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How Partnering with an AR Follow-up Company can Benefit Your Medical Practice

by | Aug 10, 2022 | Blog, Medical Billing |

Mounting unpaid medical bills is a sure sign that your practice’s accounts receivable (AR) is in trouble. AR is the outstanding amount that insurance companies or patients owe healthcare providers and hospitals for services rendered. Proactively managing A/R is essential to get recover overdue payments fast and improve cash flow. Partnering with an AR follow-up company can help you implement actionable steps to collect balances, and boost your bottom line.

Accurate and timely claims submission and follow-up is critical, especially with falling rates of reimbursement, high deductible plans, and increasing operating costs. A/R management is a set of policies and procedures to track and collect the amounts owed by patients and insurance companies.

Understanding A/R

Payment collection is the final phase in the medical billing process. Payments are collected and the revenue is submitted to A/R management, where they are tracked and posted.

A/R is measured as “days in A/R”, which is the average number of days it takes a practice to get paid or collect pending payments from patients and insurance companies. A/R are placed in aging buckets that indicate how many days they have been outstanding, such as 0-30 days, 31-60, 61-90 and on.

Days in A/R of 30 days or less indicates an efficient medical billing department. So, a practice with good cash flow will have the highest percentage of A/R in the first bucket and a progressively declining amount in each subsequent bucket. According to the American Academy of Family Physicians (AAFP), days in A/R should remain below 50 days at minimum, though 30 to 40 days is desirable.

In a Stat poll conducted by the Medical Group Management Association (MGMA) in November 2021, 49% of medical practice leaders reported that days in A/R increased, compared to 15% who reported a decrease and another 37% who said they stayed the same. Following up with accounts in aging A/R to collect dues is crucial and ensure the practice receives payment for services rendered. Efficient A/R management can prevent unwanted account aging and reduce number of AR days and claim denials. That’s where an A/R follow-up company can help.

A/R Management and Follow-up

AR management involves tracking unpaid accounts, assessing payment action, and implementing procedures to obtain payment. It involves various processes such as analyzing aging A/R, tracking and analyzing claims denial, monitoring billing and payment trends, and AR follow-up.

Establishing proper billing guidelines and a process to collect balances due and past-due accounts, and communication with patients is crucial for successful A/R management. An AR management and follow-up company can help your practice implement various processes to improve productivity and ensure optimal financial performance. Let’s take a look at the benefits of A/R follow-up support:

• A/R reports: Running A/R reports on a monthly basis can help you monitor A/R fluctuations and trends. The reports will include A/R key performance indicators (KPIs), such as the amount in aging accounts compared to the amount billed and the number of days outstanding, and more. With efficient AR management, these numbers will decline. Initiating timely write-offs in a compliant manner is required for older aging buckets i.e., A/R greater than 90 days.
• Patient follow-up: Ideally, all patient balances should be collected at the time of service. However, this is not always possible, leading to overdue patient payments. AR follow-up involves communicating with patients who have outstanding accounts to collect the balances.

• Troubleshoot claims denials: Claims analysis is essential to identify denied claims, unpaid claims, and low payments. This will help you find where claims errors have occurred that increase A/R. Prior to submission, all claims should be scrubbed to catch and correct coding and other errors. An A/R follow-up expert will help you identify the reasons why a claim was denied. Denials can occur due to various reasons such as wrong patient information, issues relating to insurance coordination of benefits (COB), no W-9 W-9 from the medical provider on file, missing authorization number, claim submitted to the wrong insurance company, and ICD-10 or CPT coding mistakes. Once the reason is identified, thorough and regular follow-up will be initiated for unpaid claims.

• Review rejected claims: Reviewing claims can help identify why collections are falling short and understand which payers are responsible. The reason for the rejected claims and payment delays is documented which could help avoid the problem from recurring.

• Identify credentialing-related denials: According to the MGMA stat poll, denials related to credentialing are a growing issue for their practices. Ensuring that physicians are credentialed for the leading payers in their geographic location and timely updating of credentialing information is important to prevent such denials.

AR management and follow-up is an essential part of medical billing. Performing insurance verification prior to providing services is crucial to obtain the correct benefit information as well as the patient’s payment responsibility for the service. Communicating with patients can help them understand how much of the bill they have to pay and other matters. Establishing policies such as online payment option for credit card transactions and payment plans can improve patient collections.

Reports indicate that the COVID-19 pandemic increased inefficiencies in A/R processes and productivity. According to a Revenue Cycle Intelligence report, in the new hybrid work environment, providers need to make workflow changes to maximize collections and improve not only productivity, but also employee and patient satisfaction. Outsourced medical billing and A/R follow-up can go a long way in helping practices achieve these goals, minimize losses and earn more revenue.

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