For a medical practice, effective A/R management is critical. Once a patient encounter is billed for treatment or services provided by your practice, getting paid accurately and on time matters. Unfortunately, that doesn’t always happen. Poor information entered into the EHR, documentation issues, and incorrect AI-related edits by insurance carriers can all delay reimbursement.
That is why accounts receivable billing and consistent A/R follow-up are so important. If claims are not followed up on properly, balances age, cash flow suffers, and revenue gets harder to recover. The process can be frustrating, expensive, and time-consuming, but ignoring it is not an option.
Many practices, regardless of size, choose to outsource A/R follow-up. Done well, outsourced follow-up can improve collections, increase billing efficiency, and take a major administrative burden off your staff.
Understanding Managing Your Accounts Receivable
As a practice owner, you likely prioritize cash flow specifically, but it’s the labor-intensive process that makes medical billing & follow-up such a complex & costly process. Breaking down the specifics is a great way to determine whether or not you want your practice to be responsible for conducting its A/R follow-up without the assistance of a third party.
The first step when billing for service is ensuring the patient’s insurance & demographic information is correct. This necessitates reviewing the patient’s insurance ID card and their drivers license before service if possible; only once this is confirmed can the service be billed accurately.
That patient information is then assigned a procedure code corresponding to the treatment provided and diagnosis codes describing the condition. Accurate coding doesn’t just result in more accurate billing, it streamlines the treatment process by allowing medical practitioners to continue treatment or at least document the relevant facts for the visit. This coding info is used to calculate the amount owed, and filing the claim with the patient’s insurance company.
With the obligation of reimbursement in the hands of the patient’s insurance, the follow-up process begins. Once the insurance company pays the bill, the payment is posted and recorded in the patient’s account; the follow-up process is especially important since this step can’t occur until the insurance company has paid or denied the claim or part of the claim.
The denials and appeals process is where an outsourced A/R company plays the most critical role. In some situations, insurance companies may refuse paying claims due to coding errors or faulty edits, meaning those claims must be reviewed and resubmitted; this is very important to protect against revenue loss. Once the insurance company does process the claim, the degree to which the patient is financially responsible varies based on their insurance plan.
With the patient billed for the remaining balance, it’s up to your practice to consistently bill the patient with increasingly stronger dunning messages to ensure payments are collected in a timely manner. At this point, it’s very important to establish effective communication to streamline the collection process and make clear the patient’s obligation to pay.
Due to the extent of this entire process, and the healthcare industry’s ever-increasing focus on profitability, it’s simple to understand why practices are making the switch to outsourced A/R. However, what specifically makes outsourced A/R such a time-saving, lucrative venture for so many practices?
How Outsourced Medical Billing A/R Follow-Up Services Help
Practices largely consider outsourcing their billing and A/R follow-up to a third-party company because they see it as a sizable opportunity to increase their profitability, especially in areas where the revenue-decreasing effects of artificial intelligence payer edits are being felt much more frequently. In particular, hiring and retaining quality billing staff still proves very challenging due to the diminished supply of these employees.
Coding errors and other billing mistakes are detrimental to the reimbursement process of any practice, but outsourcing your medical coding, billing and A/R follow-up can also decrease the likelihood that such costly errors will occur. When you outsource to a third party, managing these functions is their sole priority, and something they have the proper time and expertise to excel in. While in-house staff could have A/R management as one of a number of responsibilities, outsourcing means putting this important task in the hands of capable professionals who can devote all their time and energy to the billing process. This minimizes the likelihood of errors, saves you money, and ensures you receive the reimbursement your practice is rightfully owed.
Outsourcing can also have a positive effect on the patient experience. With less time devoted to A/R follow-up services, your medical staff can devote more energy and attention to their patients. This not only elevates the patient experience, it allows medical practitioners to focus on what’s most important: providing patients a positive condition-management encounter, encouraging them to return to your practice in the future.
5 Strategies for Maximizing Accounts Receivable Efficiency
Whether it’s in-house or outsourced, properly conducted A/R follow-up is only as good as the preparation your practice puts in to ensure things proceed as smoothly as possible. With that in mind, these are some aspects of the process to consider in order to improve your accounts receivable while enhancing your cash flow:
- Communicate Clearly with Patients About the Potential Cost of Services. If a patient knows what to expect financially before any services take place, your practice is much less likely to face A/R delays. To encourage this, draft a Financial Policy document for patients to sign before any services are rendered.
- Follow-Up on Outstanding Accounts Diligently. In A/R, late payments are a fact of life, but how late a payment goes unpaid is something frequent reminders can curtail. This is especially important when you consider that the longer payments remain outstanding, the less likely they are to be paid. Bear in mind there are timely filing limits on appealing denials as well!
