Efficient financial management is crucial in every field, including healthcare. With the rising patient volumes and changing HIPAA and payer-specific compliance, medical providers must prioritize their financial processes. One of the significant pillars of the healthcare RCM process is accounts receivable management.
Many healthcare facilities lose 5-15% of their annual revenue because of improper AR management. Efficient AR strategies help to reduce operational burden, improve cash flow, and allow providers to focus on providing quality care.
What is accounts receivable management?
Accounts receivable in RCM is the process of analysing, tracking, and collecting payments from the insurance company and patients for a medical provider. AR management is important for timely billing of claims, denial resolution, and follow-ups with the payer, and collecting dues from patients. If a healthcare facility has an average AR of 60 days, it means the payment collection will take around 60 days. AR days for every healthcare organization should be less than 25 days, and trusted accounts receivable services help to achieve this.
If the payments for a healthcare service are constantly delayed, it is called aging AR. It affects the overall financial status of a healthcare organization. AR services analyze the entire RCM process from verifying insurance eligibility, submitting claims, to regular follow-up with the payer. Here are the best practices to avoid claim denials and get faster reimbursements.
Verifying patient insurance coverage
Before offering a healthcare service, confirm a patient’s insurance coverage. A throughout verification ensures the medical provider will be reimbursed for their services.
Submitting error-free claims
Healthcare facilities are required to pay approximately $15- $20/ claim for managing and submitting the claims. That’s why claim acceptance in the first submission is important, as denials can increase this cost to 3X. Medical providers can significantly boost their cash flow by submitting error-free claims. They require trained medical coders and billers to submit clean claims.
Regular Follow-up with the Prayer & Patients
Multiple follow-ups are required for collecting payments from the insurance companies and the patients. Timely follow-up ensures uninterrupted cash flow in RCM. Experts’ accounts receivable service helps providers to connect insurance companies and patients professionally and reduce AR days.
Denial Management
Identifying the major causes of claim denials is important for efficient accounts receivable management. Denial management requires professional support to detect the reasons for denials and resubmit the accurate claims. Expert denial management services also analyze the patterns and most common reasons for claim denials.
Collecting patient balances
Payment collection from patients is crucial to managing accounts receivable management systems. Healthcare providers can leverage RCM services to engage with patients and collect their payments faster.
Periodic reports & audits
Regular analysis, reporting, and auditing are the major qualities providers always face in AR management. Audit is crucial to detect potential risks and problems in the Revenue Cycle Management. Periodic monitoring and reporting provide a clear report about the aging AR, outstanding payments, and more. The AR management services analyze the root causes of claim delays and resolve them immediately to avoid future denials.
Explore the Most Common Challenges in AR Management
Managing AR presents various difficulties for a healthcare system. The most common challenges are listed here, which can cause loss of revenue for a healthcare practice.
Medical coding and documentation mistakes- Delayed payments from the insurance company and the patient
- Absence of robust technology for tracking and managing receivables
- Confusion with patient accountability
- Not taking regular follow-ups with the patients
Essential Stages of Accounts Receivable Mastery
Efficient AR management includes three major stages. Let’s explore each stage in detail-
Stage 1: Pre-invoice
The first stage ( pre-invoicing) includes setting up the patient or payer accounts, establishing payment terms, and confirming the creditworthiness of the patient. The pre-invoice step sets the foundation of the entire healthcare AR process. During this stage, accounts receivable companies help you to conduct a patient’s credit check, establish payment terms, and set up the patient account efficiently.
Stage 2: Invoicing
This stage includes creating and sending invoices to the payer and the patients for the medical service. The process involves the following tasks-
Generate accurate invoices
Usually, a medical provider receives their reimbursement in 60-120 days. Using the right medical codes and service descriptions is important to create an accurate invoice.
Deliver the invoice promptly
Submitting the invoices within a specific time is important to avoid delays. Most AR service providers use electronic billing systems to speed up the delivery.
Follow up on unpaid invoices
Periodic follow-up with the payer and patients is important to get timely payments. This process may include calling them or sending reminder emails.
Stage 3: Payment & Collection
This is the final stage of accounts receivable management, which includes collecting payments and resolving all payment discrepancies.
Receive payment: Keeping accurate records of the payments in an accounting system.
Reconcile the account: It helps to detect any errors in the received payments.
Resolve denials: Approximately 30% of submitted claims get denied in the USA. Timely resolution of denied claims is important to avoid revenue loss.
What is a Consequence of Inefficient Management of Accounts Receivable?
When the AR of a medical practice is not properly managed, the major consequences are financial damage. It includes-
Cash Flow Disruptions: Uncollected payments directly impact the overall operational budgets.
Increased Bad Debt: If AR remains unpaid for a longer time, it becomes tough to get it collected.
Higher Administrative Costs: Chasing unpaid claims demands significant resources and manpower.
Compliance Risks: Inadequate accounts receivable processes lead to non-compliance that results in penalties.
How to Manage Accounts Receivable in Healthcare?
AR management in RCM is not a one-time effort- it’s a continuous and strategic process to improve the financial health of a medical practice. The best practices to manage AR effectively are detailed here-
Ongoing AR Aging Analysis
Utilizing modern receivable management systems helps to monitor outstanding medical claims. It breaks down the receivables by aging bucket in 0- 30 days, 31- 60 days, and 61- 90 days. This helps to identify the major problem areas.
Prioritize High-Value Claims
Focusing on claims with limited timelines and higher dollar values is important to minimize revenue loss.
Implement Denial Management
Run an effective denial management process by fixing the root causes, tracking denial patterns, and resubmitting accurate claims promptly.
Engage in Proactive Follow-Up
Build an effective schedule for timely follow-ups with the prayer and the patients. Leverage automation to minimize manual efforts.
Outsource AR Management Experts
Most medical providers are now turning to accounts receivable outsourcing services to accelerate collections and reduce costs.
Where to Get the Best Accounts Receivable Services
If you are noticing increased DSO or internal inefficiencies, it’s time to get professional AR services from panaHEALTH. Get expert guidance to streamline the billing process, improve payer communications, and accelerate overall revenue cycle. What you will get-
Expertise & Focus– Specialised knowledge of prayer’s guidelines, medical coding, and billing practices.
Faster Collections– Leverage the latest technology to shorten the payment cycle and reduce denials.
Cost Efficiency– Reduce overhead costs of hiring and training an in-house team.
Real-Time Reporting– Visibility into collection performance and AR trends for in-depth analytics.
Scalability– Flexible accounts receivable solutions from small practices to large healthcare organizations.
Conclusion
In healthcare, poor accounts receivable management can drain your resources, damage your reputation, and impact patient care. Outsourcing AR services brings a strategic approach for faster reimbursement and improved cash flow.
Still confused where to start? Talk to panaHEALTH experts to step toward greater financial health.
