Your practice is dedicated to patient care, but maintaining a steady revenue flow is just as important. Long accounts receivable cycles and claim denials can be frustrating, directly affecting your financial health.
However, slow revenue cycles follow recognizable patterns. Identifying these patterns allows you to address the root causes. Below are the most common reasons for payment delays in revenue cycle management, along with effective solutions to resolve them.
Coding Errors
Inaccurate or incomplete coding is a common reason for payment delays. Every medical service needs to be accurately coded using the ICD-11 (International Classification of Diseases) or CPT (Current Procedural Terminology) codes. These codes are used to represent diagnoses and procedures for insurance claims. If a healthcare provider submits a claim with incorrect codes, the insurer might reject the claim, delaying payment.
| Example: A patient visits a clinic for a routine checkup, and the healthcare provider accidentally codes a minor condition as something more severe. The insurance company may flag the claim, ask for further clarification, or deny it altogether. This will require the provider to re-submit the correct coding, which takes time and delays the payment. |
Solution:
Implement thorough training and ongoing education for coding staff. Using automated coding software or tools with built-in error-checking can reduce mistakes. Having a dedicated coder review claims before submission can also help ensure accuracy. Additionally, regularly updating coding knowledge to stay current with changes in ICD and CPT codes is crucial.
Insurance Verification Issues
Before a service is provided, it’s essential to verify the patient’s insurance coverage. If the insurance information is incorrect, incomplete, or outdated, the claim might be delayed. Verification ensures the patient’s coverage is active, and the provider can receive payment for the services rendered.
| Example: A patient shows up for an appointment and provides outdated insurance details, leading to a mismatch during verification. This causes the claim to be delayed, as the insurance company will need to verify the correct details or may deny the claim until it is resolved. |
Solution
Perform insurance verification before the patient’s appointment to ensure that their insurance information is up-to-date and accurate. Using automated tools or software to verify insurance information in real time can reduce delays. Having a dedicated team to verify insurance details early in the process helps to catch potential issues before they impact the claim.
Prior Authorization Delays
Many insurance plans require prior authorization before certain treatments or medications are approved. If the provider fails to obtain this approval beforehand, the claim might be delayed or denied. Prior authorization is a necessary step to ensure that the insurance company will cover the procedure.
| Example: A doctor orders an MRI for a patient, but fails to get prior authorization from the insurance company. When the claim is submitted, the insurer denies it, and the provider must wait for the authorization or appeal the decision before getting paid. |
Solution
Proactively manage prior authorizations by starting the process well before services are scheduled. Using software tools that track and automate prior authorization requests can ensure that approvals are obtained in a timely manner. Train staff to clearly communicate with insurance companies to get necessary approvals in advance.
Claim Denials
Claims can be denied for various reasons, such as coding errors, incomplete documentation, or coverage issues. When a claim is denied, it requires resubmission or appeal, which delays payment. In some cases, a claim denial can be a result of a simple mistake that can be corrected and resubmitted.
| Example: A claim for a routine procedure is submitted with missing information about the diagnosis. The insurer denies the claim, asking for the missing details. The healthcare provider must resubmit the claim with the correct information, leading to a delay in payment. |
Solution
Ensure claims are complete and accurate before submission. Regularly audit the claims process to identify common reasons for denials and address them proactively. Set up a system for timely appeals and re-submissions of denied claims, as well as staff trained to handle denials efficiently. Many denials can be resolved quickly with accurate documentation and follow-up.
Lack of Follow-up
Once a claim is submitted, regular follow-up with the insurance company is essential to ensure payment is processed. Without proper follow-up, claims might get overlooked or lost in the system, leading to delays.
| Example: A medical billing team submits a claim but does not follow up on the status. A few weeks later, they discover that the claim was lost or never processed. The team now needs to resubmit the claim, which causes a delay in payment. |
Solution
Establish a regular follow-up system for claims. Automating this process using RCM software that tracks the status of claims and sends reminders can significantly reduce the risk of overlooked or forgotten claims. Designate a team or individual responsible for following up on all outstanding claims and ensure timely communication with insurance companies.
Account Receivable (AR) Recovery
Accounts Receivable (AR) delays payments in revenue cycle management when outstanding claims remain unpaid for extended periods, leading to cash flow disruptions. Common causes include aging claims that exceed 30, 60, or 120 days, increasing the risk of non-payment. Denied and rejected claims due to coding errors, incomplete documentation, or insurance verification issues further slow down reimbursements. Insufficient follow-ups leave claims unresolved, while payer delays caused by policy changes or additional documentation requests add to the problem. Patient balances also contribute to revenue loss when payments remain uncollected.
| Example: A multi-specialty clinic notices a growing backlog of 120+ day unpaid claims, leading to revenue loss and cash flow issues. Their AR aging report shows 30% of claims are stuck in long-overdue status due to claim denials, underpayments, and lack of timely follow-ups. |
Solution
Optimizing AR management requires a structured approach. Implementing the IMMP strategy—Identify, Monitor, Measure, and Prevent—helps address claim issues before they cause payment delays. Proactive follow-ups ensure claims are regularly tracked and escalated when necessary. An effective denial management process, combined with immediate appeals, minimizes revenue loss.
Patient Billing Issues
Patients themselves can contribute to delayed payments. If they are unsure of their financial responsibility or if there is confusion about billing, it can result in delayed or missed payments. Clear communication with patients about their insurance coverage, copays, and out-of-pocket expenses can help prevent delays.
| Example: A patient is unsure whether a procedure is covered by their insurance, so they delay paying their part of the bill. This delay in payment can hold up the overall payment process, especially if the healthcare provider is waiting for the patient’s contribution to complete the payment. |
Solution
Clear communication with patients about their insurance coverage, copays, and out-of-pocket costs before the service is rendered can prevent billing confusion. Providing multiple payment options and clear, easy-to-understand bills also helps improve payment collection. Setting up automated reminders for patients about upcoming payments or balances due can encourage timely payment.
The Bottom Line
These seven reasons — coding errors, insurance verification issues, prior authorization delays, claim denials, AR recovery, lack of follow-up, and patient billing issues — all contribute to delayed payments in the revenue cycle. By addressing these areas, healthcare providers can reduce payment delays and improve their overall revenue cycle efficiency.
