How to Overcome Common Obstacles in Accounts Receivable Collection
During an assessment of a physician’s practices of medical billing, one of the perennial questions that come across is “Why are our collections in accounts receivables inconclusive?” Evaluation & effective measurement clearly shows that most providers’ staff responsible for revenue cycle management lacks the knowledge of the requisite benchmarks that can provide them a transparent picture.
♦ Instead, they start pondering over generalities & collection of dollars out of context. No wonder, we find a skeptical & frustrated approach from the physicians as it impacts their financial health.
♦ However, it is fairly an easy task if you have the right priorities in place with a streamlined collection process in place.
♦ Setting up an action plan on some precise indicators surely gives a conclusive roadmap & consistent measurement on a monthly basis surely gives an idea about warning signs that can impact collections & potential flow of cash.
♦ Setting the right checks & balances is an important aspect of the medical billing process although it may seem that you have an adequate flow of cash as of now. Key practices that can help you eliminate the obstacles will be
Measurement of AR days
One of the critical tasks that you need to perform will be an assessment of the average days it takes for your practice to collect due payments. An instance will be if your charge amounts to $280,000 over a period of six months & if the number of days count is 182, then your revenue on a daily basis will be $1,538. Again if the accounts receivables sums to $70,000, the average days spent on the collection will be 45.5 days.
♦ You get a clear idea about your present collection process with many HMO’s paying precisely on 45 days after a receipt & health insurance payers like Medicare taking 14 days after a claims submission.
♦ Ideally, a high performing department in billing should have a collection span of 30 days while 45-50 days should be the time span for an average performing department.
♦ Common loopholes like errors in medical coding complying to present ICD-10 standards, a transparent eligibility verification process & last but not the least comprehensive understanding of the claims adjudication process of the insurers in respect to treatment procedure, drugs & medication will be the key to your establishing a collection model with feasible ROI in place.
The percentage of accounts receivables in buckets that are aging can be eliminated in this manner with a precise plan in place with your A/R follow-ups based on a distinct strategy.