Accounts Receivables (AR) management is the essential chore that has a significant impact on a medical practice’s profitability. About 30 percent of claims are not paid on the first submission, for various reasons (1, 2). Shockingly, more than half of these denied/rejected claims are not resubmitted, leading to substantial losses for the providers.
So what is AR management? It involves dealing with receivables from both patients (deductibles, copays, and direct payments) and payors – Medicare, Medicaid, Private Insurance, and Workers’ Compensation Boards. In either case, sound knowledge of the rules and close attention to billing, claim submission, and follow up regarding collection is required.
The process of receivables management, an essential function of any healthcare delivery organization, includes:
Let’s have a look at the commonly recurring AR issues and strategies to tackle them:
Neglecting denied and rejected claims: Very often, the explanation of benefits (EOB) form, an intricate form, sent with the denied claim tends to get neglected by the clinic’s staff. This leads to a significant proportion of revenue to just lapse.
Dedicated AR managers, on the other hand, will deal with these matters promptly and effectively. Using their expertise and technology, they follow up with payors and patients to recover such revenue for the practice.
Loopholes in tracking the receivables: It is very important to keep a record of claims submitted and received. Overdue payments should be identified and followed up. This requires some effort from the staff’s end, but it can be automated with practice management software.
Lack of constant staff training: Clinic staff must be trained with the latest in medical billing and coding. This doesn’t always happen. Next, the staff has to be motivated to address rejected and denied claims quickly. Whether they have to resubmit and follow up themselves or involve a specialist, timeliness is vital.
Lack of regular AR performance assessment: Various metrics like AR Days, gross collection rate (GCR), net collection rate (NCR), first-pass resolution rate (FPRR), and contractual variance can quantify the effectiveness of the AR management. Not paying attention can reduce the profitability of the practice.
Not digging deep enough into rejections and denials: It is important to know the most common reasons the clinic’s claims are being returned. It is also helpful to identify the payors with slow payments and high denial rates. The right software can analyze data and generate useful reports.
Many denials can be avoided simply by improving the accuracy of claims. Practice management software will automate the coding and billing processes, hence substantially reducing the commonly occurring errors.
Lack of robust follow-up processes: The errors in the rejected claims have to be found and corrected. The denied claims have to be effectively appealed. Emails and calls to insurance companies, Workmen Compensation Boards, other payors, and TPAs are required. Patients may also have to be followed up for direct payments.
There are many different payors involved in physician and hospital reimbursement, each with different rules and formats of claim submission, making claim submission, and AR management complex. It is also vital to track overdue payments. Clinic staff may find it difficult to keep track of and follow up.
AR management starts right from the moment the patient takes an appointment. It is crucial to collect proper details about the insurance plan, check its validity, ensure it covers the procedures and services to be provided, and collect proper ID information to minimize the number of AR issues. One can also choose to either automate the processes or enlist specialists for medical billing or both. This will help in bringing down denied and rejected claims drastically.
Collecting dues from patients with high deductible plans is a major problem, especially for small practices. Direct payments from patients should be collected at the time of providing service, whenever possible.
The unpaid claims can then be handed to the AR specialist, who will assess and analyze them. The claims will be prioritized, and those that can be successfully pursued will be followed up. The payors are emailed and called with all the details required. When needed, corrected claims are submitted. Denied claims have to be appealed. The AR specialist will keep track of all such accounts and submit periodic reports to practice managers.
The AR management process is quite complex and time-consuming. The right practice management software technology is a pre-requisite for effective management of the process. A dedicated team with expertise in coding, billing, and AR management is an option for practices with deep pockets. The second option to consider is partnering with billing and AR companies who have the expertise, technology, and staff to manage the AR at a lower cost to the practice.
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1. Marting R. The cure for claims denials. Fam Pract Manag. 2015 Mar-Apr; 22:7-10.
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