One of the top headaches for any healthcare practice is getting timely payments. Medical billing accounts receivable are what come into play. If you’ve ever had the sense that your clinic’s cash flow was erratic, or you noticed that claims didn’t get paid for weeks, then getting to know this process is the first thing you need to do to fix it.
Know about the concept of Accounts Receivable in Medical Billing:
In medical billing, the money due to the healthcare provider following a medical service delivery is known as Accounts Receivable (AR). Consider it an “IOU” or an “I owe you. A patient appears at the clinic, the clinic submits a claim to an insurance company, the insurance company does not pay the claim, or the patient does not pay their share of the claim, the claim remains in the AR.
In the healthcare industry, Accounts Receivable plays a vital role:
Retailers could reap the benefits of the sale, but health care providers might not get the payment for their work for weeks or months. This creates a delay in payment for service and deposit to the bank account. A good AR process will minimize this time. Despite being fully booked on a daily basis, a poor process can result in a negative cash position.
The key components of a Medical Billing Accounts Receivable (A/R) are:
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Insurance Claims:
Most health care facilities’ sources of revenue are insurance reimbursements. Claims are filed electronically to the payers, and the AR clock starts when claims are filed.
- Patient Balances:
All insurance will be paid, and the patient will be responsible for the deductibles, co-pays or coinsurance. This part is typically delayed in receiving compared to the insurance.
- Aging Buckets:
Traditionally AR is measured during the following age groups: 0-30 days, 31-60 days, 61-90 days and 90+ days. The longer a balance is unpaid the more unlikely it will be collected.
An outline of the Medical Billing Accounts Receivable Process:
- Insurance and patient registration – Insurance information is checked prior to or during their visit.
- Code and charge entry – This visit becomes billable codes (CPT, ICD-10) and is added to the system.
- Claim submission – claim submitted to the payer – both paper and electronic.
- Claim Adjudication – Insurance Company reviews claim and makes a determination on whether or not to pay.
- Payment posting – payment received is added to patient’s account.
- Follow-up on unpaid claims – Claims denied, delayed or partially paid follow-up and resubmitted as needed.
- Collections – Where balances are not paid, they will be passed to a collection’s agent as a last resort.
Benefits of good A/R Management:
- Better cash flow – Cash is collected earlier which enables them to fund operations and payroll.
- Denial claims reduced – proactive AR management minimises denials.
- Better patient relationships – When bills are accurate and clear, there is less communication issues and complaints.
- Improved financial forecasting – you know what to expect by planning ahead.
- Reduced bad debt – follow-up to avoid uncollectable debt.
Here are some common issues in Medical Billing AR that you may encounter:
Claim Denials & Rejections:
The reasons for denials vary from missing information to the wrong codes, to eligibility issues. Each time they are denied there is a delay, an additional administrative step, and so on. The length of time insurance companies takes to respond to claims. Insurance companies’ response times.
Patient Payment Delays:
Patients are now paying more and more of the cost with higher deductibles these days. An increasing number of people have difficulty making prompt payments or are not completely sure of what they are paying.
Not providing staff training:
There are often changes to the rules on billing. Knowledge about coding and payer requirements can have a negative effect on the entire AR process if staff members are not familiar with it.
Outdated Technology:
Manual processes increase the challenge in keeping claims in check, following claims on time, and establishing trends in what claims are being denied.
Technology in medical billing A/R management:
With today’s practice management/billing software, the AR process can be automated to a significant degree. Some of the capabilities that make billers more likely to catch problems before they get out of hand include automatic eligibility checks, real-time claim tracking and denial management dashboards. There are also systems that provide patient portals, enabling patients to access and pay their bills online, thus minimizing delays in payments.
Future changes in medical billing accounts receivable:
The AR is a continuously changing field. Here are a couple of trends to keep an eye on:
AI denials prediction – Software that warns a claim might be denied before it reaches the claims submission process.
Greater price transparency – Patients are entitled to know up-front what the price is going to be as there is no element of surprise.
Changes in reimbursement – New options for tracking AR with value-based care billing.
More outsourcing – more medical practices are turning to outsourcing their medical billing function and making it more efficient.
Conclusion:
Medical billing accounts receivable is not simply a clerical duty, but a lifeline of the financial running of a healthcare practice. Faster and more accurate claims submission, with clear communication of the patient balances, will help to ensure a smoother workflow and decrease administrative burden. With a few simple measures and a few common mistakes to avoid, practices of all sizes can cut their AR cycle, minimise bad debts and make their business more financially stable.
FAQ’S:
- What is A/R in Medical Billing?
It is the sum of all monies due to the healthcare provider from the insurance companies or patients for services that have been provided but not yet paid.
- Why is healthcare the need for AR?
As payments tend to be delayed, weeks or months after the service, good AR management ensures there is a smooth flow of cash in the practice, avoiding financial stress.
- What is a good AR days number for a medical practice?
The length of time a specialty requires to process a claim depends on the specialty and the mix of payers, but many practices aim to have the claim processed within 30-40 days or more.
- What causes medical billing claim to be denied?
This is commonly because of coding, lack of documentation, eligibility and late submission.
- When to review AR Aging Reports?
It is recommended to review this weekly so that problems can be identified early and are not hard to collect balances.
