Read Time:
6 Min
What You’ll Learn:
Navigate the nuances of medical billing and maximize your revenue cycle.
The financial health of a medical practice largely hinges on the successful management of its accounts receivable (A/R). This encompasses a broad array of activities, from accurately coding procedures to meticulous billing and vigilant follow-ups on pending payments. The aim of this guide by Wakefield is to provide a detailed overview and actionable insights into optimizing accounts and receivable management in medical billing, backed by proven expertise and cutting-edge methodologies.
In the context of healthcare, accounts receivable refers to the amounts due from the medical accounts of patients and insurance providers for medical services rendered. It is an asset on a medical practice’s balance sheet, indicative of revenue that is expected to be realized in the near future.
The A/R directly impacts cash flow, a critical determinant of a practice’s operational viability. A backlogged A/R may lead to cash flow constraints, hampering essential aspects like payroll, inventory replenishment, and further investments into the practice.
This metric represents the average number of days it takes for a medical practice to collect payments from the time a patient is billed. It serves as a measure of collection efficiency, and a lower number is often indicative of a more efficient medical billing process.
The percentage of accounts receivable that are over 90 days old serves as a red flag for potential collectability issues. This figure should be as low as possible to mitigate the risk of bad debt and maintain a healthy cash flow.
We at Wakefield specialize in a ‘biggest bang for the buck’ approach. Our data-driven strategies focus on prioritizing collections from high-value accounts to maximize revenue recovery in a timely manner in the shortest possible time.
Our advanced systems are capable of sending automated reminders for overdue payments and follow-up emails for pending payments. This ensures timely collections and frees your internal staff to focus on core competencies like patient care.
The first step in addressing outstanding payments is accurate identification medical billing accounts. Utilizing advanced software systems, we at Wakefield help medical practices pinpoint aging balances that require immediate action. Having real-time data is crucial for implementing targeted recovery strategies.
One of the critical factors contributing to outstanding payments is a lack of effective communication between the healthcare provider and the patient or insurance company. A well-structured communication system, complete with automated reminders and tailored messages for timely payments, can go a long way in expediting the payment process.
If all else fails, understanding the legal avenues available for collecting debt is essential. While turning to collections agencies or legal action should be the last resort, it is sometimes necessary to maintain financial stability and integrity. Wakefield offers consulting services on the legal aspects of collections, ensuring that your practice stays within the boundaries of federal and state laws during the collection process.
Every denied claim should undergo a thorough root cause analysis to ascertain the underlying issues. With this knowledge in hand, a targeted re-submission strategy can be formulated to overturn the denial of denied claims.
Wakefield has a systematic approach to appeals, which includes filing timely and well-documented appeals to increase the likelihood of overturning denials. We also conduct regular training sessions for healthcare providers to update them on the latest billing codes and regulations to minimize future denials.
Factors such as delayed claim submissions, incomplete or incorrect coding, and insurance verification issues can adversely impact the A/R days metric.
One effective strategy is to implement stringent credit policies at healthcare organizations, including conducting thorough financial background checks on new patients and enforcing upfront payment protocols.
At Wakefield, we offer our premium accounts receivable services to a broad spectrum of healthcare providers across the United States. Whether you’re a small practice, a specialty group, a hospital, or any other type of healthcare organization, our proven methods can increase your cash flow and optimize your A/R management, freeing you to focus more on patient care.
According to a study produced by TransUnion Healthcare on January 27, 2021 – “rising unemployment and income loss, will continue to play a major role in health insurance coverage disruptions across the nation.” Protection of the revenue that has returned for your operations since the pandemic disruption becomes tantamount to success of business operations. Cash realization is what makes the engine run.
Many of our clients have experienced a shift in the types of services they provide for their patient clientele. Patients who may have once decided to fix a health issue with one, maybe two surgeries for a practice are now managing their issue through evaluation and management and telehealth visits. How does this affect your cash expectations?
