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The Importance of A/R and Outstanding Medical Claims

The Importance of A/R and Outstanding Medical Claims

accounts receivableAccounts receivable (A/R) management is an integral part of the medical billing process and it is crucial for the financial stability and success of healthcare facilities and medical practitioners. Accounts receivable is referred to as the sum of money owed to the medical practitioner or healthcare provider for the service provided, but not yet paid.

The medical services that are rendered by physicians, nursing homes, therapists, laboratory technicians, and hospitals are continuously increasing. An efficient insurance model assists a medical practice in recovering overdue payments from insurance carriers easily and on time. This is when a diligent A/R employee, or department is important, they assist the healthcare provider in being able to render their service smoothly, and successfully, while at the same time ensure that all of the owed claims are paid as soon as possible.

Healthcare practitioners struggle to stay ahead of changing policies and regulations surrounding private and public payer insurance. In medical billing, following up claims after submission will reduce accounts receivable “aging” by reducing the number of days from submission to payment. However, it is very important to submit the claim within 72 hours after service has been rendered. The process of managing account receivable involves tracking unpaid accounts, assessing payment action, and applying procedures to secure payments.

The main aspect of managing accounts receivable is to ensure that claims get paid and the patients pay out-of-pocket balances that are due. A recent survey has shown that up to 25% of the patient services rendered by a healthcare provider are going unpaid. Also, the center for Medicare and Medicaid service (CMS) shows only 70% of medical claims are reimbursed for the first time on submission. It also revealed that 18 out of 30 medical claims are not usually resubmitted to the insurance companies, which results in huge losses for the healthcare provider. All of these create billing problems which will disrupt a healthcare provider revenue cycle, which in turn creates financial hardships.

Although, after extensive phone calls, text messages, email exchanges, outstanding claims are resolvable and a payment for services rendered can be obtained. This takes considerable time, resources, and significant patience. Time is usually the one resource that is not in abundance for most healthcare providers.

Why an Accounts Receivable team is Necessary for Healthcare Service

The accounts receivable team is a team that is responsible for following up or looking after denied claims and reopening of denied claims to receive maximum reimbursement from insurance companies. Diligent A/R follow ups ensure there is regular, and timely payments of services rendered by the healthcare provider from either the insurance companies or the patient.

It is also important to note that along with the A/R follow up team, there are several other important claim processes like verification, charge entry, and payment posting that need to be attended to. During these procedures, a medical billing specialist determines the exact procedure code and diagnosis code based on the treatment plan. However, there are chances that the insurance company will deny the claims if they do not adhere to the protocols or rules, therefore it is important to have a dedicated Account Receivable follow up team who are ready to follow up with the insurance payers to resolve the denied claims.

The longer the accounts go uncollected, the greater the loss of revenue, and the greater the number of resources that the practice would need to set aside for collection efforts.

The 3 Important Stages of Billing A/R Follow-up

The billing specialists carry out the account receivable follow-up in a very systemic manner because inadequate follow up or no follow up of claims can cause the debt to pile up. Follow up of claims is usually conducted in three stages:

1. Initial Evaluation
2. Analysis and Prioritizing
3. Collection

INITIAL EVALUATION

The Initial Evaluation is the first stage, and this stage involves the identification and analysis of the claims listed on the Account Receivable aging report. The follow-up team reviews the provider’s policy and identifies which claims need to be adjusted.

ANALYSIS AND PRIORITIZING

The analysis and Prioritizing stage are initiated when the claims are identified which are marked as uncollectible or for claims where the carriers have not paid according to its contracted rate with the healthcare provider.

COLLECTION

This is when the claims identified to be within the filling limit of the carrier are re-filled after verifying the necessary documentation of billing (billing information) such as claims processing address and payment details for outstanding claims, patients bills are generated as per the client guidelines, and then followed up with the patients for payment.

Importance of A/R Follow-up in the Medical Billing Process

1. Financial Stability: One of the importance’s of accounts receivable follow up is financial stability. The financial stability of the healthcare service provider is highly dependent on maintaining positive cash flow. The hospital needs to maintain a steady cash flow of revenue in other to cover expenses and also to render patient care service. The A/R team assist in maintaining this cash flow.
2. Recovering Overdue Payments: The A/R team helps physicians, hospitals, nursing homes etc to recover the overdue payments without any difficulty. When Account Receivable follow-up team carries out their task effectively, it becomes easier for the healthcare provider to receive payments for the service rendered without any delay.
3. The A/R team follow up with denied claims. Depending on the denial reason of the claims, a new claim request can be sent with required corrections by calling the insurance company and finding out the reason for their denying the claims. Accounts receivable specialists ensure all claims are followed.

Therefore, Accounts Receivable teams ensure that service renders by physicians, hospitals and nursing homes are paid for either by the insurance company or the patients.  Healthcare practitioners can focus on patients and are able to carry out their work effectively when all claims are paid and there is a steady cash flow.

 

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