A Guide to Cleaning Up Your Accounts Receivable

When healthcare facilities examine the effectiveness of their budget management practices, many of the most important metrics are centered on the accounts receivable (A/R) office. Stretches of time between completion of care and collection of reimbursements is a natural and often expected part of a hospital’s revenue cycle process. Having a solid handle on the progress of insurance claims throughout the A/R department is vital to keeping those time frames concise.

Outstanding claims are an essential area of focus, particularly in cases where a healthcare organization can identify instances when the number of days between patient discharge and payment stretched to untenable lengths. When an excessive number of days to pay becomes routine for certain insurers, organizational viability can come under attack without rigorous correction of flawed protocols. Fixing such financial and accounting protocols usually requires improvements to both internal processes and external relationships.

Keeping Tabs from Discharge to Claims

It’s important to track how quickly payment is received from an insurer after a claim is filed, but healthcare facilities also need to consider their own efficiency in filing the claim in the first place. Providers must be diligent, timely, and thorough in delivering necessary documentation to the A/R team to file a claim. Once data goes missing or is omitted, it is likely to result in loops of internal communication that can drag on with no end in sight. Once that information lands, A/R personnel must have strategies to move it through their system as quickly as possible.

“The quicker the turnover in your accounts receivable, the less cash you have to find somewhere else,” Sean McAleer, Senior Director of Revenue Cycle Operations at New York City’s NYU Langone Medical Center pointed out to Healthcare Finance. Hospital expenses aren’t going to slow down in order to accommodate delays elsewhere in the system. It’s incumbent upon A/R—and the internal staff A/R is counting on—to keep up.

Addressing Denials

According to the Medical Group Management Association (MGMA), a healthcare organization should see a denial rate on claims at around four percent. Instead, the industry average ranges from 10–25 percent.

Getting closer to the ideal through proactive measures is preferred, but healthcare providers need to be realistic and plan for a certain number of rejected claims. Even when claims are rejected, A/R departments still have recourse: Errors can be corrected, and missing information can be provided that allows for new claim requests.

Catching the denied claims early and responding to them in a timely manner can minimize fiscal harm. A system that flags an outstanding claim can sometimes allow a facility to get feedback from an insurer prior to a denied claim notification. Robust tracking throughout the entire process can help target and resolve system flaws, minimizing the likelihood of similarly denied claims in the future. 

Lines of Communication for a Collections Culture

For years, the National Association of Healthcare Access Management and other organizations have advocated providers adopt a collections culture and bring the same vigilance to seeking payment as they do to delivering care. It’s a philosophy that might seem antithetical to the perceived altruistic spirit of the field, but it’s an undeniable requirement for those who want to continue providing valued care.

To develop such a culture, A/R departments should establish and maintain strong lines of communication with insurers. A readiness to press for payment on outstanding bills keeps dollars flowing. Tracking those insurers who regularly need an added prompt helps A/R teams set their priorities around which accounts require more intense focus.

The Right Tools

In order to maximize the effectiveness of A/R departments, support has to come from the hospital’s top leadership. There needs to be adequate personnel to tackle problems, and those staff members must be empowered and equipped to follow through from beginning to end.

MEDHOST can equip hospital CFOs and other healthcare leaders with the revenue cycle tools their teams need to sort through the clutter that can build up between care completion and reimbursement. The Account Insurance Follow-Up, as part of MEDHOST’s Revenue Cycle Services, helps provide ongoing management of outstanding A/R accounts, from the first sign of delay to working to identify and clean up the most errant claims. Follow-ups help shore up troublesome accounts to aid in placing a healthcare facility on solid financial footing.

If you need help cleaning up your accounts receivable, call us at 1-800-383-6273 to speak with one of our health IT professionals or visit www.medhost.com.

Further Reading:

Best Practices to Recapture Hospital Revenue

Contract Management: Getting Paid What You’re Due, When You’re Due

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