13 Dec Outsourcing Strategy 101: Improving Accounts Receivables for Effective Revenue Cycle Management.
Managing Accounts Receivable has grown to be a monumental chore as operating costs climb and the number of customers with high-deductible health insurance increases. Cash flow is lowered as accounts receivable increase. The majority of US medical billing firms are in this predicament,
An efficient healthcare profession requires good account receivable management techniques. The benefits of revamping and enhancing the accounts receivable process are substantial. It also affects how medical billing is conducted generally. Adopting an effective plan leads to significant changes in the accounts receivable process and offers the company enticing prospects.
Here’s a short summary of accounts receivable management in RCM, common problems, and strategies to improve the receivables to make your practice efficient and tranquil.
Account Receivable Management- A better understanding
The simplest way to define AR is the money owed by patients to practitioners or medical billing businesses for the medical services provided to them. The produced invoices are delivered to patients or insurance providers for payment. The staff must monitor the AR and determine whether payments are being received on schedule. Accounts Receivable Management (ARM), to describe it plainly, is a set of procedures that include detecting declined claims, resubmitting the rectified claims, cutting down the days of AR due, and steering clear of aging AR.
The likelihood that an account receivable will not be reimbursed escalates the longer it remains unpaid for services delivered. Therefore, despite the fact that there is undoubtedly money owing, ARs may not constitute revenue. However, if ARs are not managed promptly, finance departments become overworked, labor goes up, and even unneeded expenses for the practice occur which ultimately results in revenue erosion.
Importance of Account Receivables in RCM
According to research, practices only receive a minute fraction of their unpaid accounts receivable amounts at the time service is rendered. Although it can be years, several practices are unaware of the age of their oldest AR. Far worse, because no one had time to keep up with payers for follow-ups or even patients about unpaid balances, some AR might’ve been waved off.
It’s critical for medical offices to keep track of the insurance claims they file in order to optimize their Revenue Cycle Management, boost sales, and improve cash flow. When claims get unpaid for more than 45 days, you face the danger of having your cash flow reduced as well as having payments rejected.
Common problems in ARM
Following are some typical problems relating to accounts receivables that disrupt the RCM.
- Common grounds for claim denials by insurance companies include incomplete or faulty information, multiple applications, inadequate procedure, coding mistakes, and delayed filing. Cash flow can be disrupted or even stopped by a claim denial. You are more likely to abandon doing the follow-up task if they make it tougher for you to get compensated.
- There is a likelihood of having too many write-offs if your practice doesn’t have a standardized strategy for them. After a certain time has elapsed, practices will write off unpaid bills and deny claims without looking into other options for payment. Despite the minor sums, they add up to a bigger net deficit.
- Many patients struggle to pay their medical bills due to increased deductibles and unaffordable expenses, which results in bad debt.
- The fact that the goal of medical practices is to serve patients causes them to often avoid collection culture. Over pursuing unpaid amounts, they place higher importance on excellent patient care and clinical behavior. However, in order to keep running, a practice needs to be paid.
- Many businesses lack the resources necessary to quickly and effectively collect overdue bills.
Strategies to improve Account Receivable Management
The biggest problem with receivables is continuously collecting money. However, take into account the time and work necessary to send hard form invoices and afterward wait for traditional checks to arrive in the mail. Even if the seller pays on time, it may take as long as two weeks to pay. In today’s digital market, current liabilities and AR processing are essential for survival. To properly optimize cash flow, AR teams must reduce the time difference between receiving payments and the days when the AR was generated.
It will hardly make any difference with the number of employees you add, manual processing will always be slow and prone to mistakes. This is why implementing solutions for receivables management is essential.
Adoption of Electronic payment methods
It can be difficult to promote electronic payment options. The accounts receivable team must first choose the payment techniques that make far more sense to accept. They must then ensure that their clients will utilize their available payment choices. The customer experience needs to be seamless even when more customers are accepting electronic B2B payments.
The AR departments offer well-liked payment options to increase receivables collections. Billing can be greatly streamlined by accepting corporate credit cards, debit cards, or ACH transfers. Reduce costs and promote ACH payments by making bank-to-bank transfers with zero charges while charging a service fee for credit card purchases. The correct payment system should provide businesses the freedom to handle these unforeseen expenses. Customers should be able to pay quickly thanks to this at the same time.
Verification of Insurance Eligibility
One of the most reliable signs of AR is proof of prior insurance. The key to maintaining the medical practice’s financial success is to verify the patient’s insurance eligibility and coverage. There are other methods to check eligibility, including using software and third-party solutions to obtain comprehensive data on the payer site. The following information is also evaluated throughout the verification of the insurance eligibility process:
- Information about insurance coverage, such as the date of coverage and whether it is in-network or not
- Is the amount going to be co-paid?
- Determine the amount that has been currently met up if the amount is deductible.
- Determine the Causes of denials
Before sending any potential write-offs through, practice reviewing each one. Decide whether circumstances, based on financial requirements, medical needs, etc., demand permission. Before writing off an overdue bill, be careful to exhaust all other payment methods.
An important factor in streamlining cashflows and efficient RCM is to timely schedule follow-ups on AR. A competent team in charge of managing accounts receivable will maintain tabs on all submitted claims. In addition, it will promptly implement a plan of action if the claims are not settled within the allotted 30-day period. Additionally, the staff will ensure that no late or insufficient payments are made.
Consider Outsourcing an AR service provider
Healthcare businesses frequently experience increased administrative costs as a result of unpaid claims and delayed collections. In addition, federal rules have tightened up considerably. The demand for healthcare organizations to catch up on rejected or appealed claims grows as a result. The main cause of medical claim denials is incorrect or unnecessary medical coding.
Your healthcare firm can manage its accounts receivables more efficiently by outsourcing those services to a professional provider. They will assist you to reduce overhead expenses while also boosting cash flow. They will track unpaid receivable balances by the client and by the day that payment is due, regular follow-ups on outstanding claims, investigate the causes of claims denials, start collections, and produce periodic reports.
It is important to overcome the challenges that AR can pose to healthcare practice. Overcoming these challenges while keeping yourself efficient in practice can be a tough nut to crack. An expert AR team can assist you in clearing up your unpaid accounts and restoring cash flow if you are having trouble properly collecting patient balances. You may save a tonne of time, money, and stress by outsourcing your RCM, which will cover account receivable services as well.