Analyze your A/R in 5 minutes?
The accounts receivable (A/R) maintain a positive cash flow for your healthcare practice. Analyzing and tracking your A/R means ensuring the liquidity of your healthcare business all the time. Sales are good, but the concrete cash flows matter more. The A/R will state how your business is performing in terms of payment collection and revenue generation. Therefore, It’s essential to know how A/R can be analyzed. Automation through billing software will make your life easier and help you focus on the core activities. While billing software is the best method to manage A/R, your business isn’t entirely out of water. Let’s discuss how a physician can analyze their A/R successfully and find any discrepancies. Objectives of A/R Analysis The primary aim of A/R analysis is to find any discrepancies and solve them. Consider these additional objectives of A/R analysis: A/R Analysis Process If you are seeing some red flags in your receivables, the next step is to do the first level of analysis to validate your hunch. The analysis process depends on who is doing your billing. Monthly Collection Report Let’s say you run a preventative care and well service. Even though your practice is growing, you’re concerned about the recent revenue decline. Here’s a sample report that shows the total collection for the past month and should include all patient and insurance payments. Name Provider Service CPT Ins Paid Pt Paid Patient A XYZ 8/23/23 99214 $50 $75 Patient B XYZ 8/24/23 99213 $30 $20 Patient C XYZ 8/25/23 99205 $60 $100 Above table indicates a discrepancy in the monthly collection report. The insurance payment remained consistent, but the patient payment decreased. Upon reviewing the in-house billing department, you may find out that they aren’t sending patient reminders timely, leading to delayed payments. Implement a more proactive approach to patient billing to address this issue. Current A/R Report This report should show the current A/R, broken down by aging into 30-day buckets: Name Provider Service CPT Billed Ins Paid Pt Paid Adjust Balance Patient A XYZ 8/23/23 99214 $1200 $800 $100 $900 $300 Patient B XYZ 8/24/23 99205 $900 $600 $100 $700 $200 Patient C XYZ 8/25/23 99231 $300 $200 $50 $250 $50 Analysis of the current A/R report table reveals a few key insights: Pull Data from Billing Software The best A/R analysis can be performed through billing software. If you have access to billing software, run a billing report for a 12-month period with a start date going back 16 months through today and export the data in Excel or CSV format. This report should show you the following data for the claims You don’t need to chase the latest data or lose your patient’s contact information when you have access to a billing software for your healthcare practice. The aging schedule will help you know how many days have passed since you have generated the invoice.
How to identify red flags in medical practice AR management
Have you ever considered that unpaid claims can drain your medical practice’s revenue? Accounts receivable is the payment owed to your healthcare practice for the products and services delivered. Effective AR management is the method of ensuring that insurances settle their dues consistently on time. Most healthcare providers are concerned about whether their billers are collecting the dues effectively. Having integrated billing/EMR software, skilled billers should set aside 35%-50% of their time to manage unpaid claims in AR. Let’s take a look at a few red flags in medical practice AR management. Increased Denial Letters Denial letters are like hints about your practice’s money health. Getting lots of denial letters or explanations of benefits (EOBs) with no payments? It’s a signal that something’s off in your payment process. Denial letters can occur due to: The denial letters tell you to look closer at your practice’s earnings and what’s owed. If you’re seeing a higher number of denial letters or EOBs with no payments, you need to focus on AR management. Failing to Collect Enough Payments Poor AR Management will cause a revenue dip. If your healthcare clinic is collecting fewer payments, there might be some issues with your account receivables. Improper AR management will delay claim processing and increase the number of denial letters. However, there’s an easy method to verify. Pull up your healthcare business’s last 6 months of bank statements instead of relying on the billing software. Month Total Revenue Total Payments Collected January $100,000 $90,000 February $95,000 $85,000 March $90,000 $80,000 April $85,000 $75,000 May $80,000 $70,000 June $75,000 $65,000 From this table, we can say three things: If you cannot correspond the revenue decline to the number of visits, there’s likely a billing issue. Contact professionals in case of any suspicion. A/R is Increasing A/R in healthcare can increase and pile up for numerous reasons. Delayed or denied reimbursement from insurance companies and mistakes in medical coding will lead to outstanding payments. In addition, if patients don’t settle their dues promptly, A/R will start piling up. To verify this, create a chart of monthly account receivables of your healthcare. If your clinic is large and sees a stable number of patients every month, then A/R should stay constant. If the number is increasing every month, there might be an issue. Month Accounts Receivable (A/R) January $10,000 February $20,000 March $32,000 April $40,000 May $45,000 June $60,000 This table reflects A/R of a healthcare practice is piling up due to delayed or unpaid payments, potentially affecting the clinic’s cash flow. It could also mean that the denials are increasing and you need to identify and fix them. Also Read: How Can a Physician Analyze Their A/R? Amount Over 120+ Days is Higher A higher A/R amount in the 120+ days bucket would indicate a severe financial scenario. Collecting payments beyond this timeframe would be harder. Inefficiency in the billing and collection process contributes to high A/R aging, which would require immediate attention. You can get an A/R report either from your biller or your billing system to cross-verify. The reports should showcase the amount of money sitting in each 30-day bucket. Age Bucket Amount Percentage of Total A/R 0-30 days $40,000 40% 31-60 days $30,000 30% 61-90 days $3,000 3% 91-120 days $2,000 2% 120+ days $25,000 25% Total $100,000 100% The above table indicates that you have $100,000 total A/R outstanding, out of which $70k is your current A/R, and the 120+ day bucket comprises 25% of the total A/R. The amount that should reside within the 120+ bucket will vary from one practice to another and also depends on location, specialty, services, and other parameters. Usually, once the amount in the 120+ bucket crosses the 15% mark, the overdue payments would require urgent attention and resolution. While this doesn’t necessarily mean something is going wrong, you still need to search for the reasons. Monitor the 120+ bucket for the next few months to evaluate steadiness. Summary So, where does this leave us? If you’re not noticing any of the warning signs mentioned earlier, does that mean your biller is effectively managing your A/R? As we’ve seen, assessing overall revenue and outstanding receivables can boost A/R management, as we’ve seen. However, there are some things providers need to consider: At Primrose, we believe each healthcare provider has its medical billing requirements. Our streamlined billing process will help you with accounts receivable and end-to-end billing.