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Healthcare practitioners and hospitals must file claims to insurance companies and payers to be reimbursed for their services. In order to do that, medical facilities must have a reliable way to process their accounts receivable.
However, the Centers for Medicare and Medicaid Services reports that only 70% of claims get paid the first time they are presented to insurance companies. Thirty percent of claims are dismissed, lost, or disregarded. In this post, we discuss why hospitals overlook accounts receivable (AR) and what you can do to guarantee your AR plan is on track to collect your money.
Medical accounts receivable (AR) management refers to the sum of money patients owe to providers or medical billing businesses for medical treatment they received.
In the accounts receivable process, employees prepare and deliver invoices to insurance companies or patients for payment. The employees must monitor the AR and ensure that payments are received on time.
In other words, it is a group of processes that include identifying denied/unpaid claims, re-filing rectified claims, lowering AR days, and removing aged AR.
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There is a dire need for medical accounts receivable services in the healthcare industry. Meeting this need could solve the most important challenges and have a considerable influence on cash flow.
Following are some barriers to efficiency in this process:
1. Insurance Claim Rejection in Healthcare Accounts Receivable
Insurance firms routinely and purposefully make receiving payments difficult by declining insurance claims for various reasons. This is largely because insurance firms operate for profit. Therefore, it financially benefits an insurance company not to accept a claim. Missing information, late filing, lost claims, duplicate fillings, and coding errors are all major reasons for claim denial.
This is also the primary cause of old accounts receivable processes in healthcare. An insurance company’s reluctance or unwillingness to accept a claim frequently results in unpaid bills.
2. Bad Debts in Accounts Receivable
Healthcare is continually evolving, and patients are paying more due to higher deductible plans and rising patient expenditures. Seventy-four percent of medical professionals reported an increase in patient financial burden. And the increased accountability leads to an increase in bad debts. These are bills that patients never pay.
3. Unwarranted Write-Offs
Unjustified write-offs are regarded as “forgiving” a customer’s debt without payment. However, even seemingly insignificant write-offs can significantly influence your bottom line. You must prevent them as much as possible.
Write-offs can become a bigger problem for businesses that use a manual collection approach. This is because details tend to slip between the cracks, leading to unpaid amounts building up.
4. A Disorganized Collection Method
Medical offices, like any other business, require payment to continue operating. While it is a difficult procedure, when possible, expenses for care should be discussed and disclosed to patients at the time of service. Fortunately, there are many actions you can take to make the collection process go more smoothly.
Before contacting patients, staff should approach this dialogue with sensitivity and compassion. They should make payment arrangements with patients as explicit as possible to avoid complications. However, many organizations struggle with transparency because they lack the necessary means to keep patients informed of billing, deadline, and payment confirmation data. This can have a detrimental effect on the customer experience. This is especially the case for patients or families who are already struggling with the burden of illness or injury.
It may also result in unjustified write-offs, requiring the provider to bear the debt. Write-offs are frequently the result of an incompetent collection method or the lack of a structured adjustment approval process.
5. Restrictive Payment Modes in Medical Accounts Receivable Processes
Accepting multiple payment methods allows you to satisfy your clients’ needs better. Failure to do so places your firm at a significant competitive disadvantage. This is because patients are more inclined to seek services from a provider who offers greater flexibility in their accounts receivable process.
It is also critical to collect patient information, such as payment requirements. This positions both patient encounters and billing transactions for future success. However, this can be demanding and time-consuming if you still rely on manual processes and systems. Without tools that make it simple to record this information, you risk claims rejections and denials, which delay bill payment and impair liquidity.
A high accounts receivable inhibits cash flow and keeps your practice from functioning optimally. Following are eight steps you can take to improve your accounts receivable process:
1. Maintain Patient Relationships and Inform Them of Financial Obligations
A strong business is predicated on providing an exceptional customer experience that is as transparent and helpful as possible. For example, more than half of consumers say they would switch healthcare providers if they had a better customer experience.
Customers will feel more comfortable notifying you of any payment issues or complaints if you build pleasant and open communication with them. Furthermore, a healthy AR process can make avoiding and mitigating problems such as insurance claim denials easier. This frees up time to focus on deeper connections and better patient care.
2. Collect Payment at the Time of Service
Collecting payment at the moment of service is the most convenient approach to keep your AR department working efficiently and money flowing in. It’s critical to thoroughly investigate your consumers to ensure they’ve paid other businesses on time. This is a crucial predictor of their ability to keep up with medical payments. Offering early payment incentives, which encourage patients to pay on time, can be beneficial.
3. Obtain an AR Aging Report
An accounts receivable (AR) aging report is a report that breaks down the number of debts and how long they’ve been outstanding. It will tell you which accounts are delinquent and how long they’ve been delinquent. This allows you to intervene with collections or quit providing services to reduce credit risks. This might help you avoid problems with regular late payers.
4. Maintain Contact with Outstanding Accounts
Consistent follow-up on outstanding accounts is crucial for boosting the likelihood of payment collection. It would help if you established a clear collection policy for past-due payments, including courtesy calls, letters of demand, and, maybe, the use of a collection firm. Then, if a customer fails to meet deadlines, your AR department will have practical options.
5. Employ Experienced Workers
Medical billing practices are constantly changing. Having an experienced AR team who can keep up with those changed operations, collection techniques, and more is beneficial. Furthermore, employees should be well-versed in dealing with a wide range of common and unique situations and successfully communicating potential resolutions with clients.
6. Consult with Patients and Insurance Companies
Maintaining solid relationships with patients and insurance carriers and conducting your due diligence to recover late ARs will help keep cash flow concerns at bay. To remain on top of things, you’ll need to keep detailed accounts of interactions, payment information, and persistent late-payers.So make sure you build a procedure that functions like a well-oiled machine.
7. Collect Patient Data Using an Automated System
While gathering patient information may appear to be basic sense, it is critical to good AR management. However, manual, out-of-date collection techniques (such as spreadsheets, different systems and tools, paper forms, and so on) can make capturing and updating customer information challenging.
Many healthcare companies have begun to use automated solutions to improve the formerly time-consuming and error-prone process of collecting, searching, and updating client information. These systems also ensure that those details are not duplicated or destroyed throughout the process of transitioning between systems or transcribing them from paper copies.
8. Streamline Your AR Workflow
Manual accounts receivable tasks, including invoicing and payment processing, are time-consuming and prone to error. Automating accounts receivable improves various AR procedures’ productivity, including invoice delivery and payment updates.
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Managing accounts receivable can be difficult for healthcare organizations due to the many moving pieces that can risk your success. However, to remain competitive and increase profitability, healthcare providers must collect timely payments by running an efficient AR business.
Healthcare facilities must maintain consistent and secure communication with their patients through an efficient accounts receivable procedure. From patient onboarding to homecare instructions to billing and collections, efficient communication within your healthcare company is critical. With intelligent picture retrieval, workflow automation, and transaction management, medical billing services will help you provide better customer service while increasing the return on your investment.
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