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Winning at Medical Billing: How Properly Managing A/R Can Take Your Practice to the Top!
As a healthcare provider, you may understand that an increase in A/R days will impact your bottom line directly. Now coping with the changing landscape of the medical industry era and high operational cost managing AR has become a herculean task for providers. But do you know what A/R stands for or how it works?
In this must-read blog, we’ll break down what Account receivable means in medical billing and we will also let you know how to measure Account receivable and in last we will see how outsourcing A/R management services can be the key to unlocking maximum profitability for your practice.
Accounts receivable (A/R) is the money owed to a business by its customers. In medical billing, it incorporates patient out-of-pocket payments and insurance reimbursements. A/R management involves following up with patients and insurers to ensure timely payment of all outstanding bills.
In medical practices, it’s important to track the age or time since each bill was sent. This is known as Days in A/R (DAR). A high DAR may indicate issues such as delayed payments, denied claims, or problems with the billing system on the other hand, A low DAR indicates an efficient billing process, with money coming in on time.
Managing A/R effectively can significantly improve the financial health of your practice. A well-managed A/R process can result in increased cash flow, reduced overhead costs and improved patient relationships.
It’s essential to have an efficient system for tracking payments, following up on unpaid bills and resolving any discrepancies that may arise. This requires substantial time and resources, which can be difficult to come by in a busy practice.
Measuring accounts receivable (A/R) is crucial for healthcare practices to understand their financial health. To measure A/R, healthcare providers can use the following formula:
A/R = (Total Charges – Payments) + Adjustments
Total charges refer to the amount of money billed for all patient services. Payments refer to the actual amount received from patients or insurance. Adjustments refer to any charge reductions due to contractual agreements, insurance write-offs, or other reasons.
Once you have calculated your A/R, you can divide it by the average daily charges to determine the number of days outstanding. This will give you a clear idea of how long it takes for your practice to collect payment for services rendered.
By measuring A/R, healthcare providers can identify trends and potential issues, such as slow payment from insurance companies or patients, and take action to improve their revenue cycle management.
Accounts receivable (A/R) can be classified in terms of aging based on the length of time that they have been outstanding. A common way to classify A/R is to group them into different categories based on the number of days they have been outstanding.
The categories are typically broken down as follows:
Current: A/R that is less than 30 days old and considered up-to-date.
Classifying A/R in terms of aging gives them an insight of billing. It allows healthcare providers to identify any potential issues in their revenue cycle management and take appropriate action to overcome those issues.
For example, if a large portion of A/R is classified as 120+ Days, it indicates that there are issues with the billing process, claims, or patient collections that need to be addressed. By monitoring A/R aging, healthcare providers can improve their financial performance.
Accounts receivable (A/R) management is a critical aspect of revenue cycle management for healthcare providers. Billing companies offer A/R management services to help healthcare providers optimize their revenue cycle and maximize collections.
A/R management services provided by billing companies typically include:
A/R analysis: Billing companies will analyze your A/R data to identify any issues, such as unpaid claims or overdue patient balances.
Follow-up and collections: Billing companies will follow up on unpaid claims and past-due patient balances, using a combination of phone calls, emails, and letters.
Denial management: Billing companies will identify any denied claims and appeal them on behalf of the healthcare provider.
Reporting and analytics: Billing companies will provide regular reports on A/R aging, collections, and other key metrics to help healthcare providers monitor their financial performance.
Payment posting: Billing companies will post payments received from insurance companies and patients to ensure accurate and up-to-date A/R data.
Outsourcing accounts receivable (A/R) management services can provide many benefits for healthcare providers. Here are some reasons why providers should consider outsourcing A/R management:
Improved cash flow: A/R management services can help providers collect payments faster and reduce the number of days outstanding, resulting in improved cash flow and increased revenue.
Cost savings: Outsourcing A/R management can be more cost-effective than hiring and training in-house staff to manage it. Providers can save on salaries, benefits, and other overhead costs associated with hiring additional staff.
Expertise and resources: A/R management companies have specialized expertise and resources in revenue cycle management. They stay up-to-date with industry regulations and best practices and have access to the latest technology and software.
Reduced administrative burden: A/R management can be a time-consuming and complex process. Outsourcing it to a billing company can free up providers’ time and resources to focus on patient care and other critical aspects of their practice.
Increased transparency and reporting: A/R management companies provide regular reports and analytics to help providers monitor their financial performance and identify opportunities for improvement.
Outsourcing A/R management services allow healthcare providers to improve their financial performance, reduce administrative burden, and focus on delivering high-quality patient care.
Electronic claim billing and Electronic Funds Transfer (EFT) have become a trend in medical billing & play a significant role in reducing accounts receivable (A/R) days for healthcare providers. Here’s how:
Electronic Claim Billing: Electronic claim billing involves submitting claims electronically to insurance companies, reducing the time and cost of paper-based billing. Electronic claims are processed faster, resulting in quicker payment and reduced A/R days.
EFT: EFT allows healthcare providers to receive payments electronically from insurance companies and patients, eliminating the need for paper checks. EFT payments are typically processed faster than paper checks, which can reduce A/R days and improve cash flow.
Real-time Eligibility Verification: Real-time eligibility verification can be integrated with electronic claim submission to reduce A/R days. By verifying patient eligibility in real time, healthcare providers can identify potential coverage issues and avoid claim denials.
Auto Posting of Payments: Electronic billing systems can also automatically post payments received from insurance companies and patients, reducing the time and resources required for manual payment posting. This can help reduce A/R days and improve collections.
By leveraging electronic claim billing, EFT, real-time eligibility verification, and auto-posting of payments, healthcare providers can streamline their revenue cycle management and reduce A/R days. This can result in improved cash flow and financial performance.
Managing A/R is a complex medical billing process that can often overwhelm healthcare providers, especially with limited resources and knowledge. But there’s a solution to this problem – seeking assistance from a professional medical billing company like iRCM.
iRCM provides the necessary resources and expertise to help providers reduce A/R days and stop revenue leakage. With our cutting-edge technology and skilled team, we can help streamline your revenue cycle and improve your financial performance.