It is becoming increasingly more important for medical practices to be proactive in managing accounts receivable (AR). Despite the increasing expenses that providers are faced with, payers continually reduce the amounts they will pay for medical services, so practices of all kinds are operating on leaner margins than they have in the past.
Unpaid Claims Can Usually Be Resolved
Industry-wide research has recently found that medical organizations are losing up to 25% of their revenue by not following up on rejected or denied claims. It is important to understand that when a claim is rejected before it is even reviewed, the cause is likely to be a simple clerical error.
Payers will not attempt to figure out what the error is and correct it, they simply reject the entire claim. Transposed digits in the patients account number or a misspelled name are all it takes to cause a claim denial. Clearly, it’s important to check for these errors before submitting the claim, but it’s equally important to fix them if the claim is rejected.
When a claim is reviewed and the payer refuses to pay or underpays, the AR recovery team needs to determine what went wrong in the coding that caused the problem, correct it and submit an appeal. It can be tedious work for medical personnel, so we recommend outsourcing AR recovery (along with the rest of your medical billing) to a business like Medcare MSO that is completely dedicated to medical revenue cycle management.
Good Communication with Patients Results in More Payments
In addition to the payment that is due from the insurer, there is also usually a part of the bill that the patient is responsible for. This information is available when the insurance coverage is confirmed prior to setting an appointment. Informing patients what their cost will be up front helps them feel they are being treated fairly. If a copay is required, it is helpful to collect it at the appointment rather than billing for it later.
There is a tendency for medical staff to let small balances go unpaid, but these small amounts can add up over time, so it is really better for all concerned to bill patients for the amount they are responsible for paying.
For more expensive procedures, the patient may need to set up a payment plan, and again, open communication is helpful. It is gentler and more effective to send a reminder immediately when a payment is late or missed than to let the account get far behind and sent to a collection agency.
Analysis of AR Processes Results in Better Practices
The AR department should keep track of some basic statistics, like the percentage of payments due that is actually collected, the average number of days bills are outstanding, etc. It is also helpful to generate reports showing more detailed information, such as the amount of each denial and the payer. That way you can see if you are having trouble with large or small claims and if you have regular denials from the same payer, you will know that you need to make sure you aren’t simply failing to meet some unique requirement of theirs.