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Back to Basics: Decreasing Time in Accounts Receivable

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The A/R clock starts ticking once a medical claim is submitted to the payer. Is your health care organization prepared to beat the clock?  

The current industry standard is < 30 days but some health care providers and medical practices are missing the mark. Errors in claims, multiple denial appeals, and/or missing timely filling dates are all contributing to an increased A/R.  

We've compiled our top five tips to help your healthcare organization get back to basics and decrease payment turnaround time and total A/R outstanding. 

TIP 1: Get your claims out the door 
On average, hospitals take 17 days to get their claim out the door. Payments from payers (Medicare, Medicaid, and Commercial Insurances, etc.) are usually made within 15 days of the submitted claim. By reducing the time of the claims process to less than five days your cash flow will improve naturally. 

There are two main ways to get claims out the door faster. First, make sure you are staffed with enough highly productive billing/coding experts to process claims daily. Second, ensure departments are compliant with getting charges in timely.  Late charges are huge time-wasters and a big reason for delayed billing.

TIP 2: Stop denials in their tracks 
Traditionally, hospitals and medical practices were solely reliant on billing and coding staff to hold extensive coding and compliance knowledge to prevent denials. No human being is perfect, mistakes are bound to happen, even with seasoned medical coders. You might be asking yourself is there a better way? Yes. It's by investing in a top-notch claim scrubbing software to verify the claims are correct. Simply put, if you submit a clean claim to a payer you will get paid within 15 days.  Sophisticated payer claim editing is the single most important RCM (Revenue Cycle Management) process to improve A/R – not to mention decreasing FTE and reducing denials.  Then add in a denial management system that integrates back to the claim scrubber to prevent future denials –  you’ve completed the circle to ensure a high percent of your claims go to the payers correctly allowing for the 15-day payment turnaround providers need to ensure financial security.

TIP 3: Work Denials EVERYDAY
The longer you wait to work through your denials the harder it is to get paid. Don’t allow denials to pile up – that is the biggest cause for increased A/R.  Appealed denials may take up to 90 days to receive payment from payers, which greatly impacts your health care organization's bottom line, especially if 10% or more of your claims are denied on first submission.  When time is of the essence, stay on top of denials daily to ensure your appeals will be filled in a timely manner.

TIP 4: Work your ATB 
Although the new trend is to use work queues that slice and dice your open accounts in a million different ways, there is nothing like regular review of your detailed ATB to ensure things are not slipping through the cracks.  At least monthly, review all high dollar accounts aged over 45 days to ensure timely processing and all accounts aged over 180 days to look for trends on why they didn’t get paid sooner.

TIP 5: Track and Analyze A/R 
It's important to track and analyze your denial rate and overall accounts receivable. Review your denial rate at least every 6 months and actively focus on improving it. Using the data you've collected gives your health care system or practice valuable information to make an informed decisions about your revenue cycle, what's working and what's not.  

Accounts receivable are a very important part your health care system's financial vitals. Going back to the A/R basics will decrease the amount of time accounts spend in A/R, which will positively impact your revenue cycle by increasing cash flow, decreasing FTE, and eliminating denials. 

Learn More
For more on how your organization can benefit from implementing an innovative revenue cycle software to reduce time in A/R, visit Revenue Cycle Management for additional information.