Strategies to Improve Accounts Receivable (AR) in Healthcare

For healthcare providers, a healthy stream of incoming revenue is crucial for delivering quality care which depends upon the total time consumed during accounts receivable. Several aspects of the RCM process affect accounts receivable including medical billing, coding, and denial, among others. Among these, medical billing is one of the crucial aspects that can be complex, due to which, a significant portion of revenue often gets tied up in accounts receivable (AR). This can disrupt cash flow and hinder ability to invest in growth. Accounts Receivable (AR) refers to the money owed to a medical provider or organization for the services rendered to patients. In other words, it is the outstanding bills waiting to be collected, from either patients themselves or their insurance companies. Understanding AR is crucial for maintaining cash flow and ensuring the financial health of a healthcare organization. 

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Understanding the AR Challenge in Healthcare

Several unique factors contribute to AR challenges in healthcare:

• Complex insurance landscape: Healthcare providers face a challenging insurance landscape with varying rules, coverage limits, and procedures across different plans. Often healthcare providers are unable to navigate through these complexities and end up making mistakes in their claims.  In such cases insurance companies then reject faulty claims due to various reasons like missing information, late filings, lost claims, duplicates, or coding errors which results in outstanding payments and aged accounts receivable. 
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• Failure of Payments by Patients: The rise of high-deductible health plans (HDHPs) has added a significant portion of medical expenses onto patients, who often struggle with high out-of-pocket costs. This has led to an increase in bad debts, where patients delay or fail to pay their medical bills, causing a buildup of accounts receivable for healthcare providers.
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• Unwarranted Write-offs: Healthcare providers sometimes write off unpaid medical bills, removing them from accounts receivable and recording them as losses. Manual collection processes are prone to errors, leading to premature or erroneous write-offs. These unwarranted write-offs can result in considerable revenue loss, undermining a provider's financial stability and contribute to aged accounts receivables. 
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• Disorganized Collection Process:  It can arise from manual systems that use paper records or spreadsheets, which are error-prone. Additionally, a lack of clear policies for tracking payments and following up on overdue accounts leads to confusion and inefficiency, causing delays in identifying unpaid balances and hindering timely action. Effective collections are crucial for healthcare providers' financial stability. When the collection process is disorganized, unpaid balances can accumulate, ultimately impacting accounts receivable.
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Strategies to improve Accounts Receivable in Healthcare 

Enhancing accounts receivable (AR) in healthcare requires a varied approach that addresses various stages of the AR process. Here are some strategies to optimize AR performance in healthcare:

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Verify Patient Eligibility and Coverage:

• Verify patients' insurance coverage and eligibility before providing services to minimize claim denials and delays.
• Implement real-time eligibility verification tools or integrate eligibility checks into the patient registration process.
• Educate front desk staff about the importance of obtaining accurate insurance information and verifying coverage prior to patient appointments.
• Clearly define payment policies that outline expectations for patients, such as due dates, late fees, and consequences of non-payment and  communicate to patients upfront.
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Optimize Documentation and Coding:

• Ensure thorough and accurate documentation of patient encounters to support appropriate code selection and billing.
• Provide training and resources to healthcare providers and coding staff to improve documentation practices and coding accuracy.
• Conduct frequent audits to identify coding errors, insufficient documentation, and areas for improvement.
• Ensure accurate and timely submission of claims by implementing electronic claims submission systems.
• Use modern technological solutions, such as AI and data analytics to automate coding, billing, and claims generation processes, reducing errors and speeding up claim processing.
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Implement Effective Denial Management Processes:

• Develop robust denial management protocols to identify and address the root causes of claim denials promptly.
• Analyze denial trends and patterns to identify common issues to implement corrective actions.
• Establish clear workflows and responsibilities for denials management, including timely follow-up, appeals, and resolution.
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Optimize Payment Posting and Reconciliation:

• Automate payment posting processes to reduce manual errors and accelerate cash posting.
• Implement electronic remittance advice (ERA) processing to streamline reconciliation of payments with remittance information.
• Regularly reconcile payments received with expected reimbursements to identify discrepancies and address them promptly.
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Strengthen Payer Relationships:

• Develop collaborative relationships with payers through proactive communication, contract negotiations, and performance monitoring.
• Regularly review payer contracts to ensure compliance with reimbursement terms and identify opportunities for improvement.
• Advocate for fair reimbursement rates and timely claims processing through active engagement with payer representatives and industry associations.
  
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Continuous Monitoring and Improvement:

• Establish ongoing monitoring and review processes to track AR performance metrics, identify areas for improvement, and implement corrective actions.
• Conduct regular staff training and education sessions to keep employees informed about changes in regulations, payer policies, and best practices.
• Foster a culture of continuous improvement and accountability, encouraging staff to contribute ideas and suggestions for optimizing AR processes. 
• Partnering with a third-party revenue cycle management company can help healthcare providers streamline their AR processes, leverage technology, and improve overall financial performance.
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Conclusion

Implementing a blend of these strategies empowers healthcare organizations to substantially enhance their AR performance and ensure smoother cash flow. Emphasizing proactive measures, leveraging technology, and maintaining clear communication must be at the helm of all administrative and financial processes with the aim of promoting a robust AR system and sustaining financial health within a healthcare practice.

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If you are a healthcare organization and wish to discuss how you can improve your Accounts Receivable, feel free to write to us at partnerships@homrcm.com

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