In medical services, the money that patients or their insurance companies owe to healthcare providers after issuing treatment is known as accounts receivable (AR). Collecting reimbursements for accounts receivable in a timely fashion is a major challenge in healthcare accounting and one that service providers must surmount to avoid bad debt and lost revenue. The longer that accounts receivable go unpaid, the less likely a medical practice is to receive payment.
The AR cycle begins when a healthcare provider issues a bill to the patient or their insurer. ARs do not necessarily count as revenue for as long as they remain unpaid, even if they do indicate money owed. Unresolved ARs strain healthcare providers’ finances, create more work for finance teams, and frequently result in revenue leakage and unnecessary additional costs.
The best way that healthcare providers can improve their accounts receivable process is to evaluate and fine-tune their incumbent procedures. This enables them to address any existing oversights and process inefficiencies that lead to unresolved ARs and eventual revenue leakage. The following best practices, for instance, can help medical organizations resolve ARs on time:
Ensure Claims Are Correct the First Time
Providers that submit inaccurate patient information and mistakes on insurance claims will have to deal with claim denials and protracted AR cycles from the get-go. In fact, current research shows that unverified insurance is the biggest threat to timely medical claim reimbursement. Hence, healthcare organizations must collect the right data and turn in correct claims the first time.
Healthcare providers can ensure that they gather the most accurate data upfront by improving their patient scheduling and registration procedures. These processes create a solid foundation of information that will make it easier for providers to bill and collect claims efficiently.
Define Payment Terms Clearly before Starting the Treatment
Communicating clearly with patients about financials before treatment even begins can help significantly reduce delayed and delinquent payments. Define your payment terms clearly and communicate them to patients ahead of any scheduled appointments. Consider having new patients sign a payment responsibility document during their first visit to clarify and cement payment expectations going forward.
Require Payment for Co-Pays and In-Office Services
In line with the above, collecting payment for co-pays and services rendered in the office can help reduce the money owed on accounts receivable. Providers must make an effort to collect at least part of their bill before patients exit care settings to avoid lost revenue. Collecting immediate payment in this manner helps close one portion of the AR cycle and makes it easier for providers to follow up on their remaining balance.
One easy way to manage co-pay collection is to integrate collecting procedures with other release processes so that patients can settle their portion of the bill right after receiving treatment. It’s also helpful for providers to offer partial payment plans for patients who can’t cover this expense immediately, as this mechanism allows organizations to secure a fractional reimbursement and establish a payment schedule for easy tracking.
Follow-Up on Outstanding Accounts Frequently
Late payments are all but inevitable in the medical industry, but proper management can help minimize the financial loss incurred from having numerous outstanding unpaid accounts. Outstanding accounts are less likely to be settled the longer they’re left idle, so aggressive follow-up action is a must for healthcare organizations. Notifying patients frequently by mail, phone, and even through digital channels is an effective way to ensure that they settle their bills promptly.
Consider More Frequent Billing Cycles
Many healthcare providers only send out billing statements once a month, which can create more delays with accounts receivable. Billing more frequently can help expedite your financial processes and resolve outstanding balances faster. It doesn’t hurt, for instance, to mail or submit invoices on a weekly or biweekly basis instead of monthly.
Automate AR Workflows
Using digital accounting software solutions to automate the AR process’s more tedious and time-consuming parts can be highly beneficial for healthcare organizations. Digital software available today is sophisticated enough to automatically generate AR reports, submit claims, verify benefits, and other basic tasks. This technology will not only enable your organization to invoice and collect payments more efficiently with the support of this technology but also reduce the risk of incorrect claims, overlooked AR accounts, and other costly procedural errors.
Run Regular AR Reports
As part of effective revenue cycle management, medical organizations want to resolve accounts receivable in as few days as possible. To achieve this, they must commit to tracking AR closely and analyzing AR data each month to identify problematic trends or long-running problems with current payment collection processes. These reports should examine the following vital information for insights into how to improve the AR process:
- Length of delays between rendering treatment and invoicing
- Aged accounts
- Payment collection rates
- Average length of AR cycles
By fine-tuning your procedures and leveraging the right resources, you can stay on top of accounts receivable with minimal issues. A more efficient AR process will in turn help guarantee a healthier and more consistent cash flow as well as more stable financials for your organization.