What Adds Up To Form a Practice’s Accounts Receivable?
Whether it’s the overhead costs or having to ensure timely payments from insurance companies and patients, there are a huge amount of financial factors for healthcare providers to consider. In particular, one area that often goes overlooked is the healthcare accounts receivable.
Simply put, accounts receivable in healthcare basically represent the money that’s owed to your practice for services rendered but hasn’t actually been collected yet.
While this might feel like just one of the many numbers you have on your balance sheet, medical accounts receivable actually plays a fairly critical role in how successful medical practices can be run.
Essentially, this is how your practice keeps the cash flow circulating, meaning it has a direct impact on your profitability.
Furthermore, efficient A/R management isn’t just about tracking your outstanding balances; it’s more to do with maintaining a delicate balance between the quality patient care you’re providing and ultimately ensuring you’re paid on time.
Whenever this process becomes tangled or neglected, it can naturally lead to issues with your overall revenue cycle management, resulting in potential lost revenue.
Ultimately, unpaid invoices/unpaid accounts can have a considerable impact on your ability to invest in new equipment and expand, so we’ll be breaking down some of the various factors that add up to form A/R days so medical providers can avoid unnecessary revenue leakage.
How to Prevent Revenue Loss with these Key Factors
1. Patient Responsibility
Firstly, let’s turn our attention towards the patients and what role they play in accounts receivables.
Understandably so, it’s no major secret that collecting payments from your patients isn’t exactly an effortless process, with many patients experiencing financial hardship that impacts their ability to pay on time.
As a result, it’s your medical practice that takes the hit when it comes to your overall cash flow.
Having said that, don’t worry – there are actually quite a few different strategies you can employ to improve some of your collection rates.
For instance, clear and concise communication about all the patients’ financial obligations and payment expectations can be great for improving transparency, not to mention how it can prepare them better for any future payments.
Furthermore, being able to offer flexible payment options for your patients (like the option to pay in installments) or utilizing various technologies for an easier payment process can help too.
Ultimately, this is a delicate and slightly daunting process for all involved, so a little bit of empathy goes a long way whenever you have to deal with patient payments to reduce your A/R days.
2. Coding & Billing Accuracy – Minimizing A/R Days through Precision
As many healthcare providers will already be aware, accurate coding and proper billing procedures play one of the largest roles when trying to maintain healthy accounts receivable.
Specifically, medical coding refers to certain codes being assigned for any particular diagnoses, procedures, or services that you provide to your patients.
Next, these codes are then used in order to generate claims and bills for reimbursement from a patient or their insurance company.
Like most medical practice owners have to find out the hard way, inaccurate coding or medical billing practices can actually lead to various claim denials and delayed payments – meaning an increase in A/R days.
Lastly, it’s worth reiterating the importance of ensuring accurate coding as well as adhering to all the current coding guidelines in your state. Training your staff can be very helpful in terms of overall reduced coding errors, but ultimately outsourcing your practices’ coding tasks to professionals is the way to go for improved claim accuracy.
3. Denials & Rejections
While denials and rejections are naturally fairly frustrating, it’d be foolish not to acknowledge some of the insights they can provide into areas where your practice might need some improvement.
By identifying common reasons for denials—whether it’s missing information, incorrect coding, or simply miscommunication—you’ll be able to take more proactive measures to minimize their impact on your bottom line.
Reduce Your A/R Days With PMN
When it comes to A/R management, you don’t have to navigate some of the complexities alone – outsourcing to medical billing services like PMN can be a game-changer.
Whether it’s comprehensive audits or guaranteed regulation compliance, PMN can play a huge role in optimizing your overall practice.
If you’re interested in hearing further about how PMN can support your practice, get in touch today by calling (949) 215-5055. Alternatively, come for a face-to-face chat in their office in Laguna Hills, Orange County, California!
How Can I Prevent Accounts Receivable Issues Caused By Insurance Claim Underpayments?
Firstly, make sure you closely monitor reimbursements and compare them to expected amounts. In addition, try to identify and appeal underpayments promptly, maintain open communication with insurance companies, and stay informed about changes in reimbursement rates and policies. Overall, being diligent when monitoring and making proactive changes is the only way to optimize accounts receivable performance.
How Can Data Analytics Help Improve Accounts Receivable Performance?
Data analytics usually helps the most when you’re trying to identify trends, bottlenecks, or any other areas for improvement within your practice. By analyzing data related to claims, payments, denials, and aging reports, you can make data-driven decisions to optimize your revenue cycle, identify opportunities to increase collections and improve overall accounts receivable performance.