Are You Effectively Converting Your Accounts Receivable into Cash?

Are You Effectively Converting Your Accounts Receivable into Cash?

By: Candice Smith Director, HealthCARE Express Billing Converting your accounts receivable into cash is a critical process in the development of healthy cash flow in any business. The business you run, however, makes things a bit more complicated. Why? Let’s see… In the Medical Practice setting, your patients come into your clinic to be seen by a provider. Your billing staff then submits a claim to the patient’s insurance carrier. After payment is rendered by the insurance, you still must collect what is due under the “patient’s responsibility”(i.e. deductible, copay, coinsurance, or all of the above). This balance is your clinic's nightmare! So how can you effectively convert it into cash? Mistake #1: Not Verifying Insurance Before Seeing a Patient If you knew that you only had a 35% chance of collecting copays, deductibles, and coinsurance after a patient leaves your Medical Practice, would you do everything in your power to collect it? Now you know! The current industry standard is patient accounts have a 65% chance of not being collected if the front end staff doesn’t collect it at during the patient's visit. Surprised? You’re not alone. Many Medical Practices do not collect on balances or do insurance verification during the patient’s visit, leaving lots of uncollected revenue on the books. As a result, AR days sky rocket out of control. Don’t worry, all hope is not lost. If you depend on your patient accounts team to collect patient balances on the backend, you have to have impeccable communication between your billing team and your front line staff. Setting up systems that alert your front desk staff if a patient owes money can aide in collections should that patient return to be seen before you send out a statement. A good rule of thumb is statements should be generated once a month for 3 consecutive months. If there is no payment made, a last chance letter should be mailed to the patient acknowledging that the account is 90 days past due. If there is no payment after this letter, a call should be made asking the patient, "What can we do to help you get this balance paid with no further action?” If the patient still refuses to pay, the account should then be sent to the collection agency. This gives your patient a total of 120 days to pay a balance with no adverse affect to their credit. Mistake #2: Not Understanding your Fee Schedules and Allowables One of the biggest mistakes Medical Practices make is not properly training their front desk staff on insurance verifications and fee schedules. Proper training helps ensure every patient is verified before seeing a provider and pays their copay and/or coinsurance amounts before leaving their visit. Fee schedules should be updated frequently in order to give the front desk an accurate allowable amount to work with when collecting deductibles. Online verification sites provided by the payers are also a must in getting the patients verified in a timely manner. These sites often provide training to help your team understand verification processes. Mistake #3: Not Setting up Payment Arrangements Finally, if a patient’s account ends up needing to go to collections, make sure you have truly exhausted all other avenues, including offering to set-up payment arrangements and mailing discount letters. Remember, most collections agencies charge a fee of about 7% of the balance, and even then, collections aren’t always guaranteed. Certain times of the year, like Christmas, are more difficult to collect money from patients. During these times, it may be a good idea to make an extra phone call or two before sending someone to collections. It turns out, that’s all the collection agency will be doing, too.