All healthcare practices require proper financial management to remain successful; however, one of the greatest impactors, within the revenue cycle, is A/R Management. This is defined as the management of your healthcare business's receivables – specifically tracking, managing and collecting payments owed to you (both by insurance companies and patients). When a practice effectively manages this process, it creates predictable cash flow, decreases aged accounts receivable, and increases the overall financial performance of the practice. 

Unpaid balances, claims that have been denied, or late payments can decrease the financial viability of a healthcare practice and increase its administrative burden. Proper management of all your accounts receivable (A/R) will enable your healthcare organization to detect possible delays in payment before they occur, as well as to take action to minimize any future losses of revenue while at the same time increasing the amount collected from your patients.

Overview of A/R in Health Care

Accounts receivable refers to the amount of money owed to health care providers for services performed and will usually come from an insurance company or government agency or from the patient themselves. To properly manage this process requires that proper procedures are followed regarding how to submit claims, how to track payments accurately, and how to follow up on outstanding balances.

A well-organized accounts receivable workflow can provide a way for a health care practice to track their unpaid claims and identify problems such as billing errors, inappropriate coding, or delayed responses from insurance companies. The better the tracking of claims and the more timely the follow-up on claims will greatly enhance the ability of the practice to collect on the unpaid claim.

The Reason That Missed Claims Are Bad For You

In a healthcare practice, managing your accounts receivable process is crucial to ensure your practice has a financially sound basis. When claims go unpaid for an extended period of time, this creates a slowdown in your overall revenue cycle, which ultimately affects how quickly you can operate and provide services to your patients.

If you do not manage your accounts receivable properly, you put yourself at risk of experiencing the following problems:

1. Inconsistent cash flow

2. Increased rate of denied claims or delayed reimbursement

3. Improved financial transparency

4. Fast identification of billing issues

5. Increased total collections from your patients

By working on unpaid claims as soon as possible after they have been submitted, providers can stop minor billing problems from evolving into significant financial problems.

Main Aspects of A/R Management

1. Claim Submission

The first step in decreasing outstanding A/R balances is submitting claims that are correct. It is necessary to have correct patient demographic information, insurance information, and correct medical coding in order to submit accurate claims. This will help decrease the amount of claim denials, which will result in quicker payments.

2. Claim Tracking

Once submitted the claim then must be tracked until payment is received. Tracking the claim allows the Billing Department to determine what claims have not been reimbursed in the expected timeframe so that they can take action on those claims.

3. Timely Follow-Up

Insurers can delay the payment of claims for various reasons, such as lack of required documentation or coding denials, which can lead to long payment cycles. Therefore, conducting timely follow-ups with the insurer will help to resolve any outstanding issues quickly and reduce the overall number of days that it takes to get paid for services provided.

4. Denial Analysis and Resolution

When a claim is denied, the first step is to research why the claim was denied, so that the error can be corrected and the claim can be resubmitted properly.

5. Patient Payment Management

There has been a dramatic increase in patient responsibility for payments. Properly managing patient statements/billing, and providing accurate, effective communication with the patient allows for improved collections.

How to Improve Your A/R Performance

To enhance their collection of payments, providers in the Health Care Industry can implement a variety of strategies and solutions.

• Establish Standardized Billing Processes

Standardized billing processes ensure that all claims are handled in the same way every time. This will allow the billing team to eliminate inconsistencies when processing claims, resulting in less confusion among billing personnel.

• Review Aged Accounts Frequently

An aged A/R report organizes all open A/R balance(s) by how long they have been outstanding. Regular reviews of Aged A/R reports help to identify instances of delayed payments and assist with prioritizing follow-up for the collection of outstanding balances.

• Improve Insurance Verification Process

Validate patient eligibility of health insurance prior to the rendering of services to reduce the opportunities for billing errors and to make sure the claim is submitted to the right insurance company.

• Improve The Detection of Billing Issues

The sooner a billing issue can be identified, the easier it is to resolve. Claim audits and regular claim reviews can aid in identifying potential issues prior to them impairing the cash flow.

• Maintain Strong Communication

Effective communication between the billing staff, the health care provider, and the insurance company will help ensure that any issues related to billing are resolved as quickly and accurately as possible.

Benefits of Outsourcing A/R Management

A lot of healthcare companies have decided to outsource their billing processes to experienced companies such as CareLink Billing Services. Outsourcing gives practices the ability to concentrate on their patients while professional billers manage the financial aspects of healthcare.

Among the benefits to outsourcing are:

• Faster follow-up on claims and collection of payments

• A decreased administrative workload on the staff of the healthcare facility

• More accurate claims and fewer denials

• Access to experts in medical billing

• Improved financial reporting and tracking of performance

By utilizing experts with extensive knowledge in billing, healthcare providers can improve their revenue cycle and increase financial success.

Conclusion:

Properly managing A/R is crucial to a successful revenue cycle in the healthcare industry. Healthcare organizations can enhance their cash flow and minimize the amount of time their revenue is delayed by effectively tracking open claims, quickly resolving issues associated with billing and establishing strong financial processes.

Having a structured A/R strategy enhances financial stability for the healthcare provider and gives them more resources (in terms of manpower and time) to devote to their patients. When A/R activities are effectively monitored, followed up on, and billed correctly, medical organizations can have a more sustainable and reliable finance system for their operations.