Hospital accounts receivable is the total amount of money that you owe from your patients and their insurance companies. You can also consider hospital AR as the pending invoices or delinquent accounts.
However, according to the Centers for Medicare and Medicaid Services, almost 70% of the claims are paid on the first try. The remaining 30% are denied, lost, or ignored. In this blog, we’ll look at why some practices and hospitals overlook their accounts receivable (AR) and how you can keep your AR plan on track to recover your revenue.
What is Hospital Accounts Receivable?
Denials take up time and resources, and 60% of them are never resubmitted to insurance companies. As a result, 18% of denied claims go uncollected, hurting the practice's finances.
Hospital accounts receivable include payments due from insurance companies, patients, and others. Every healthcare practice aims to get paid on time and manage AR effectively. If AR increases, it may mean copays aren't being collected upfront, which could lead to cash-flow problems if not addressed.
To streamline a perfect hospital accounts receivable management process, you must know about the “delays in accounts receivable days” first so that you can take the proper measures to keep the AR days low.
What is the standard for days in Hospital AR?
In practice, "days in AR" is used to measure accounts receivable. It’s calculated by dividing the total AR by the average daily charges. For instance, if a practice has "50 days in AR," it means payments are expected within 50 days of the service.
“Age of payment” is not considered by your hospital accounts receivable. It is the time since you first billed your patient or their insurance company for the provided course of treatment. There is another way to categorize your delinquent accounts- based on their age. There are four age buckets-
- 0-30 days
- 31-60 days
- 61-90 days
- 91-120 days
You should always leverage this metric to measure your hospital payment collection rate. You must keep a proper monthly track of your AR percent and always compare that to the previous month to know whether it has improved or not. The more an account is aged, the less likely you are to receive full payment from that account. The reality is you will only receive 10 cents per dollar from an account aged 120 days or more.
There are several factors like poor economy, high amount of deductibles; new regulation like Affordable Care Act can cause your hospital to face delayed reimbursements. The higher number of denials and underpayments always make it challenging for your hospital to get reimbursed properly. At the same, your primary objectives should be to increase revenue, cut operational costs and ensure optimal patient care.
How to improve hospital AR collection?
You can drastically reduce operational costs and improve patient care by leveraging the following things-
- Using electronic health records (EHRs)
- Advanced patient portal
- A streamlined revenue cycle management process
The revenue cycle is crucial, starting from when a patient makes an appointment or visits your practice and ending when all payments are collected and posted. If a claim isn't paid on the first submission, it’s unlikely you’ll ever get the money. Here are some strategies to improve your accounts receivable:
Catch potential denials before you even submit claims to insurance companies. This way, your claims are more likely to be paid on the first try. Use an advanced tool designed to spot claims that might get denied. The best software updates regularly and adapts to new rules to reduce denials and boost collection rates. Look for software with a high first-pass resolution rate (FPRR), which means it helps you get paid on the first submission. By catching potential denials early, you can submit more accurate claims and get them processed faster. This prevents the hassle of reviewing denials and following up with insurance companies.
Traditionally, account receivables were tracked every 30 days. But since different insurance companies have their own schedules, you’d need to handle each payer’s receivables differently. The best approach is to use the methodology that tracks receivables daily. This way, you can create letters, resubmit claims, and send them to the collector’s queue as needed.
A smooth revenue cycle helps ensure you get paid accurately and fully for your services. Electronic remittance advice (ERA) messages from insurance companies are computer-readable reports showing payments received. The right ERA helps you collect more, work more efficiently, and get paid faster.
Wrap up
Hire one of the best hospital AR outsourcing companies to manage your accounts efficiently and increase your overall collection drastically. Outsourcing also enables you to invest more focus and time in patient care so that you can achieve more patient satisfaction score.
If you are looking forward to hiring one of the best Hospital AR recovery services, look no other than Sunknowledge. As one of the leading RCM companies in the nation, this company has enabled more than hundreds of hospitals across the nation to streamline the perfect hospital accounts receivable services.
