Are there consistent errors within your medical accounts receivable management processes that are restricting your organization’s cash flow? There are a few common problems that plague healthcare providers that can be avoided in a few simple steps.
One of the most common AR problems plaguing healthcare organizations is denied insurance claims. You’ve probably heard the expression, “If you have to ask, you can’t afford it.” That is how the healthcare community should be about insurance claim denial rates. Benchmarking information is hard to come by, but various sources estimate the industry average denial rate ranges from 10% to 25% of all claims submitted. However, according to the MGMA the best performing groups should have a denial rate of only 4%.
Despite this being an industry-wide problem, less than two-fifths of practices actually appeal denied claims. This is a significant lost opportunity for recovering revenue owed to your practice or hospital, and can often be resolved by making simple corrections. Your accounts receivable staff should review all claims prior to submission to ensure they meet payer guidelines, and follow up on all denials.
Learn the top 7 causes of claim denials and how to avoid them in our Dodging Denials Guide. Download it free here.
While some write-offs are necessary, many are not. These are often related to the first common problem we shared: denied claims. Rather than automatically writing off denials, your receivables team should take the time to review each one. Often a simple correction can lead to the reimbursement your organization deserves.
Additionally, prior to writing off unpaid accounts, review each one to ensure that all payment options have been exhausted. Most patients, if given the chance, are willing to work with you to reduce their balance. A brief review of each overdue patient account could result in a significant improvement in receivables.
A few simple guidelines to follow for managing write-offs include:
Patient responsibility now accounts for more than one quarter of the healthcare industry’s revenue, and rising bad debt is becoming an increasingly common medical AR problem as a result.
It is no longer sufficient to discuss patient responsibility only at the time of service. In order to improve patient collections it is critical to start collecting throughout the entire revenue cycle. Pre-service your office should be gathering all necessary billing and insurance information in order to calculate expected out-of-pocket costs and verify coverage so that by the time of service the patient already understands and has agreed to their responsibility, and their insurance bill verifies what they already expect. Additionally, following up and staying engaged post service will help to improve recovery and decrease bad debt.
Providing this kind of comprehensive billing experience and being a resource to patients for financial information will dramatically improve the likelihood of payment, while also helping to maintain a relationship with your patient and ensuring they have a positive billing experience.
Our Collecting from Patients eBook is packed with tips and best practices for improving patient collections at every stage of the revenue cycle. Get your free copy here.
Healthcare professionals usually enter the field to help patients, not to collect money from them. As a result, it is not uncommon for accounts receivables to be disregarded in favor of providing care or an exceptional patient experience. But getting paid for services rendered is crucial for maintaining a successful practice, and continuing to provide care.
In order to make accounts receivables a priority, your healthcare organization must foster a culture of collections. This requires buy-in from leadership, who must make a top-down decision to create it. It requires building the right team and providing them with the right tools, as well as empowering your staff to collect money, and training them on how to be successful. Consider your healthcare organization: Do you have a good collections culture?
Written by Ali Bechtel, Marketing Manager
This information is not intended to be legal advice and may not be used as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.