Don’t Let the Condition of Your Accounts Receivable Make Your Practice Sick
By Teri Thurston, Billing & Coding Manager, PECAA
Extended aging of a practice’s accounts receivables is a symptomatic condition known as “lack of process management.” There are key symptoms when managing the accounts receivables that if not treated early, can become chronic. Determining the root cause of delayed payments and denials is essential to identify where the breakdown is occurring. Just like in the body where all systems work together, so does the revenue cycle. If one system is not working optimally, the other systems will be required to work twice as hard to accommodate.
A proactive approach is always the best strategy in minimizing payment delays and denials. Simple adjustments can often make big differences. Periodic review of each area of the revenue cycle identifies outdated processes and brings to light opportunities that allow you to take corrective action and stop revenue leaks or stalls.
Creating a “clean claim” begins when the patient schedules an appointment. The scheduling process is the perfect time to start setting financial expectations. First, obtain the patients complete demographic and insurance information prior to the visit. This allows for verification of insurance coverage and benefits and eliminates the possibility of seeing a patient with terminated insurance coverage or network changes you may not be contracted with. Having a clear understanding of the insurance benefits and coverage, prior to the visit, is better for the patients understanding of their financial responsibilities.
Prior to submitting a claim for payment, review each claim to ensure all necessary elements are present. This includes the patient’s information, appropriate CPT codes supported by the visit documentation and appending appropriate modifiers. Bill with specific ICD-10-CM codes, as invalid or unspecified codes may result in denials. When billing HCPCS codes, check the individual payer policy to ensure the correct code is being used. Incorrect submissions may not only cause denials, it may leave uncollected revenue behind without you even being aware of it. Being knowledgeable of individual payer policies is a vital part of the billing process. Submitting claims timely will reduce the number of days it takes to receive payment. Timely and consistent filing habits are crucial for a steady cash flow.
Once payments have been received, timely posting to the patient’s account allows for transparency of the actual number of claims that are outstanding. When posting is behind, there is not a clear picture of the denials. The ability to reconcile that and other issues in a timely manner becomes more difficult and time consuming. In addition, prompt payment posting allows for statements to be sent out right away. No need to wait. The longer the span of time a patient waits to receive a statement, the harder it will be to collect on that balance.
Understanding each insurance carrier’s contracted rates and making this information accessible to the team establishes better financial results. Assessing “at a glance” any potential incorrect reimbursements during the posting process is the first line of defense. Address any payment discrepancies with the payer right away. Resolving payment issues and correcting already paid claims may take some time. Presenting a history of past claims paid correctly, along with the current underpaid claims, may be necessary to find the root cause of the discrepancy.
Despite all the proactive steps you’ve taken prior to the claim submittals, it is impossible to avoid all denials. Manage denials by resolving as soon as received from the insurance plan. Each denied claim needs be reviewed for the reason or cause of the denial. Understanding the reason is the key to taking the correct course of action. If the reason for a denial is unclear, contacting the insurance plan may offer some clarification into the problem. Once corrected, determine the best course of action to submit a corrected claim for that payer. You may re-submit electronically through the website, on a CMS-1500 form or through the payer’s appeals process. Resubmitting a corrected claim improperly for that payer could further delay reimbursement. Be aware of the timely filing period for each of your contracted plans. Submitting or resubmitting claims outside of the timely filing period will result in lost revenue.
A good benchmark to determine where your outstanding insurance accounts receivables on average should fall is 12%. This means the total dollar amount of the outstanding claims, 31 days and over, do not exceed more than 12% of the total AR. For example, if the total for all outstanding claims 0 to 150+ days = $150,000, the total dollar amount for all claims outstanding between 31 to 150+ days would not exceed $18,000 or 12% with the heaviest balances falling in the 31 – 60 days, aging.
The percentage rate may be slightly higher or lower depending on the types of insurance plans you contract with. If the payer mix has a greater number of vision plans the benchmark would be a lower percentage, 8% – 10%. If the payer mix has a greater number of contracted medical plans the percentage rate may be slightly higher, 13% – 15%. If the percentage spikes, it’s a good indicator that you should dig deeper to find the root cause. The goal is to produce consistency within the practice and to ensure all revenue is being captured timely and denials are within a healthy range.
Investing in the time to review and implement the necessary processes and resources to complete the revenue cycle will increase efficiencies, avoid costly delays and eliminate revenue loss. When the accounts receivables are healthy, the practice revenue stream will thrive.
Get Started With a Complimentary Assessment!
PECAA’s Billing & Coding Manager Teri Thurston would be happy to offer a complimentary assessment to those interested in improving their accounts receivable processes. Simply fill out this form and we will get started on your assessment.
Questions on how to get started improving your accounts receivables processes?
E-mail me at firstname.lastname@example.org or call the PECAA office at 503-670-9200.