With the changes happening fast in the healthcare industry, effective revenue cycle management has become an important instrument for a healthcare provider that wants to sustain and increase the finances of their practice. One of the key components of RCM to attain this goal is accounts receivable, and also the biggest stumbling block to having a successful RCM.
When a healthcare provider has a lot of unpaid bills either from insurance companies, patients or third-party organizations, it creates a financial lag and jeopardizes the viability of their practice in the long term. As the complexities of medical billing grow, improving AR management has become an important topic that healthcare providers need to fully understand.
When revenue is delayed, it obstructs the flow of cash in a healthcare operation. However, there are different ways to improve your accounts receivable in healthcare.
In this blog, Unify Medicraft will explain accounts receivable for medical practices, the challenges and steps to take to deter its delays.
What is the Meaning of Account Receivables?
Medical accounts receivable is known as the total amount of money that patients and insurance companies owe a healthcare provider for the services they already give.
When healthcare providers are unable to receive payment for the treatment they rendered, it becomes a significant financial burden as it ties up cash that ought to be used to pay for other operating expenses.
In healthcare, there is always a time frame between when healthcare providers render treatment and when you are paid. However, the goal is to reduce that time otherwise, expenses will outweigh profits, making financial sustainability unattainable.
Managing accounts receivable helps healthcare providers reduce the risk of bad debt, and improve their cash flow, and their overall financial performance.
How Account Receivables Works in Medical Billing
When a patient or insurance provider is billed for services, the money that needs to be paid to the healthcare provider is known as accounts receivable (A/R). The longer a healthcare provider goes unpaid after services are rendered, the more problems it creates for the practice.
It is important to note that ARs do not necessarily equate to revenue even though there is money owed. Research indicates that when ARs are not handled in a timely manner, it affects the financial departments, increasing workload that leads to unnecessary costs and revenue leakage for the practice.
Ways to Boost Financial Health in Medical Practices
Prioritize Insurance Verification
According to statistics, claim denial continues to increase because healthcare providers do not ask patients and insurance payers crucial questions about eligibility. Therefore, it is important to verify patient insurance coverage before providing treatment.
With insurance verification, healthcare providers are fully assured they will get reimbursed for the services they provide for their patients. Insurance coverage also determines the type of treatment costs covered by insurance and the amount the patient needs to pay. Therefore, patient records should be updated before their appointments, to confirm their coverage and any unpaid balances from prior appointments.
Create Easy Payment Plans
For better accounts receivable, healthcare providers must create an easy payment plan for patients who cannot immediately pay their fee but are eager to pay in installments. For example, create an agreement paper with penalties for the patients when they skip any instalment and make them sign the contract.
Streamlined Medical Billing
The secrets to streamlined medical billing, coding, and timely reimbursement are accuracy and effectiveness. Achieving this starts with collecting correct patient data, establishing clinical information, charge entry, and reporting invoices correctly. All of it directly influences the efficiency of the entire AR and forms the structure through which claims can be billed and obtained on time.
Set Payment Expectations
Setting payment expectations and letting your patients know the cost of their treatment costs is important to prepare them for what is to come.
According to statistics, healthcare providers lose a 20% likelihood of gaining revenue once a patient leaves their clinic without partial payment or insurance coverage. Therefore, in order to prevent unnecessary late payments, make sure patients pay part of their medical bills before administering the treatment.
Track Your AR Reports
Tracking your accounts receivable reports helps in determining what causes continuous debt and also allows you to calculate your collection rates. Collecting rates and aged debtors are the most important measurements that help healthcare providers know if they are using the right strategies to increase their cash flow.
Collecting rates shows how successfully healthcare providers recover overdue money within a specific timeframe. While aged debtors show the amount each customer owes and how long the debt has been overdue. So, comparing both will show how much effort is required for healthcare providers to get owed money.
Increase Billing Cycles' Frequency
The more swiftly your medical billing is submitted to the insurance company, the faster you get reimbursement and can quickly send owed invoices to your patients.
Talking to your patients regularly about their medical bills will persuade many of them to make continuous payments. Also, creating easy payment options for your patient will increase regular bill payments, speeding up your billing cycle.
Submit Error-Free Claims
Medical claim submission is an important step in healthcare RCM and thus requires experienced medical billers and coders to submit clean claims. Also, healthcare providers spend $15- $20 every time they want to submit a claim and resubmitting a denied claim costs three times more.
Therefore, it is important to submit an error-free claim the first time. According to statistics, healthcare providers who submit error-free claims experience a significant increase in their cash flow.
Charge Capture and Entry
When your charge entry is not correct, it directly leads to claim denial or rejection, causing a huge loss in the healthcare provider's revenue. According to statistics, more than 5% of denied claims from insurance companies have incorrect or incomplete information.
Also, many claims are rejected due to mistakes in coding, service documentation or overlooked expenditures. When this happens, healthcare providers need to correct and refile the claim, causing a decrease in cash flow.
The Importance of AR in RCM Cycle
Streamlined Cash Flow
Medical billing and accounts receivable are important for cash flow management. Continuous cash flow is the backbone of any healthcare practice as it is critical for the payment of supplies, equipment, and staff salaries.
Effectively Improving AR management ensures healthcare providers have all the cash needed to cover their expenses and grow their practice.
Revenue Optimization
Effective AR management helps healthcare providers increase their revenue optimization. It also ensures all eligible claims are paid in full and on time, preventing revenue leakage and minimizing write-offs.
Increase Patient Satisfaction
Many patients want clear and accurate billing with a seamless payment option. Healthcare providers make this happen through improving AR management, and accurate billing.
The Bottom Line
Medical billing and accounts receivable, though challenging, are important if you want to have great financial health in your medical practice. Improving AR in medical billing improves cash flow, allowing healthcare providers to fully focus on their patients.
Unify Medicraft is a trustworthy software designed to make the medical billing process seamless for healthcare providers. Our software is easy and convenient to use with zero interruptions, giving you everything you need to receive faster reimbursement.