When delayed reimbursements begin to pile up, an efficient medical accounts receivable services become a necessity to ensure the financial health of providers.
Effective accounts receivable service in healthcare ensures financial stability of providers. A successful medical practitioner must have access to a specialized team that can manage such procedures effectively. This team should have precise knowledge of such norms and regulations; and should be persistent in making multiple follow-ups to ensure proper revenue cycle management.
What are medical accounts receivable services?
In healthcare, accounts receivable (AR) refers to the money owed to medical providers for patient care rendered but not yet paid. The duty of such services providers lies in managing, tracking and collecting such due amounts from patients as well as insurance companies. These service providers mainly focus on minimizing medical accounts receivable days, tackling claim denials, and speeding up cash flow by pursuing outstanding balances, leading to quicker reimbursements and enhanced financial stability.
Some of the important elements of such services consist of engaging with insurance payers and patients regularly to address payment hold-ups. Another important aspect here includes precisely documenting received payments and updating financial records. Such service providers also help in shortening the duration from service provision to complete payment (typically aiming for less than 30-60 days).
Why providers struggle with their healthcare accounts receivable
In healthcare revenue cycle management, managing such processes is the most challenging aspect. Providers frequently face difficulties in collecting their payments from insurance companies on time, which negatively impacts their cash flow. Some of the most common operation and administrative issues that cause challenges in accountable receivable includes:
1) Higher Claim denials: This is one of the most significant reasons for accounting for receivable challenges in healthcare. As per industry experts, the number of claim denials in healthcare is only increasing with 20% of all initial medical claims being denied. The reason for such can be insurmountable, and includes errors in coding, inaccurate documentation, untimely filing of claims and so on. When denials are not addressed properly, it creates a delay for providers to get reimbursed for their services rendered further increasing the number of outstanding receivables.
2) Improper documentation: Insurance companies (even patients in case of co-pay, deductibles and so on), often fail to make timely payments. This happens when there are discrepancies in claim submissions and requirements for additional documentation to justify medical necessity of services rendered. This increases the time for processing claims. Such delays overall are bound to significantly extend the payment cycle.
3) Delayed Claim Submission: Oftentimes medical providers do not have access to effective billing workflows at hand. This happens due to overreliance on manual processes, outdated billing systems, and inefficient claim tracking systems, and hence delay in the submission. All these can lead to not only errors in inefficient claim tracking systems as well.
Not only that, often staff shortages act as catalysts for creating such ineffective billing workflows. For example, as per expert reports, medical providers face 40% turnover rates in their billing departments.
4) Inconsistency in follow up: Without dedicated expert support, it becomes tough for providers to consistently follow-up given their primary focus stays on patient care. This basically reduces monitoring of accounts, persuasion of unpaid claims, and further hindering financial performance of the providers.
All these reasons lead to revenue loss for providers. Thus, for them to ensure efficacy of such processes, hiring a team of experts is a necessary step.
4 key features of professional medical accounts receivable services
Professional service providers help healthcare providers maintain their revenue cycle by managing their outstanding payments. They identify unpaid claims, constantly follow up with insurance companies (even patients), and resolve the issue promptly. 4 key features of such service providers which make these services essential for healthcare providers are listed below:
- These expert teams are dedicated to constantly following up with insurance companies. After the submission of claim, these professionals monitor the status of the same regularly. They try to make sure that the claim is processed correctly and within the time limit. If they identify that a claim is put on hold due, they promptly communicate with the insurers to resolve the same. Such proactive effort helps in reducing payment delays.
- Such service providers also analyze denied claims. They go to the root cause of any rejection, including coding errors, missing documentation, and incorrect billing information. After the issue is identified, they make corrections in the claim and make prompt resubmissions. This again reduces outstanding delays.
- These experts are also equipped at conducting the critical step of an aging accounts for receivable analysis. Through this, the professionals monitor and manage receivable balances based on their age, like 30 days, 60 days, 90 days, or more. Evidently, they prioritize the older accounts first and ensure they are resolved before they are termed under “uncollectible”.
- Lastly, these experts also are trained to manage patient payment collections. Given that deductible health plans are on the rise, patient responsibility has also increased over the years. Thus, such specialists communicate effectively with patients regarding outstanding balances and help them navigate through the billing process. This process helps providers obtain the payers' dues in a structured manner. Without hindering patients’ care experience.
Why outsourcing medical accounts receivable services is better than inhouse teams
Even though in-house teams are quite effective in managing such requirements; outsourcing is more calculative. This is because outsourced teams are much more cost-effective. Not only that, but these experts are also often dedicated resources requiring no internal training to navigate through the complicated procedures of the same.
Real life case example
A leading fertility clinic in New York, widely recognized for its advanced reproductive treatments and patient-centered care, faced ongoing challenges in managing critical revenue cycle functions due to its accounts receivable follow-up, and denial management. These operational hurdles were not only slowing reimbursement cycles but also affecting overall financial performance and administrative efficiency.
In such a case, the RCM solution company SunKnowledge showed a calculative approach in obtaining receivable amounts for one of the many infertility clinic clients they have. They conducted a thorough aging report analysis, identifying high-value claims in the 60+ and 90+ day categories. Not only that, but they also even went through payer-specific denial trend reviews and identified recurring issues and implemented targeted solutions. They identified that the provider had made systematic errors in prior authorizations, which resulted in a high number of claim denials. which resulted in a high number of claim denials
With a proactive approach, they were able to recover 39.42% of accounts receivable from 60+/90+ claims. Not only that, but they also even flagged some of the slow payers and recovered 10–12% via appeals from them.
Choose the right medical accounts receivable service provider
Ensuring effective management of of such processes is the most crucial step to managing the revenue cycle of providers. Complex steps like analyzing accounts receivable days, and making consistent follow ups, it becomes quite difficult for providers. Simply put, such an extensive amount of administrative work can negatively impact patient care, but at the same time not being able to manage such processes will lead to loss of cash flow. Thus, having access to a specialized team is a must who can take care of the providers’ revenue cycle. In today’s times, outsourcing such experts can be a better measure as it is much more cost-effective and resourceful.
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