Want your money faster? There are ways to improve your cash flow
Want your money faster? There are ways to improve your cash flow
Improving accounts receivable lets you pick low-hanging fruit
In the good old days, a physician treated a patient, submitted a claim to the insurance company, and a few weeks later got a check for the full amount of charges.
"Now it’s more like a war, and every day you have to be prepared for different battlefields for each insurance company. But at the end of the day, [AR] is the revenue stream for your business and that’s why it’s critical to get paid," says Elizabeth Woodcock, MBA, FACMPE, an Atlanta-based consultant with the Medical Group Management Association (MGMA) in Englewood, CO.
Savvy physician practices devote a lot of time to analyzing and managing their [AR], adds Tammy Tipton, principal of Appeals Solutions, a Lewisville, TX, consulting firm that specializes in insurance reimbursement. "There are many different philosophies in practice management, but the bottom line is: You want to get paid for the work you do. Once you get into analyzing [AR], it can be very rewarding because small changes can have really big results," she says.
In the past five years, physician practices have put a higher priority on AR management, but many fail to look at the entire process, Woodcock adds.
It’s not that difficult for a physician practice to improve its AR collection rate, asserts Dan Steck, director of the MGMA Consulting Group. "It’s low hanging fruit for a lot of groups," he adds.
Woodcock outlines a five-stage process for managing AR that begins with negotiating the contract with the payers. "The billing office that manages the priorities is the most successful. Those who manage the five-stage process equally do best," she says.
The stages are:
1. Keep track of what you are supposed to be paid so you’ll know when an insurer fails to pay the correct amount.
2. Discuss copayments and past-due accounts with patients when they call for an appointment and at check-in.
3. Make sure you submit a clean claim to the payer.
4. Follow up on all of your claims.
5. Look at trends, see what is happening, and make changes to improve the process.
Too often, a physician’s office makes following up on all collections over a certain number of days its highest priority. "That may be as much work as the rest of the stages, but it doesn’t produce the most money," Woodcock says.
Following up is critical to the billing process, but practices that are the most successful in managing their AR focus on the entire revenue cycle, she adds.
"Physician practices need to understand that AR should be a constant management concern, not something that can be looked at once a year or quarterly," Steck says.
There are a lot of factors that affect your AR, and those factors can change over time, Steck points out. For instance, payers may change the amount of time it takes to reimburse you, your reimbursement methods may change, or new patients will come into the practice. All of these influence your accounts.
To find out if your AR process needs overhauling, start with a financial analysis. Look at your performance and compare to other groups. If your performance isn’t up to par with other groups in your specialty, this is your first indicator that you’re not doing so well. Specifically, if your adjusted-collection percentage is low, follow it and see how much it is and what you are writing off. If you have a lot of old accounts, work them for collection or write them off.
Break down your AR into categories
Look at your days outstanding and break that into various categories, such as zero to 30 days. MGMA has data available on AR collections that can be used as benchmarks to help you identify problems. If your practice compares poorly to other groups in the same specialty, this may be a sign that you have a problem in your procedures.
In addition to comparing your practice as a whole, look at AR by physician as well, Steck advises. Also, create a flowchart for your current process to determine what steps are involved and how long it takes to process claims. See if there are ways to improve your efficiency. For instance, if you identify a backlog in getting claims out the door, determine if you need more staff.
Here are some categories to examine:
• Gross-collection percentage.
This may not be a good indication of problems in your management procedures. For instance, if you have a really low gross-collection percentage, your fee schedule may be too high.
• Adjusted-collection percentage.
Determine the percentage by taking your gross charges for all CPT codes and deduct contractual discounts to come up with your adjusted charges. Look at all the money you collect to determine your adjusted-collection percentage.
According to Steck, the latest MGMA survey data show that the median collection percentage for family practice groups is 98.02. If your percentage isn’t high, you’re probably writing off things that are not contractual in nature, such
as bad debt and courtesy discounts.
• Internal days in AR.
If a long time elapses from the point of service to the time the claim is submitted, you may be losing money.
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