Home / Medicine & Business / Collecting accounts receivable efficiently

Collecting accounts receivable efficiently

By David H. Glusman, CPA.

One of the most challenging issues facing the back office of any medical practice is the efficient use of personnel in the collection of accounts receivable. On a normal day, an office may see anywhere between 25 and 75 patients per physician. At the same time, there are hundreds, if not thousands, of outstanding accounts receivable that must be continually monitored for optimum collection. Most practices would consider collecting accounts receivable more efficiently to be one of their priorities. So how does a practice go about doing this?

One of the first issues that should be addressed is the evaluation of the amount of time spent by the staff on accounts receivable collections. It is important to ensure that the A/R staff is spending their time as effectively and efficiently as possible. In order to do this, it is necessary to empower the staff with the appropriate tools. This starts with an appropriate accounts receivable/billing system. Any good system will have the ability to differentiate between those outstanding accounts that need attention by the staff from those that are simply in the normal timeframe of collection from the appropriate insurance company. If your system has the ability to identify “expected payments” for each service rendered (this is normally based on the insurance coverage by the patient) combined with the information from the contract your group has with the insurance carrier and the payment history for the same procedure codes, then your system can routinely advise management of the total amount of collectible accounts receivable by insurance carrier. Monitoring this amount, and having an aged accounts receivable by carrier, will allow for better use of billing staff time.

The use of electronic records for incoming Explanation of Medical Benefits paid (EOB) documentation will additionally allow the computer system to provide optimum tools for the staff to use. Whether your computer system provides the ideal circumstances or not, the staff needs to spend time first on the older and larger accounts receivable. The ability to sort accounts receivable based on age, as well as on dollar amount, will lead to the best use of the staff time available.

One of the other issues that will frequently raise its head in the billing function is a particular insurance carrier delaying payment or changing their pattern of rejections. For this reason, it is very important to continually monitor the outstanding accounts receivable aging by carrier. Whether it is done electronically or manually, certain parameters should be applied to each insurance company based on a contract and their history of payment. As an example, if XYZ insurance routinely pays clean claims in 40 days, there should be a trigger for any claim that is outstanding to that carrier for 60 days. If the carrier begins to fail to meet their required timeframe, two things should happen:

· The carrier should be notified in writing, as well as with a phone call to the Group’s representative, to determine if there is any problem.

· The insurance company should be notified of the imposition of any interest or other penalty as appropriate in the contract.

The use of this technique will help “nip in the bud” the occasional changes that may occur in an insurance company’s payment policies.

An additional area that requires attention is: Secondary Insurance Companies. When a patient has more than one insurance company, the “primary” insurance company will always be billed first. Once the primary insurance company has made its payment, billing to the secondary or tertiary insurance company should then be completed. In certain circumstances (primarily Medicare patients who have MediGap coverage with a carrier related to a Medicare intermediary) the secondary insurance payment will be made automatically. In many circumstances, however, the billing office must generate a new claim which, in some circumstances, may require the initial EOB to be attached to the secondary insurance claim. The ability to quickly identify those claims requiring secondary insurance billing and to generate the bills on a timely basis will greatly enhance the speed of collection and reduce the overall time needed in the billing department.

An area that is often overlooked is collection at the time services are rendered. It is far more effective and efficient to collect funds at the counter when the patient is there than it is to send a bill and try to follow-up after the service is completed. This is especially true when patients have co-payments and deductibles at the beginning of the calendar year. Simply asking the patient whether they have a co-payment and/or deductible will sometimes provide the correct information, leading to the ability to then request payment. An efficient way to obtain the co-payment and/or deductible information would be to get that information directly from the carrier in advance of the patient visit. One to two days before the patient is scheduled to visit, a call to the carrier for this information will provide a practice with the ability to notify the patient when they are in the office of their responsibility. The ability to then accept credit card payments and/or checks will again speed up cash receipts and reduce the collection efforts significantly.

It may also be important, depending on the practice, to establish a policy with regard to uninsured or uncovered services. Most practices will attempt to maintain their fee schedule at an optimum level for total reimbursement by all carriers. Nonetheless, it is understood that many carriers, through contractual relationships, will pay substantially less that the fee charged. In most instances, it is allowed (and may be appropriate) for a practice to offer a discount to an uninsured patient, or one undergoing a non-covered service for prompt payment. Again, the ability to make the collection effort at a time that services are rendered will reduce or eliminate the need for follow-up effort by the billing and collection staff.

It is a good idea to review your A/R reports with your administrator and billing manager on a monthly basis with a good solid review each quarter to make sure your staff is collecting all the money due you. Often, it is discovered that practices are not optimizing their collections, not because the staff does not want to do a good job but because they are either overwhelmed with the current insurance company climate or the department is understaffed.

The ability to determine which carriers are rejecting claims, and necessitating the billing department to start over – both delaying the ultimate receipt of the funds and costing dear time for the limited staff – will also enhance the efficiency of the office. Many practices will perform an analysis of rejections by carrier and by staff member. Each type of rejection can then be tracked to limit or eliminate repeat occurrences of the same issue, often avoiding the issue being confronted later in the case of a second carrier following the same protocol at a later date.

The ability to perform the analysis of what has gone wrong before, and to correct the internal policies and procedures to avoid these same issues being repeated, will usually be well rewarded. By way of example, the knowledge that Carrier A is rejecting otherwise clean claims due to a lack of a referring physician in the case of an office consultation can lead to either an additional claims “scrubbing” routine or a manual review of this area before the claims are submitted to this carrier. Also, the knowledge that biller C is responsible for 35 percent of the rejections due to lack of date of birth on the billing submission, while she is only responsible for 10 percent of the practice’s billing will lead to the knowledge that additional training and/or supervision may be required. This type of enhanced information on the rate and type of rejections can lead to a better incentive system for the billing department, and the front desk staff, based on a reduction of the rate and type of rejections from the base lien level.

Let’s not forget there is another option. Your practice may benefit from outsourcing their billing. This is a common issue that often arises when a medical practice is deciding whether to buy a new updated practice management system because they have recently found out that theirs will not be supported in the future or because they are having trouble finding quality billing staff and their accounts receivable balance is climbing. It may be a good idea for the medical practice to at least explore the billing company option to see what it can offer and how much it will cost compared to what they are paying now.

The ability to maximize the use of staff time and optimize the efficiency and effectiveness of the billing department relies upon a complete and coordinated cycle in the collection process. This cycle begins at the billing desk when the patient is there, collecting those funds that are available, and making sure that all insurance and mailing information is correct and updated, and then, utilizing the time appropriately, making certain that those items that begin to fall behind are caught early. Most practices find that these steps greatly increase the total efficiency of the accounts receivable collection function.

David H. Glusman, CPA, is a principal at Margolis & Company P.C. and is co-chair of the firm’s Healthcare Services Group.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.