What is Patient Accounts Receivable and Why Does it Matter?

An insurance company alone is not responsible for the treatment charges. Patients also have some financial responsibility. The amount that a patient owes to the provider requires follow-up and is called patient accounts receivable. Likewise, after receiving the treatment and the payer’s payment, it’s the patient’s responsibility to pay the remaining due amount. Due to a busy schedule, providers often find it challenging to maintain continuous follow-up with patients. Therefore, the physician hires experts for RCM billing services, ensuring consistent cash flow.

What is Patient Accounts Receivable?

Accounts receivable need continuous monitoring to protect the bottom line and prevent revenue leakage. It is the amount that the patient owes for services rendered by the provider. Similarly, timely and accurate reimbursement enables providers to optimize their financial health. Sometimes, the payer pays its part, but the patient’s payment is still pending because the patient has to pay out-of-pocket costs. It is an outstanding payment that the patient owes to the provider. In addition, providers can consult experts to speed up the AR recovery process.

Why PAR Matters in Medical Billing?

It matters because it reduces the risk of revenue gaps by increasing financial stability. The unmanaged A/R is a risk to the overall revenue cycle. An accurate AR management helps protect the bottom line. Furthermore, patient accounts receivable management enables providers to streamline the billing process. Hence, clear communication with patients regarding their outstanding payment enhances patient experience and trust.

How Does Patient Accounts Receivable Work?

Step 1: Patient Receives Care

The first step in healthcare includes examination, diagnosis, treatment, and surgery, among other procedures, depending on the individual’s requirements. The provider or billing staff verifies the patient’s insurance eligibility and provides exceptional care to ensure timely receipt of patient accounts receivable.

Step 2: Provider Submits Claim to Payer

When the patient receives the treatment, the provider collects all the necessary information and documents. Moving forward, the provider submits the claim to the payer for reimbursement of the services rendered.

Step 3: Payer Pays or Denies Claim

After receiving the claim, the payer verifies the credibility of the claim. If the claim is accurate, the payer reimburses the provider. However, if the claim is invalid or incomplete, the payer rejects it. The provider must ensure effective claim denials management and resubmit the claim.

Step 4: Provider Bills the Patient

Billing Medicare and Medicaid using CPT, HCPCS, and ICD-10 codes is mandatory. CMS updates the codes for medical services annually, so keeping yourself updated is necessary to avoid claim denials.

Step 5: Patient Payment

When the patient receives the bill from the provider, they pay the owed amount. However, if the patient refuses to pay, then it becomes the patient’s accounts receivable. The provider continuously reminds the patient of the payment until it’s received.

Final Takeaway

An outstanding amount, if not paid on time, poses a risk to the overall payment collection. It improves cash flow and increases the risk of revenue leakage. Therefore, the provider needs to follow up with the payers and patients to receive accurate and timely reimbursement. For this purpose, a provider can outsource medical billing services to reduce patient accounts receivable efficiently. Clear communication with the patient helps the provider get the rightful payment for the services rendered. Furthermore, it is fruitful for the financial stability and overall revenue cycle.