Your accounts receivable (AR) are the heartbeat of your practice, and keeping a finger on the pulse is imperative to the health of your company. A bounced check or financial pressures should not be the triggers spurring you to look at your AR reports. Instead, your AR reports should be reviewed, updated, and monitored continually. Monitoring your AR regularly gives you the advantage of identifying trends and proactively fixing common issues that can cause a dangerous bottleneck in cash flow if gone unnoticed. In this article, I outline some key tips for assessing and managing your AR. If implemented and utilized regularly, these tips will help you to create a system that can keep your cash flowing and your AR under control.
Measure your AR aging: The AR aging process starts once a claim is submitted to an insurance company. Claims age in the following ranges: 0-30 days old (sales that have occurred within the last 30 days), and claims that are 31-60 days old, 61-90 days old, 91-120 days old, and over 120 days old.
Most practice management software programs have a report built into the system’s infrastructure to measure AR aging. It is a snapshot to see where your outstanding claims fall. This report allows your practice to manage claims effectively and proactively. Each AR aging range is reported as a percentage of total AR. If your software does not do this for you, you will need to calculate it yourself. A healthy AR will have most of the unpaid claims within 90 days.
While running these reports might seem obvious, it is all too often that we have clients come to us for help with collecting claims on old AR that are uncollectable because the insurance company never received the claims, and now the claims are past the filing deadline. This is preventable by monitoring your AR aging regularly and holding your staff accountable for submitting claims promptly.
Have a second set of eyes on each account: At our practice, we have an employee from the management team continually monitoring each client’s AR aging report. This person, who is someone other than the lead biller on the account, can also look for trends and red flags. Based on these reports, we either give kudos for maintaining the majority of the aging within 90 days or help to identify the problem and make corrections as needed.
Hold regular meetings with your lead biller and/or your billing team: This will provide an understanding of the speed bumps in the revenue cycle. Once those are identified, you can focus on the remedies. Examples of some common speed bumps we find are unfair insurance contracts, poor documentation, unpaid patient balances, and lengthy audits. It is imperative to see the whole picture before you can manage and fix it.
Internal billing audits: It is a smart business practice to review the explanation of benefits received from insurance companies. Are your claims getting paid on the first submission or are too many being denied due to simple clerical errors, such as a missing modifier, or mistakes made in haste that can be easily remedied by reviewing the claim before submitting it? Conducting this simple internal audit will improve cash flow, compliance, and claims management.
The viability and longevity of your business is inextricably tied to the degree of control you have over your AR. The good news is you can institute practices internally that ensure this critical aspect of your business is properly managed. This fact should be an encouragement and incentive to stay on top of your cash flow.
Erin Cammarata is president and owner of CBS Medical Billing and Consulting. For more information, contact .
