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Outsourcing Account Receivable

Accounts receivable management (AR) in healthcare is the management of payments due either from the insurance companies or the patients to physicians. These payments are for provider care services. It is important to manage these payments effectively and balance them all on time to avoid financial downfalls from revenue loss. The benefits of outsourcing account receivable are much more than sustaining regular cash flow from patients or insurance providers. Plus, outsourcing RCM services ensures avoiding AR accumulation – which would otherwise affect the practice’s financial goals.

The quality and efficiency of accounts receivable management are key requirements for keeping the monthly cash flow of a healthcare practice. Missing out on AR follow-ups can end up triggering revenue pitfalls, essentially affecting the continuity of the business. Effective and daily management of AR helps avoid AR aging of claims older than 60 days. The benefits of outsourcing account receivable also help keep your practice’s financial goals steady and profitable.

Reasons for Medical Practices Losing Money

Most medical practices lose money due to a lack of comprehensive policies, procedures and even due to internal oversight control, which leads to loss of revenue. Some of the common reasons for practices losing revenue include:

  1. Account receivable backlogs
  2. Not having the right personnel to manage the RCM process
  3. Failures in collecting co-insurance and patient co-pays
  4. Not instating an efficient insurance eligibility process
  5. Unable to effectively manage denials
  6. Unnecessary or excessive write-offs
  7. Not leveraging the benefits of outsourcing account receivable
  8. Not focusing on patient collections
  9. Inaccuracies in coding
  10. Not utilizing the claims edits system
  11. Being unable to match patient consumerism demands/trends
  12. Failure to consistently manage KPIs

In 2020, healthcare systems and hospitals in the USA faced a massive loss of over $202 billion in revenue. The figure comes close to $50.7 billion per month – according to AMA (American Hospital Association).
So, what is the solution?
One of the most effective ways healthcare practices address these challenges is by ensuring timely payments for the provided services. It can be done through close examination of days in A/R in addition to instigating appropriate measures for optimization. Doing so will not only help healthcare practices to establish solid foundations, but it will also set their course for long term financial success.

Reasons for Medical Practices Losing Money

Outsourcing account receivable management to a third-party billing company offers several benefits that contribute to the financial stability of healthcare practices. These advantages are vital for maintaining a consistent flow of revenue, covering daily operational expenses. Here are the essential benefits:

Providing Financial Stability

Efficiently recovering accounts receivable is essential for financial stability in healthcare practices. Dedicated efforts in collecting outstanding payments ensure consistent reimbursements, addressing day-to-day operational needs.

Claim Status Transparency

Next on the benefits of outsourcing account receivable is the status of each submitted claim. AR teams diligently track the status of every submitted claim through various channels, such as the provider portal, billing software, and phone communications. Each claim is categorized as paid, partially paid, denied, or under process. The billing software reflects timely updates on paid claims, while denied and partially denied claims are flagged for denial management.

Accelerated Receiving of Denied Payments

The primary focus of accounts receivable management is accelerating reimbursements for denied claims. Swift processing leads to a more robust revenue cycle management, ensuring a steady revenue inflow for healthcare practices.

AR Aging Report Insights

Third-party RCM services offer regular AR aging reports, either weekly or monthly, based on practice requirements. It is yet another one of the benefits of outsourcing account receivable. These reports break down outstanding debts, indicating which accounts are delinquent and for how long. This approach allows practices to address issues with habitual late-payers, facilitating timely intervention through collections or discontinuation of services and mitigating credit risks.

No Need to Hire In-House AR Teams

Outsourcing accounts receivable services eliminates the need to hire in-house billers or AR callers. The denial management team comprises experienced professionals in various medical specialties. They meticulously review each denied claim, understand the associated codes, and initiate appeals with improved information, sparing practices from the burden of additional staffing expenses.

Cost-Effective Solution

Many practices lack effective strategies to minimize or regularly address Accounts Receivable (AR). Ignoring AR claims and delaying their resolution can result in the accumulation of aging AR buckets, causing missed claim submission deadlines and reducing the likelihood of reimbursement. It’s essential to recognize that this accumulated revenue is vital for covering various expenses, such as staff salaries and business-related costs. Neglecting these financial responsibilities month after month can become intolerable and challenging to manage over time.
Furthermore, the implications of neglecting accounts receivable can be detrimental to a medical practice’s revenue. Outsourcing Account Receivable management to a reputable medical billing company offers a strategic solution. The benefits of outsourcing account receivable management include:

  1. Process efficiency
  2. Timely processing
  3. Increased collection possibilities
  4. Cost-effectiveness, and more.

By embracing outsourcing, healthcare practices can work around the intricacies of billing more effectively and ensure sustained financial health.

Implications of Account Receivable Backlogs on Your Practice Revenue

Better management of denied claims before those even leave your office can effectively bypass the resource-draining process of reworking. Doing so will also increase compensation coming in on your first claims submissions, in addition to lower leakage, can improve your revenue cycle. Doing so can achieve a better ROI, with even fewer headaches of reprocessing claims.

Conclusion

Better management of denied claims before those even leave your office can effectively bypass the resource-draining process of reworking. Doing so will also increase compensation coming in on your first claims submissions, in addition to lower leakage, can improve your revenue cycle. Doing so can achieve a better ROI, with even fewer headaches of reprocessing claims.

Frequently Asked Questions

The most common reason for denied claims is incorrect information. Be it by accident or intentionally, coding and billing errors are the most common reasons for claims denials due to incomplete, missing, or incorrect information.

Your billers can forward an appeal letter to the insurance provider stating why you believe the claim denial is wrong, thus, requesting the insurance company to reverse the denial.

It is a strategic process that aims to resolve and unmask problems that lead to claim denials.  

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