practice.
6. Offer Payment Plans
Offering payment plans to patients who are unable to pay in full can help reduce accounts receivable. This can also help you retain patients who might otherwise go to another provider who offers more flexible payment options.
Medical billers are often placed in charge of payment plans as they take care of payment posting and collection efforts for any outstanding balances. Requiring monthly auto-payments for any payment plan can increase your collection rate and reduce time spent on follow-up.
7. Train Staff
Well-trained billing staff is crucial for reducing errors and ensuring that claims are processed correctly. You should provide regular training to your staff to keep them up-to-date on current billing and coding practices.
This can help reduce errors and ensure that claims are processed correctly the first time, reducing the time it takes to receive payment and reducing bad debts overall.
8. Utilize A Medical Billing Company
Professional medical billing services can greatly increase the overall financial performance of healthcare facilities. Some practices will choose to have their in-house billers handle the initial billing and coding of a claim, then will have a billing company work through denied claims and A/R follow-ups.
Medical billing companies are often skilled and experienced in the accounts receivable process and can greatly improve the overall cash flow of a healthcare practice.
Overall, these strategies can help you improve your accounts receivable in medical billing, reduce the time it takes to receive payment, and ultimately improve your financial performance. By implementing them consistently and effectively, you can streamline your billing process, reduce errors, and improve cash flow.
The Importance Of Accounts Receivable For Financial Health
Anytime a charge is billed to a patient’s account balance, it is considered an account receivable. Accounts receivable are an important measure of the overall financial health of a medical practice. These metrics are directly impacted by accounts receivable:
Accounts receivable can impact the cash flow of healthcare providers. The longer it takes to collect payment, the longer it takes to receive revenue, which can impact the financial health of the practice. Healthy cash flow is essential to the overall financial stability of the practice.
Accounts receivable is an important component of a healthcare provider’s revenue stream. It represents the amount of money that the provider has earned but not yet collected. Efficient accounts deliver income earned within 30-60 days of the date of service, increasing the overall profitability of the medical practice.
Monitoring accounts receivable can help healthcare providers identify inefficiencies in their billing process. For example, if claims are consistently rejected or denied, it may indicate a problem with billing or coding practices that needs to be addressed.
Accounts receivable can impact patient satisfaction. If patients receive bills that are inaccurate or unclear, or if they are unable to pay in a timely manner, it can lead to frustration and dissatisfaction.
Healthcare providers are required to comply with regulations related to billing and collections. Monitoring accounts receivable can help providers ensure that they are following the rules and regulations related to billing and collections.
Reduce Your Practice’s Aging Accounts Receivable
Accounts receivable is an important metric in medical billing as it impacts cash flow, revenue, billing efficiency, patient satisfaction, and compliance. Healthcare organizations should monitor their accounts receivable regularly and take steps to improve their billing processes to ensure timely payment and overall financial health.
Hiring professionals to manage your practice’s medical billing process will reduce the average days a balance is left unpaid and can increase overall collections. Utilizing a medical billing service can greatly increase your practice’s overall financial performance, often far exceeding the fees they charge for their services.