Effective Strategies for Working Accounts Receivables Managing Your Receivables So They Don’t Manage You

Neglected or On Target? Accounts Receivable is usually the most volatile as well as substantial asset in the medical practice and yet it is often the most neglected aspect of the practice. When cash flow is good, it is easy to focus on other areas of the practice and neglect aging balances. However, when cash flow slows down substantially, we tend to point fingers which does little to solve the problem. Keeping collections under control and on course requires a genuine commitment to establishing workable policies, monitoring their efficiency and adapting them to meet changing circumstances.

Start with a Plan  Success starts with a plan  Identify all the duties of your position  Line out a routine that makes time in your schedule for all of your duties  Break big projects into manageable pieces

Best Practices To keep receipts flowing steadily there must be a series of policies that map the way from “service rendered” to “paid in full.” The following are some practices that are absolute essentials.

Best Practices –  Prompt posting of receipts Insist that all services rendered that day are captured and billed out. If the offices provides services off the property, such as nursing home and hospital visits, make sure that a reliable system is in place to gather that information from the provider so it can be billed out daily as well.

Best Practices -  Insist that all patient payments and insurance payments are posted promptly.  Without exception, patient payments should be posted daily.  Unless the volume of insurance payments is excessive, these should also be posted the day they are received as well.  Balance your cash drawer daily and make a daily deposit that reflects this total.  File claims daily to keep a steady flow of payments.

Best Practices -  Send out patient statements regularly  If the practice is large, break this down into sections by alphabet. Most people pay their bills by the 10 th of the month. Sending patient statements regularly and consistently assures that your patient includes you in their budget.

Best Practices  Following up on unpaid insurance claims and unpaid patient balances is critical to the success of the practice.  This includes handling requests for additional information needed for claims processing.  Dealing with rejected claims due to billing errors or policy lapses.

Best Practices  Collection of delinquent accounts is another critical aspect of working A.R.  Promissory notes, phone calls and collection letters are potential tools to help keep accounts current

Best Practices  Write off and turn over uncollectible accounts/bad debt.  Establish criteria for determining when to write off bad debt and when to turn over for collections. I recommend sending three statements and at the fourth determining to write off or send to collections. Following this rule keeps your aging reports down to a manageable level when it comes to following up.

A Place to Start Analyze Your Current Data  Every practice experiences a cash flow cycle.  Typically a family practice is busiest in winter with infectious season, slower during summer and regains momentum in the fall with back to school services  Track your practices cash flow to be sure receivables stay consistent and any sudden increase or decrease can be handled properly  Use your billing software to find the average monthly income for your practice. Find the total income for each month in the last year, then divide this number by twelve to determine the “average” monthly income.  Multiply this number by three. Ideally your outstanding A.R. should not exceed this number.

Focus on the Current  Run an aging report that shows unpaid claims broken down by 0-30 days of age, days, and 91 and older.  It should also show your total outstanding A.R.  Compare this figure regularly to your three month average income figure.  Use this report to focus on claims that are in the day window since these are still eligible for insurance payment when under 90 days old.  Follow up on these unpaid claims first (use internet tools such as Navinet).  If you discover claims in your system that are not received by insurance, check to see if billing problems are keeping your claims from getting through the clearing house.

Watch Your Aging Claims  After working unpaid claims in the day window, focus next on those in the 31 to 60 window particularly those more than 45 days out from the date of service.  According to Texas law, commercial insurance has 45 days to pay or deny a claim. So focusing on those claims in the day window makes the most sense. Medicare allows up to one year to submit a claim.  After working aging claims that are still payable by insurance work on claims older than 90 days as you have time, adjusting off old balances that are uncollectible or turning them over for collections.  If a nonpayable claim is the fault of the office – get it off the books and move on. Learn from mistakes but don’t leave uncollectible debt on your books.  Many corrections to claims can be one electronically. We can touch on this in another session.

Resources  Texas ACOFP Website – click on the Members tab then on “Practice Management” for various billing tutorials.  Bill Flash for statements Inexpensive option to sending patient statements  Navinet web portal – Internet option for verifying eligibility and verifying processed claims.

Summary  Know all the duties your position is responsible for.  Create a daily routine that ensures all aspects of A.R. is touched on monthly  Including patient statements  Following up on unpaid claims, including requests for additional information, medical records and errors that cause rejections  Post payments daily  Capture charges daily  Send claims daily  Keep uncollectible debt from languishing on your books  Meet with key office leadership monthly to review financials  Hold regular staff meetings to address training and office procedures