What Is Accounts Receivable in Medical Billing?
You should think about many things when managing your practice's revenue cycle management (RCM), but your accounts receivable (A/R) is one of the most important.
To build a successful and financially stable healthcare business, it's important to keep an eye on and improve your medical accounts receivable.
Let's look at the details, what is accounts receivable in medical billing?
What Does Accounts Receivable Manage?
In the healthcare sector, "Accounts Receivable," or A/R, stands for the pending payments that a medical practice, hospital, or other health services provider is yet to receive. This pending money could be unpaid patient invoices or money insurance companies must pay them.
When your practice issues a bill to a patient account or claims an insurance provider, the A/R process starts. This A/R state turns around until the insurance company wraps up the payback process. Or when the patient clears their bill.
In the domain of healthcare revenue cycle management, A/R is typically categorized by period into 30-day increments:
↗️ 1-30 days
↗️ 31-60 days
↗️ 61-90 days
↗️ 91-120 days
↗️ Over 120 days
Why Is Healthcare Accounts Receivable Important?
It is usual for accounts payable to be a part of medical billing and healthcare revenue cycle management, but it should be addressed.
The more past due accounts, the less money your office makes. The longer an invoice or claim stays in A/R, the less likely your business will get paid in full.
When accounts receivable build up, it cuts into the cash flow that can be used to keep the practices running and pay staff.
Over time, you may have to write off patient payments that are late or not made as "bad debt," which means your practice loses money. For your practice's financial health and stability, keeping track of and reducing your accounts receivable is essential.
Healthcare Accounts Receivable Benchmarks
Keeping up with good healthcare accounts receivable practices means monitoring important revenue markers. Here's a couple of significant ones:
i. