Manage Accounts Receivable in Medical Billing to Boost Profitability

Taking care of all the financial metrics is essential to managing the revenue cycle of a medical practice. Accounts receivable in medical billing are a critical financial aspect for healthcare providers. Simply put, it is the amount of money patients or insurance payers owe to medical practices. Similarly, the unreceived revenue is recorded when the providers render patient services. Additionally, accounts receivable depict the financial health of a healthcare organization. If a medical practice has a higher AR, it suggests that the billing process is inefficient. Further, healthcare providers with a consistently higher AR show the potential issues in practice cash flow.

Critical Components of Accounts Receivable

To get a better understanding of accounts receivable, let’s look into its key components:

Charges

When the physician renders services to the patients, the charge is the amount billed to the insurance payer. Similarly, the charges depend on the fee schedule or rates the healthcare provider and insurance company decide on.

Payments

The actual funds that healthcare providers receive from the insurance payer are payments. Likewise, these payments can be reimbursements from payers or patient payments. These payments reduce the outstanding accounts receivable in medical billing.

Adjustments

Some contractual agreements reduce the billed charges through discounts or write-offs. These adjustments depend on the negotiations between healthcare providers and insurance companies.

Claim Denials

When an insurance payer refuses to pay a healthcare provider for a rendered service, it is termed a claim denial. Various reasons lead to claim denials, such as errors in documentation or billing for services not covered by the insurance plan.

Why is Accounts Receivable in Medical Billing Important?

For optimal cash flow management, reducing the days of claims in AR is essential.
Monitoring accounts receivable in medical billing enables providers to achieve consistent cash flow.
Managing AR helps medical practices keep the revenue cycle efficient and improve overall collections.
Lower accounts receivable reduce the chances of write-offs and bad debt. Consistent follow-up on pending payments can improve reimbursements.

How to Improve Your Accounts Receivable

Here are some steps healthcare practices can take to manage the increasing AR:

Revisit Insurance Verification Process

Insurance verification must be checked before the patient visits the provider. Submitting medical claims not covered by insurance payers leads to denials. So, a vigilant eye on insurance verification can significantly avoid revenue losses. As a result, it reduces accounts receivable and creates smooth cash flow for medical practices. Utilizing tools for checking insurance eligibility and developing mechanisms for regular checks can reduce aging AR.

Collect Upfront Payments

Catering to patients’ financial responsibility in medical billing avoids payment delays. Similarly, healthcare providers can improve accounts receivable in medical billing by collecting upfront patient payments. Additionally, it increases overall collections, and patients know what they will pay. As a result, medical practices can reduce AR, and patients remain stress-free simultaneously. Further, it improves patient satisfaction and enables providers to retain patients.

Track and Follow-Up on A/R Regularly

Tracking payments helps medical practices manage their accounts receivable and improve their financial health. Not following up with payers frequently results in revenue losses, and providers miss out on revenue opportunities. As a result, medical practices identify areas for improvement and avoid payment delays. So, keeping track of payments is another way to improve AR and the bottom line.

Trust Accounts Receivable Experts

Hiring third-party billing services is another option for healthcare providers who witness aging AR and face revenue losses. Similarly, these RCM experts have a team of professionals who understand accounts receivable in medical billing and optimize cash flow. Additionally, partnering with a billing team that understands the reasons behind aging AR enables providers to fuel the reimbursement rate.