Accounts Receivable (AR) is one of the most critical functions in any medical practice. If not managed effectively, would result in inefficient cash flows. Unfortunately, most medical practices are experiencing several challenges in managing AR effectively. The reasons are many - more denials, underpayments and missed or ignored claims are some of them. Reducing outstanding balances is the key to increasing your practice cash flow.
Above all, new regulatory changes such as the Patient Protection and Affordable Care Act and federal incentives have made physicians embrace electronic health records, making healthcare landscape more uncertain. Taking all these aspects into consideration, it has become even more important for practices to collect the money they owe.
So, how practices can solve their biggest AR challenges and reclaim the missing funds? One ideal way is to simplify and automate AR processes. Technologies such as electronic health record systems, patient portals, and practice management systems can help practices reduce operating costs and provide quality care. Health care practices that want to increase their collections, reduce denials and underpayments must ensure they choose a practice management system with robust capabilities that help manage accounts receivables effectively. This article illustrates how practice management system can help you overcome the most common accounts receivable challenges and allows you to track, measure, and collect receivables.
Identify Potential Denials
The best way for practices to improve the billing efficiency is to identify potential denials prior to submitting claims to payers so that more claims can be paid the first time itself. Adopting software that can automatically identify claims that are likely to be denied can help overcome this problem. Best solutions use an intelligent engine that automatically enforces and constantly updates the rules so as to let practices to continuously improve their collection rates. The software you choose should be able to collect data about claim denials from every practice so that you can learn why other practice claims have denied. This can help prevent similar denials happening for your practice.
The benefits of choosing billing software with rule setting capabilities include:
- First Pass Resolution Rate (FPRR) Since potential denials are identified prior to claim submission, practices can get paid for the first submission. The systems with robust rules defined can help improve their pay rate to a great extent.
- More Collections, Less Time Identifying potential denials allow practices to submit more accurate claims that get processed faster, improving the average payment time. Improving the FPRR allows practices to reduce the money left on the table.
- Reduce the Burden for Practice Staff Getting claims paid the first time eliminates the task of reviewing denials and going back to the payers. This makes practices more efficient and allows staff to spend more time on handling the most important tasks.
Aging of Receivables
Normally, receivables are tracked based on 30-day increments – actions can be scheduled based on whether a receivable is 30 days old, 60 days old, and 90 days old. Payers will operate on its schedule, so two receivables with the same age would require different actions, given that they are from different payers. The challenge is to act on claims based on each payer’s individual schedule. This can’t be accomplished with manual processes, so using an automated system that allows for the daily aging of receivables is important. Automated systems can streamline collection incidents such as resubmitting a claim, creating a collection incident, sending to the collector’s queue and much more.
Tangible benefits include:
- Faster Collections Days sales outstanding (DSO) rates can be improved as practices can ask for the payments when delayed. Also, automatically tracking outstanding claims will ensure that lost or ignored claims will not slip down through the cracks.
- Increased Productivity Accounts receivable staff will be automatically notified when collection incidents are required, so you will not need to spend time manually tracking claims.
Enhanced Processed Workflow
The entire revenue cycle - right from scheduling patients to collecting final reimbursement involves many steps. Manual work not only makes practices less efficient but also leaves room for costly and time-consuming mistakes. That’s why medical practices should use automated solutions to streamline their workflow.
Automated systems can respond to different events such as patient scheduling, due dates, and upcoming deadlines. This ensures that the right information is delivered to the right people, and tasks are assigned in the right way. Customized responses will be automatically generated when assigned jobs are not completed.
This helps practices to:
- Increase Visibility and Improve Efficiency When the workflow is automated, a lot of manual tasks are eliminated, leaving no room for error. Also, the system provides an organized view of denial, underpayment, lost and ignored claims.
- Better Staff Management Having a defined workflow to manage the practice revenue ensures that the work is being completed by staff in a timely manner.
Data Set Analysis
To make the right decisions, medical practices require access to the complete data sets. Accessing the practice information in real-time through web-based software allows you to analyze trends. Knowing billing and collection trends will figure out the areas where the practice can improve. Having a system with extensive reporting and analytics capabilities will make it possible. Automated solutions allow you to schedule reports to be created at certain intervals for analysis and generate custom reports on the fly when you need specific information. The best systems create reports in a variety of formats and automatically send them to multiple users to view, comment, and share their perspectives within the systems.
Choosing systems with extensive reporting capabilities offer several benefits such as:
- Making Right Decisions Creating reports easily ensure that all the necessary data is analyzed before making important decisions.
- Productivity Generating reports automatically mean that staff members need not spend time gathering data, print reports and share manually.
- Spot Underpayments Advanced reporting capabilities make it easy to audit payments received against practice payer contracts, so as to make sure practices will get paid as per the contracts.
Ensuring accuracy of the payments made is very important for an efficient revenue cycle management. Electronic Remittance Advice Messages (ERAs) is one standard method of reading the payments made. Choosing the electronic system that accepts ERAs allows practices to verify the payment details against payer contracts and ensures that practices are being paid as per contracts. In addition, choosing the system that post denials will make it easy to track and manage denial claims, and helps prevent more denials in the future.
This can help practices by:
- Increasing Collections Electronic remittances help practices ensure they are receiving what their payer contracts owe. Automatically posting denials and ignored claims help track unpaid claims so the issues can be resolved.
- Getting Paid Faster Automating the phases of a payment cycle helps practices dramatically improve their DSO (days sales outstanding) metrics.
Tracking collections efficiently greatly improve practice efficiency and workflow. The following are the benefits of collection tracking:
Automated systems will automatically send assignments to employees with appropriate skill sets. For instance, the Medicare denials should be sent to the Medicare specialist.
The system should be easy-to-use and intuitive. All actions, including re-submissions, demographic and insurance data changes, appeals, and verification should be done in one click.
Payers allow practices to check the status of their claims so they can know when to expect a payment and when to follow up a claim. Choose a system that allows practices to electronically connect with payers and check status instantly.
Practices should be able to store and access all your accounts receivable data from a single location so they can make better decisions and improve collections. Automated solutions should be able to sort denials by payer, provider, payer type, billing amount and another category.
The system should allow you to categorize denials based on their types such as enrolment, authorization, coverage, and others. The denial types should be categorized in a standard way across different payers. This allows practices to analyse when trying to minimize denials.
The Bottom Line
Getting a handle on your accounts receivable processes help you to overcome some of the biggest challenges your A/R department experience. Choosing the practice management system that helps you to overcome major challenges is something that can help perk up your accounts receivable operations. Effective billing management will not only save your practice money, but allows medical practices to provide the highest quality of care to patients.