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Accounts receivable: Strategies for better management


Maintaining healthy accounts receivable (AR) is essential to strong financial performance, but it’s easy for practices to feel overwhelmed or become complacent when it comes to keeping this piece of the revenue cycle on track. Here's some strategies to keep your AR on target.

The aging of your AR is crucial to watch because the older bills get, the harder and more costly they become to collect, says Laurie Morgan, MBA, a senior consultant with California-based Capko & Morgan. “When your AR slips and you have a very large backlog or balance, it can seem like you’ll never be able to tackle it,” she says.

What’s more, this challenge has been compounded in recent years by the rise in patient financial responsibility for medical care. While high-deductible plans have existed for some time, they’ve become even more widespread as more and more products available through new health insurance exchanges offer low premiums in exchange for high deductibles or coinsurance.

Related:Getting paid: Strategies and best practices

The multitude of new plans available to patients can in itself result in complexity and confusion for practices. Throw in the fact that many affected patients are unfamiliar with how health insurance works in the first place, and AR can suffer dearly.

Analyze your AR in detail

The first step in improving your AR is to analyze your starting point. But just as the proportion of patient-paid AR has evolved, so too should the way you run reports. “It’s important to break down the patient AR from the insurance AR to be able to understand what’s driving each of them. You can’t just look at it as one massive AR,” says Morgan.

So if you note that your patient AR is mounting quickly, for example, that could suggest deficiencies in your front-desk processes or the way employees communicate to patients about your financial policy. Declining performance on the insurance side could also indicate front-desk errors, or point to a larger issue related to a third-party or centralized billing function.


NEXT: Prioritize insurance verification


Prioritize insurance verification

A starting point for addressing many of these issues is your process for verifying patients’ insurance coverage and eligibility. “Making sure we’re checking insurance eligibility well in advance of that patient presenting to the clinic is a strong indicator of AR,” says Stephanie Davis, director of revenue cycle management for Halley Consulting Group in Ohio.

Most systems that practices use to check eligibility-including payer websites, software built into practice management systems or third-party products-can now provide medical office employees with detailed information that can help with AR. This data includes, for example, not just whether the patient has coverage, but how much of the deductible has been used up and even if the policy is in danger of suspension due to nonpayment of premiums. Ideally, practice employees communicate (and potentially translate) this information to patients before they come to the office for an appointment.

“If patient insurance eligibility is not being verified or we’re not connecting with the patient prior to them presenting to the office, it creates a massive amount of work on the back end to try and resolve open AR or open claims,” Davis says.

Tina Smith, CPC, CPC-H, administrator of Steamboat Medical Group in Colorado, adds that practices often make the mistake of not maintaining sufficient staff to adequately verify benefits and educate patients. “The value of that function gets minimized and physicians have a difficult time seeing the bigger picture,” she says. “But what you’re collecting as a result of doing that [upfront] work will more than pay for the additional staff member it takes to do that.”

Collaborate with outside billers

Of course, the revenue cycle extends far beyond the front desk-even if a practice uses a third-party billing company. “Practice managers are often really busy and anxious to offload some things to not worry about,” Morgan says. “So the temptation is there to start thinking as though billing is someone else’s job.”

Related:Collecting patient bills: When to use a collections agency

But even when most of the billing legwork is outsourced, practice managers have to work in concert with billers to make sure all parties are getting the information they need and performance is meeting expectations. Success in this area depends on maintaining a strong relationship with your billing company, according to Smith. Because her office is in a rural area, she enjoys the benefit of using a local billing company whose employees pick up the practice’s charge slips and drop off reports in person.

When face-to-face interaction with billers isn’t an option, it becomes even more important for an individual in the practice who understands billing rules to communicate with the company routinely. When possible, the same billing company employees should work with a given practice consistently, she adds, so the company becomes familiar with your office’s charges and contracts.


NEXT: Focus on coding


Focus on coding

In almost any primary care practice, there is opportunity for physicians to improve documentation and coding. When physicians see patients in multiple settings, such as nursing homes or hospitals, it’s especially important for practices to have systems in place to capture all of the services physicians are providing across these settings, says Davis.

“You would be amazed at the amount of billable services that are not captured by physician practices just because we don’t have processes implemented that will allow physicians to enter that charge capture,” she adds.

Even if physicians are using a superbill, they need to make sure not only that they are capturing all charges, but also know which of them they can and can’t charge separately, Smith says.

“It’s a challenge because it’s not physicians’ area of expertise. They want to be seeing patients, not learning all the coding rules and regulations. But at the end of the day it’s the physician who is responsible. If there’s evidence of fraudulent billing, it’s not going to come back to the billing company. It’s going to come back to the physician,” she says.

Related:Maximize patient collections using the web

Accurate coding also speeds up the billing cycle, which increases the likelihood of patients paying their balances, Morgan points out. Any delay in the time it takes a bill to get through the clearinghouse and then to the health plan for payment also stalls the practice’s bill to the patient.

The more time that elapses between when the patient is seen and when he or she receives a bill, the greater the chances the patient will have forgotten about the bill, will consume staff time questioning the bill, or simply not pay it. “So you lose money not just on the operating expense of dealing with the problem, but you may not get paid at all,” Morgan says. “Even in the best case it creates a negative experience for the patient, which is a result you don’t want.”

Engage patients

Instead, it’s crucial to engage patients early in setting expectations so that a bill or request for payment will not come as a surprise.

This step doesn’t stop with providing patients with your payment policy or reminding them of their balances. It also means giving patients easy ways to connect with the practice and pay their bills, says Davis.

“Patients are very technologically savvy, and the more you can give them access to communication tools, such as an online portal, and convenient methods of payment, it makes it easier for the patient to be engaged in that process,” Davis says.


NEXT: Beware of consolidation caveats


Beware of consolidation caveats

Patient engagement and accessibility are particularly important when a practice is going through a transition such as a merger or hospital buyout, notes Morgan.

Of particular concern, switching to a hospital billing system often results in billing delays, leading to the problems mentioned previously that can sour a patient’s relationship with the practice. “So anything you can do in the clinic to communicate what’s going on, such as changes happening, updates to infrastructure, potential billing delays, or a new person to talk to with questions can head off problems,” Morgan says.

Related:How physicians can improve cash flow with accounts receivable financing

Also, while being owned by a hospital or health system can be a plus when it comes to negotiating contracts, adopting hospital-centric policies is not always advantageous from a billing perspective, according to Davis. “We recommend you try to get the best of both worlds, whereby you allow the practice to continue to do their charge capture and other revenue cycle functions that are going to drive that performance,” Davis says.

Follow the golden rule

Regardless of your practice structure, Davis recommends following a credo of, “Whoever enters the data owns the data.”

An example of this philosophy at work would be when a claim comes back denied because of an incorrect subscriber ID. Rather than taking the seemingly quickest route of fixing the error at the back-office level and resubmitting, Davis suggests routing the claim back to the employee who made the mistake so he or she can see what happened and not perpetuate the cycle.

“Our front-desk personnel are typically people who strive to do their best. And where we see the breakdown is when we don’t provide that feedback loop and we don’t allow them to understand the results of their actions,” Davis says. “Engaging employees in the solution is the ultimate training.”


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