Efficient revenue cycle and optimal cash flow are the vital components of a successful medical billing process. However, reaching peak proficiency demands dealing with various challenges and situations. Cash flow improvements depend a lot on the management of accounts receivable. Only proper handling of A/R in medical billing leads to maximum reimbursement and operational development.
Healthcare providers and practices need to take accounts receivable seriously to achieve adequate revenue. For this, knowing the challenges related to A/R in medical billing is crucial.
In this blog, we will learn how healthcare providers and practices can optimize accounts receivable. Let’s explore and know the role of A/R for productive medical billing.
Understanding A/R in Medical Billing
Accounts receivable is the amount of revenue healthcare providers are supposed to acquire by patients or insurance companies. When healthcare providers or practices fail to collect A/R on time, they suffer losses. This is a huge drawback in maintaining the financial stability of any practice.
The moment any claims are submitted for billing, A/R days start accumulating. As the number of A/R days increases, the chances of revenue recovery decrease. However, with A/R management, healthcare providers and practices can solve this problem.
Effective A/R handling can make the practice more financially stable, maximize revenue, and boost the bottom line. Healthcare providers can either achieve this themselves or employ medical billing services. In both situations, understanding the core of accounts receivable is essential.
Piling up overdue payments is not a good sign, so it is better to take measures and change the situation.
Top Reasons Behind Increasing AR Days
There are various reasons that can cause an increase in A/R days, such as:
- Improper insurance eligibility verification
- Errors in documentation
- Mistakes while coding
- Delays in submitting claims
- More claim rejections
- Credentialing issues
Making sure that all steps in the medical billing process are performed accurately is vital for proper A/R management. That is why healthcare providers need to pay attention to details and reduce errors and delays in the medical billing process.
How to Calculate A/R days?
Calculating A/R days is necessary to keep track of the outstanding balances. A/R is medical billing and is counted at 3 months mark, 6 months mark, and 12 months mark.
When it comes to A/R classification, they are sorted as:
- 1 to 30 days after billing
- 31 to 60 days after billing
- 61 to 90 days after billing
- 91 to 120 days after billing
The increasing number of days indicates a possibility of accounts staying unpaid. So, if A/R in medical billing is as old as 120 days, receiving revenue becomes difficult.
The formula to calculate A/R:
A/R Days = (Accounts receivable ÷ Annual revenue) x Number of days in the year
Tips to Improving A/R Days in Medical Billing
The following are some essential tips for healthcare providers to prevent A/R days from increasing and causing revenue losses:
Start with Establishing Patient Responsibility
Setting up an open conversation about the patient's payment responsibility is the right way to start. Healthcare providers must initiate this and communicate about patient responsibility clearly. This can reduce the number of A/R days in medical billing.
The best practice is to draft a payment responsibility document for the patient before offering any medical service. This will set expectations and increase the chances of a reduction in A/R days.
Keep A Check on Overdue Balances
The first step to managing A/R in medical billing is keeping a check on the outstanding payments. Healthcare providers must check unpaid accounts to effectively deal with bad debt and late revenue. The problem arises when the A/R is inactive for a long time. As the A/R days increase, the chances of losing revenue become prominent.
That is why staying current and knowing the A/R status is necessary to act at the right time. Healthcare providers must also inform patients in case of overdue balances.
Maintaining Accounts Receivable Reports
The goal is to keep A/R days as few as possible to optimize the cash flow. To ensure this, A/R management demands regular reporting. Healthcare providers need to track A/R medical billing frequently and analyze data every month. Checking consistently will help in pointing out issues and understanding setbacks. As a result, managing accounts receivable will become easier.
Things an A/R report must include are average A/R cycles, time gaps between services and their billing, aged accounts, and rates of collection.
Process Co-payments Right After Rendering Services
Making sure that patients fulfill co-payment requirements in the office after receiving services can help with A/R. As a large part of revenue is collected on time, outstanding balances reduce decreasing A/R days. This process is even more helpful in the case of treatments where some part of payment is charged in advance. Even though the number of A/R accounts remains the same, they usually don’t result in revenue losses.
Making the Billing Cycles Short
Delays in submitting claims are also a reason behind increasing A/R in medical billing. A simple solution to this is streamlining the billing cycles. Rather than submitting claims on a monthly basis, healthcare providers can process claims as soon as a patient receives treatment. Pacing up the process is good for accounts receivable and helps in attaining complete revenue. Preventing delays can solve a lot of problems related to A/R in medical billing.
Outsource Medical Billing Services
Managing A/R is a task, and healthcare providers have limited time to deal with all this. A/R management is more about handling the entire process efficiently than just solving issues.
Professional medical billers and coders are skilled in dealing with errors, delays, and increasing A/R days. Also, healthcare providers can shift their medical billing burden and focus on improving the quality of patient care. This way, healthcare providers can achieve accuracy, efficiency, and adequate revenue without any hassle.
Choose Eminence RCM
Eminence RCM is a medical billing company providing tailored accounts receivable solutions. We work with a talented team of billers and coders proficient in A/R and its management.
Our team provides comprehensive medical billing support, resulting in a reduction of errors, delays, and denials. We are particular about meeting all compliance requirements and taking all measures to prevent data breaches. All in all, we spend our time streamlining RCM, maximizing reimbursement, and enhancing operational efficiency.
Choose professional medical billing services and achieve effective A/R management!
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