Handling accounts receivable is one of the crucial components of your hospital billing system. The advent of accounts receivable is the total amount of money you owe your patients and their insurance companies. Simply put, hospital accounts receivable can be considered as delinquent accounts or pending invoices. In the complex and dynamic environment of the hospital industry with continuously evolving federal and private healthcare insurance regulations, an efficient management of hospital accounts receivable services plays a significant role in ensuring the financial stability of your practice. Some of the major pitfalls that most hospitals encounter are delayed reimbursements, underpayments and denied claims. Prior to navigating the frequent challenges associated with hospital accounts receivable, you need to have a clear idea about accounts receivable.
Grasping hospital accounts receivable:
Ideally, claims must be submitted within 3 working days after providing the services. You can expect to receive payments from a patient’s insurance company within 14 working days if the claim is fully clean. In 2022, the American Hospital Association revealed a shocking reality: nearly half of the hospitals and healthcare systems across the nation were drowning in debt, with each holding a staggering $100 million in delinquent accounts that had been overdue for more than 180 days.
If you have been constantly dealing with late collection and skyrocketing overdue payments, it would cause your hospital to face increased days in AR. “Days in AR” is the average claim reimbursement time based on your practice’s daily charge volume. When it comes to identifying the critical areas for improvement and ensuring a healthy state of financial stability, measuring your hospital AR days is crucial.
You can measure the days in AR by dividing the total accounts receivable by the daily charges. American Academy of Family Physicians always recommends keeping the days in AR below 50 days. Though, the span of 30-40 days is the perfect one that you should aim for.
Another pragmatic way to segment your delinquent accounts is by considering their age. There are 4 age buckets for classifying AR:
- 0-30 days
- 31-60 days
- 61-90 days
- 91-120 days
The harsh reality is that as accounts age, the chances of recovering payments plummet. For instance, when an account is over 120 days old, you can expect to recover just a mere 3 cents for every dollar owed.
Monitoring AR days is crucial for understanding the time it takes to collect payments, allowing you to implement strategies to boost collections and enhance your overall revenue cycle. For example, a hospital noticed their AR days were steadily increasing, indicating delays in payment collections. By analyzing this data, they identified bottlenecks in their billing process and implemented targeted solutions, ultimately reducing AR days and improving their cash flow.
The common factors that lead to increased hospital AR days are-
- Delays in filing claims
- Inefficient process of insurance eligibility verification
- Coding errors
- Inaccurate data entry
- Increased claim rejections
- Poor process of appealing
- Delayed credentialing process
- Poor payment posting process
- Significant amount of out-of-pocket payments for patients and failure to collect the amount on time
Luckily, you still can manage to improve hospital accounts receivable with some powerful strategies as mentioned below:
Powerful strategies to improve accounts receivable services:
1. Insurance verification before patient appointment:
Accurately identifying a patient’s current insurance information is essential to determine their exact coverage and potential out-of-pocket expenses. Your front-end staff should collect and verify details like insurance, demographics, and contact information, ensuring it’s updated before each appointment. For example, a patient might have changed insurance providers since their last visit. By verifying their eligibility beforehand, you can identify any outstanding balances from previous visits, allowing you to address payment issues upfront and avoid surprises later.
2. Patient education:
You must clearly inform patients about all the insurance benefits, limitations, and potential out-of-pocket payments in advance. You should draft a clear payment policy that outlines your payment expectations from your patients and their insurance companies.
3. Payer communication:
Collecting payments from insurance companies is crucial for the overall financial health of your practice. It is important to implement a follow-up plan so that you can communicate with the payers to know about the real-time payment status. It enables you to track all your hospital accounts receivable efficiently.
With the right team and efficient processes, you can optimize your AR management. By partnering with a top hospital accounts receivable service, you can focus on patient care while your partner handles all aspects of AR management. A reliable AR management and virtual assistace partner ensures timely collections and reduces AR backlogs, keeping your practice financially healthy.
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