Accounts receivable management methods for CFOs and RCM directors of medical groups.
Healthcare accounts receivables especially for medical billing is a back-end phase and is often neglected because it involves more time and energy to resolve pending and unpaid claims. Medical groups that have in-house billers often miss work on AR because they will be caught up with daily billing processes as these Medical groups do not have the resources to maintain multiple staff just for managing accounts receivable.
Why is it necessary to hire an AR Team for Medical groups?
The AR follow-up team is responsible to resolve unpaid and denied claims and get those claims reimbursed so that the Medical groups can achieve financial goals and grow. The medical group should note that using well-accomplished A/R cleanup services is essential in their revenue cycle operations.
6 Reasons Why A/R Follow-up is vital for Medical groups:
- Financial stability of the Medical Group:
The stability of any medical group depends upon its financial performance to maintain a positive revenue cycle. The hospital or medical group should maintain a gradual flow of revenue to compensate for expenses of performing patient care services, and therefore the A/R department ensures this is often taken care of.
- Helps in recovering pending or overdue accounts:
A/R follow-up helps all hospitals, medical groups, physicians, etc. to recover the over-due payments with less trouble. once there’s a team that is consistently concerned with AR experts within the claims follow-up tasks, it becomes easier for the provider and medical groups to receive payments on time.
- Lowers AR aging days for outstanding payments:
The primary objective of A/R management is to reduce the days in AR and aging to prevent AR to stay outstanding. The AR team tracks accounts that haven’t been paid assesses the appropriate action needed to secure payment and implements procedures for secure payment.
- Complete accountability of paid and pending reimbursements:
The biggest reason for the delay in payments is that the claim is not being received. This typically happens once paper claims are filed to the incorrect payer or lost. To avoid this, it’s informed to send the claims with EDI, for payers that don’t have electronic methods it’s easy to fax these claims. If the claim has been followed-up and you’re aware that the claim hasn’t been received, then it becomes easier to send another request for the claim and have it accounted for.
- Identifying the root cause of denials:
Depending on the denial reason, you’ll be able to truly send a replacement claim request with the specified corrections created. AR teams prevent denials by analyzing the insurance carriers and checking out the previous denial reasons rather than watching for the denial reason on mail or ERA, the A/R department will make sure that all claims are followed up through final reimbursement.
- Resolving pending information claims by submitting requested documentation.
Sometimes claims usually lept without no action just because some documentation is pended from the providers or patient side. By following up properly the A/R team will inform the member concerning matters and so appropriate action is taken so the method is sped up.
The Stages of A/R Follow-up:
Most of our accounts receivable specialists perform the A/R follow-up in an exceedingly systematic manner, which is typically conducted in 3 stages:
Stage 1 – AR Analysis
The analysis and identification of the claims listed on the A/R aging report. The team reviews the Medical group provider’s policy and identifies that claims got to be adjusted.
Stage 2 – AR prioritizing and consolidating
The second stage is initiated once the claims are consolidated and prioritized according to the aging, the dollar values, and the insurance carrier. We will also include the reason for nonpayment or whether the payment delay is because of the Medical group provider’s issues such as laps in the contract or services not included in the fee schedule.
Stage 3 – Finalization and next action
The claims within the filing limit of the insurance carrier are re-filed once the finalization verificatory process including charge data, CPT codes, provider numbers, billing and pay to addresses, etc. if the claim required additional information our AR callers will contact the insurance rep, and get the exact delay for payment and get it expedited. Payments that were sent through paper checks can also be requested to be reissued by our AR team if the Medical group’s staff failed to acknowledge it.
How to use AR formulas to create beneficial KPIs?
Calculating days in AR grants actionable insight into RCM process efficiency and can speed up the collection process. Using such AR formulas can be beneficial for Medical groups to boost their efforts in reducing AR and maximizing reimbursements.
A/R days can be calculated according to your revenue cycle which has a certain time period of 3 months, 6 months, and 12 months.
The formula to calculate A/R days is:
A/R Days = (Accounts receivable ÷ Annual revenue) x Number of days in the year
For example, A/R for the Medical group is $100,000, and it’s (Accounts receivable/total charges) X 365 days is $600,000.
Then the A/R days for this Medical group will be:
A/R Days = ($100,000 A/R ÷ $600,000) x 365 days = 60.8 A/R Days
Other beneficial formulas that can keep unwanted write-offs and bad debts at bay:
Gross Collection Rate (GCR) and Net Collection Rate (NCR) calculations
Gross Collection Rate = Total Payments / Charges *100% (specific time period)
Net Collection Rate = (Payments / (Charges – Contractual Adjustments)) * 100%
AR clean-up services for Medical groups:
The Lost Revenue Recovery Audit service (LRRA) is a service that can be beneficial for Medical groups to evaluate and determine your revenue health using the data that this audit. Once it is we analyze your complete AR and collections we will be able to determine the collectible and non-collectibles and how much you can recover from the existing pending revenue to be collected from insurance companies.
LRRA is performed by companies that charge more than $2000 which BillingParadise provides this audit to help Medical groups revamp their collections and streamline their billing process.
BillingParadise has conducted a survey with prospects who wanted us to clear/recover their uncollected revenue Out of the 100s of Medical groups, we audited for, most of the practices lacked follow-ups of their regular AR which piled up.
At the end of the year a practice whose average collection per month is $500K they were only able to get reimbursed for the clean claims which decreased their annual revenue to $300K – $200K.
You are not too late and this is the perfect opportunity for streamlining your fresh billing and claims so that your practice may not make the mistakes from last year. BillingParadise takes 24-48 hours to provide you with the data depending upon complications in the existing billing processes.