Kaiser Permanente states that by June 2020, 30% of all outpatient visits nationally we be performed via telemedicine. The insurance giant utilization of the telehealth was used 90% of the time for its appointments during the height of the pandemic, compared to 26% during the same time the previous year. They accomplish this without reducing access to care for its connected patients. They also stated that they believe the US companies could save $6 billion a year with more investment.
Practices and businesses should begin to examine how this shift is and will influence their financial outlook moving forward. As services shift to more outpatient management, and less face-to-face treatment, does that increase or lower your cash expectation? How will such a movement change your staffing needs? Is your operation equipped with the appropriate technology to provide telemedicine as a service?
With the need to support staff who are mostly working from home in today’s environment, the need for efficiency and technology support will be a priority for collection efforts. In particular, workflow optimization is an essential component.
Understanding workflow is critical because the most common issues on the back end of collections are caused by breakdowns in the early parts of the revenue cycle, like clinical denials or incorrect 837 data. We’ve automated AR workflow by identifying “at-risk” accounts so an FTE doesn’t have to spend the time doing so. Second is data reconciliation.
One of our strongest procedures to optimize revenue is our in-depth reconciliation processes throughout collections. We found that when we follow behind another billing company or inhouse billing, there are many missed encounters which can lead to 5-10% missed revenue in AR follow up alone.
So we’ve put multiple checks in place to ensure that every single claim has been followed up on, processed by the insurance company, and there is money in the bank.
Here’s an example of a common mistake made by many providers when they are not taking the time to capture each encounter accurately and failing to reconcile billed claims to payment.
In this example, the provider billed 20 encounters and 17 of them were successfully processed by the insurance company. But because the provider did not diligently follow up, the other 3 encounters were never processed by the insurance company.
If each of these encounters were worth $3,000, this would result in $9,000 of missed revenue just that day. Now think if this error occurred every day, it could result in a $180,000 loss of revenue throughout the entire month!
The point is, even missing only one charge per day can add up to significant dollars lost in the long term.
Do you know if you are getting paid correctly? If that answer is anything but a confident YES, then chances are your facility is leaving money on the table. The most important from a financial perspective in that tracking is cash receipts. Understanding what your team should collect based on the revenue produced tells executives whether the performance has been good enough or not.
Having static goals unrelated to revenue produced creates tension in some cases where none is called for, and celebration in other instances where team members should be checking for issues blocking cash. Knowledge is power. Know what to collect based on the revenue your operation produced.
Additionally, here are some key metrics and reports that are more important than ever before to monitor to ensure you are able to collect the highest possible reimbursements from payors.
Patient volume Report – are you open, do you have a business, what type of marketing do you need to doing?
Patient Responsibility Report – do you have up-to-date rules on co-pays? Are rule out procedures part of out-of-pocket, or not?
Backlogs exist? – related to covid, staffing shortages, visit growth?
Billing Report – charges out and reconciliation
Coding reports – that no backlogs are building
Telemedicine – how are you being paid? By payor? By CPT code?
Denials by Payor, Procedure, & CPT code – adopting a root cause analysis system for failed claims
Accounts receivable in medical billing serves as a pulse check on the financial well-being of a healthcare organization or practice. Given its far-reaching impact, it is imperative that healthcare providers adopt a strategic, data-driven approach for efficient and effective A/R management. Wakefield stands as your partner in this endeavor, offering unparalleled expertise and innovative solutions that directly contribute to your bottom line.
Discover how simplifying healthcare billing can transform the future of medical finances. Learn about the latest trends, technologies, and strategies for efficient healthcare cost management and patient billing solutions.
Discover how simplifying healthcare billing can transform the future of medical finances. Learn about the latest trends, technologies, and strategies for efficient healthcare cost management and patient billing solutions.
Discover how simplifying healthcare billing can transform the future of medical finances. Learn about the latest trends, technologies, and strategies for efficient healthcare cost management and patient billing solutions.
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