- Require Patients to Pay for Services Before Seeing the Practitioner. This will ensure patients will at least have a portion of their billed services paid for before there is time for any of it to be owed. This practice doesn’t decrease the amount of accounts that owe, but it can help to decrease the amount owed by each one.
- Increase the Rate of Your Billing Cycles. Simply stated, if you bill patients sooner for your services, their outstanding balances will be paid sooner. Some healthcare providers only bill patients once a month, but if you’re willing to consider increasing that rate, it may yield faster payments.
- Run A/R Reports Frequently. The more A/R days that accrue for an owed payment, the less likely it is for that payment to be fulfilled. When it comes to A/R management, minimizing the amount of days a bill goes unpaid is the top priority and this means A/R data should be closely tracked to ensure no accounts slip through the cracks. It is imperative that an A/R follow-up personnel sweep through the aging balances and “touch” them at least monthly.
3 Common Misconceptions About Outsourcing Your A/R
While outsourced medical billing services have become more popular in recent years, misinformation and common misconceptions about these services persist. The reality of these supposed downsides is more dependent on the needs of your practice than inalienable truths. Here are some of the most commonly spread misunderstandings about outsourcing:
- Outsourced Billing Is Only for Large Practices: This is a particularly ironic misconception, because in many cases, the opposite is true; outsourced billing is often more advantageous for smaller practices. Smaller practices have fewer resources and less money to channel into everything they need, and eliminating the costs associated with supporting in-house billing can be extremely useful in freeing-up resources that can be better spent on patient care or other areas. This also alleviates the cost and time that billing errors can take up, something smaller practices may have more difficulty accommodating than larger ones due to the many levels of expertise necessary to stay ahead of the payers.
- Outsourcing Means Losing Control Over the Billing Process: While it is true that outsourcing allows less control than in-house billing, some of that loss of control is actually a good thing for practices,and it’s important to remember that less control does not mean no control.It is imperative that review reports and ask for special reports that highlight and summarize new initiatives, etc. Generally, outsourcing your billing still allows for control over how your billing is conducted, and what the priorities of the practice are in this area. The transparency and ease of communication many of these billing companies allow for also means changes can be quickly communicated so billing is handled in the most efficient way for your practice.
- Outsourcing is More Expensive than In-House Billing: While paying for a third-party to conduct billing services sounds expensive, the reality is it’s usually less expensive than conducting that billing in-house. While paying for quality billing services isn’t necessarily cheap, not needing to pay for billing staff, training, onboarding, equipment, turnover and any additional costs that arise from errors or other liabilities means outsourcing costs significantly less than handling the billing yourself. Some outsourcing companies operate on a fixed rate, but others have a variable rate that fluctuates based on the revenue of your practice, and this too can sometimes be a way to save money.
A/R Improvement FAQs
How Often Should A/R Reports Be Reviewed?
A/R reports should be reviewed regularly, and for many practices that means at least weekly. Practices with higher claim volume or tighter cash flow may benefit from reviewing key A/R metrics even more frequently. The goal is to identify aging balances, denial trends, and unpaid claims before they become larger revenue problems. Waiting too long to review A/R often makes collections more difficult and reduces the likelihood of full reimbursement.
What Are the Most Common Reasons Claims End Up in A/R?
Claims typically end up in A/R because something interrupted the payment process. Common causes include inaccurate patient information, insurance eligibility issues, coding errors, missing documentation, authorization problems, claim denials, and payer underpayments. In some cases, the claim was paid incorrectly and simply requires follow-up to recover the remaining balance. The longer these issues go unresolved, the harder it becomes to collect what is owed.
When Should a Practice Outsource A/R Follow-Up?
A practice should consider outsourcing A/R follow-up when outstanding balances continue to grow, collections slow down, or internal staff no longer have the time or resources to stay on top of unpaid claims. This is especially common when front office staff are balancing too many responsibilities or when billing teams are understaffed. Outsourcing A/R follow-up can help improve collections, reduce aging accounts, and allow your internal team to stay focused on daily operations and patient care.
Boost to Your Practice’s A/R
Proper billing practices, and by extension, proper A/R follow-up is vital to the revenue stream of any practice, but conducting it can also be disruptive to the time, resources, and finances of a practice. Because of this, it’s important to understand that outsourcing your billing can be just as, if not more beneficial to your practice, than making sure the billing process is conducted correctly in-house.
In-house billing may offer a greater degree of control, but it also leaves practices susceptible to a greater degree of loss and liability, as well as expending time and money which could be better used elsewhere. If you’d like to learn more about outsourced medical billing, and the importance of proper A/R management, contact Practicefirst today!
