You can’t correct a problem if you don’t know it exists. Physicians usually spend the day focused on patients and patient care so it can be difficult to spot A/R inefficiencies unless key performance goals are in place. Specific reports should be generated each month to analyze the practice collection performance.
Warning Signs of a Problem
If your A/R increases from one accounting period to another, this may be a sign that time of service payments are not efficient. Many workflows should be analyzed if the insurance aging is increased in the over 90-day category. If this continues, you can expect potential cash flow problems.
Key performance metrics below will help you assess the efficiency of your revenue cycle.
- Days in A/R This is the average number of days it takes to bill for and collect payments due. You want this number to be low. We recommend it being 30 to 40 days.
- Aging A/R Your aging reports should reflect insurance aging and patient aging in separate categories so you can pinpoint a problem if either aging category reveals more than 15 percent of the accounts receivable is over 90 days old.
- Slow paying carriers Some insurance carriers are slow to pay, such as Medicaid and Medicare. If the bulk of your billing is to slow-to-pay carriers, talk to your A/R personnel and implement strategies to address this problem.
- Subtract the credits Make certain your staff is subtracting any credits from the A/R. If they aren’t, you may be getting a false, skewed impression of your practice’s financial standing. An insurance credit should be repaid to the insurance carrier within 60 days of an identified credit. Patient credits should be assessed monthly and reconciled with patient balances. Credits on inactive accounts should be paid to the State in order to resolve the credits.
- Payment plans not working Patient debt is increasing, especially those with high deductible insurance plans. A practice should designate a few people to set up payment plans. The practice should set a plan using a credit card on file to assure a commitment to resolve the debt. Any large balance should be considered for financing, as opposed to an internal payment plan.
How To Fix It?
All the physicians in the practice need to be committed to the changes necessary to solve this issue. Through our work with hundreds of medical practices, there are a few best practices that we can share.
- Assure you have a self-pay fee schedule to reduce costs for patients with no insurance.
- Keep your website current and interactive. Get your website professionally built to include such features as prescription refills, email communication, appointment requests, care summaries and acceptance of online bill payments.
- Initiate a policy for billing for missed appointments. No-shows undercut your profit so institute a cancellation policy and charge for missed visits.
- Have at least two well-trained staff dedicated to collecting fees. Review your billing practices frequently. Make certain bills are going out on a daily basis and denied claims are immediately followed up.
- Have a worker on staff who specializes in insurance verification. Be certain insurance cards are frequently checked and verification is up-to-date.
- Pre-certification is a big deal, so make certain you have one or two specialists in pre-certification on hand to obtain all necessary prior authorizations to avoid issues with insurance payments for services rendered.
- Collect co-pays and out-of-pocket expenses at the time of service. Require pre-authorization for nonpayment at time of service.
- Pack the schedule. See as many patients per day as possible without compromising quality of care.
There may be some issues that need addressing, such as increased accounts receivable and collections that are stagnating, but these are not problems that can’t be overcome. Turn your diagnostic eye to your practice. A consultant can perform a financial workflow assessment to assist you.
Heal the business side of your practice so you can focus on why you’re there: healing your patients.
Article contributed by Tammie Lunceford, Healthcare and Dental Consultant, Warren Averett Healthcare Consulting Group. Warren Averett is an official partner with the Medical Association.