4 Mistakes That Can Inflate Your Company’s A/R
How to Avoid Errors and
Unnecessary Write-Offs
High accounts receivable mean one thing: Consumers, patients, or insurance companies are not paying in a timely manner.
Did you know that bills outstanding for more than 90 days are worth less than half their original value? High A/R is a key indicator that you need to improve your company’s overall revenue cycle.
Here are four of the most common red flags that suggest your A/R is too high:
Poor Communication
Effective communication channels are an essential part of getting paid on time. Haphazard communications result in erratic customer payments. Keeping a customer communications log can help maintain a healthy information flow.
Routinely review your records for accuracy, and ask for updated information with each customer contact. Bills mailed (or emailed) to the wrong address only contribute to late payments.
The Precertification Predicament
It’s estimated that up to 80% of denied medical claims are due to failure to obtain proper precertification.
Once the claim is denied, the provider must try to obtain authorization retroactively. This can result in a long process of more denials, appeals, and reviews.
Medical practices without the time and resources to devote to precertification should consider outsourcing this task to a company that specializes in healthcare revenue cycle management.
Source: PracticeSuite
Send statements and invoices immediately after services are rendered or goods are received by the consumer. Then follow up with regular reminders.
Use A/R automation software and electronic invoicing to establish a recurring billing schedule and stay on top of customer communications. According to the Federal Reserve, 92 percent of electronic invoices are paid on time, compared to 45 percent of paper invoices.
Billing Errors
Staff members who don’t understand revenue cycle management are likely to make billing errors. This is especially true for medical practices, where employees can forget to verify or preauthorize insurance. (See sidebar, “The Precertification Predicament.”)
A well-trained A/R staff is your strongest line of defense for preventing billing and coding errors. This requires a two-pronged approach: 1) hiring only the most qualified workers and then 2) providing them with ongoing training.
If your company or medical practice has neither the time nor the resources to hire and train qualified A/R staff, you’ll want to consider outsourcing your revenue cycle management.
Unnecessary Write-Offs
Regularly review write-offs to identify any errors. For instance, you can enable staff to closely monitor contractual write-offs by providing easy access to the company fee schedule. (Medical office staff should also check the reimbursement schedule from each primary claim payer.)
Many non-contractual write-offs are avoidable (e.g., missing a deadline or administrative errors). A monthly review of both contractual and non-contractual write-offs can help significantly improve your company’s revenue cycle.
When bills are deemed uncollectible, they become bad debt write-offs. The IRS requires that all collection efforts be exhausted before the debt may be written off. This brings us to the fourth mistake that can inflate a company’s A/R…
Low Collection Rate
A low collection rate is usually the result of two factors: 1) inadequate collection procedures and 2) a general failure to prioritize collection efforts.
Internet Usage in Rural America
Rural America has made significant gains in adopting digital technology over the last decade.
A 2021 survey by Pew Research Center revealed that 72 percent of rural residents have a broadband internet connection at home. That’s a 9 percent increase since 2016.
Source: Pew Research Center
Here are a few ways to address a low collection rate:
- Encourage payments at time of service.
- Offer multiple payment options and keep consumer credit card information on file.
- Update billing information during every contact.
- Offer incentives, such as a 10% discount, for early payment (e.g., paying within ten days when usual payment terms run up to 30 days).
- Thoroughly explain financial responsibility to patients or other consumers, and offer to negotiate a payment plan.
- Analyze monthly financial reports to identify problems.
- Train staff members on proper collection procedures.
Finally, if your company’s internal collection rate is consistently subpar, or you don’t have the trained staff required to effective collect on overdue accounts, it’s time to retain a collection agency for help.
CBSI
is ready when you are.
Sources:
Featured Image: Adobe, License Granted
Paystand
RevCycle Intelligence
American Medical Association
Recent Posts
Share On: