Accounts receivable management is a complex and critical aspect of the medical billing revenue cycle. Healthcare providers face numerous challenges in managing accounts receivable, such as dealing with insurance companies, navigating complex payment policies, and addressing the increasing financial burden on patients. Efficient accounts receivable management is essential for healthcare providers to maintain their cash flow, reduce the risk of bad debt, and improve their overall financial performance. In this article, we will discuss various strategies for managing accounts receivable in medical billing revenue cycle management.
Examples and Context
Let’s consider a typical example of a healthcare provider that bills insurance companies for patient services. The provider’s billing team spends hours each week verifying patient information, processing claims, and following up on unpaid balances. Despite their efforts, the provider’s accounts receivable continues to grow, leading to reduced cash flow and financial instability. Despite the provider’s best efforts, it just requires too much time to stay abreast of the mandatory claims follow-up and overall time dealing with the insurance companies to ensure payment is received. Many providers are also in the dark as to what they are not doing correctly to stop repeating mistakes that continue to lead to more friction on claim payments.
Strategies for managing accounts receivable
Verify Patient Information
The first step in managing accounts receivable is to verify patient information. This includes verifying insurance information, patient demographics, and contact information. Accurate patient information ensures that the healthcare provider bills the correct insurance company and the correct patient. Verifying patient information reduces the risk of denied claims and improves the provider’s chances of receiving timely payments.
Establish Clear Payment Policies
Establishing clear payment policies is crucial for managing accounts receivable. Payment policies should be clear and concise, stating the payment due date, acceptable payment methods, and consequences for late payments. Payment policies should be communicated to patients and staff members to ensure compliance. For instance, a clear payment policy could be that patients must pay the full balance of their medical bills within 30 days of receipt. If patients fail to pay within the specified time, they could be charged a late fee, and their accounts may be sent to a collections agency. Patients are often unclear about how much they will owe after insurance, and your accounts receivable will benefit from giving patients as much notice as possible on how much this will be.
Bill in a Timely Manner
Billing in a timely manner is essential for managing accounts receivable. Billing should occur as soon as possible after services are provided to reduce the risk of delayed payments. Delayed billing can result in missed payment deadlines and reduced cash flow. For example, a healthcare provider could implement a system where bills are generated automatically once services are provided, ensuring that bills are sent out promptly and without delay. EOB’s and ERA’s need to be reconciled against the patient account promptly before payments can be posted and then to generate accurate patient statements.
Follow Up on Outstanding Balances
Following up on outstanding balances is critical for managing accounts receivable. Staff members should be trained to follow up on unpaid claims and balances regularly. Patients should be contacted regarding outstanding balances and offered payment options to reduce the risk of bad debt. Out-of-network claims can result in claims payments that go directly to the patients, and patient balances can quickly increase substantially without a consistent effective process for follow-up.
Utilizing technology can streamline the accounts receivable management process. Electronic health records (EHRs) can be used to verify patient information and bill insurance companies automatically. Automated payment reminders and payment plans can also be set up to reduce the risk of late payments. For example, a provider could implement a patient portal where patients can view and pay their bills online, reducing the burden on staff members and improving the patient experience.
Monitor Key Performance Indicators (KPIs)
Monitoring KPIs is crucial for managing accounts receivable. KPIs such as accounts receivable days, denial rate, and collection rate can provide insights into the performance of the revenue cycle. Regular monitoring of KPIs can identify areas of improvement and help healthcare providers optimize their revenue cycle. For example, a provider could set targets for KPIs and regularly review performance against those targets.
Outsource Accounts Receivable Management
Outsourcing accounts receivable management can be a viable option for healthcare providers. Outsourcing can provide access to specialized expertise, reduce the burden on internal staff members, and improve cash flow. Outsourcing can also provide healthcare providers with access to advanced technology and streamlined processes. For example, a provider could partner with a third-party revenue cycle management company that specializes in accounts receivable management, allowing the provider to focus on patient care while the third-party manages the billing and collections processes.
In conclusion, managing accounts receivable is a critical component of the medical billing revenue cycle. Healthcare providers must verify patient information, establish clear payment policies, bill in a timely manner, follow up on outstanding balances, effectively utilize technology, monitor KPIs, and consider outsourcing to optimize their revenue cycle. Effective accounts receivable management can improve cash flow, reduce the risk of bad debt, and improve the overall financial performance of healthcare providers. By implementing these strategies, healthcare providers can ensure they maximize their revenue potential while providing high-quality care to their patients.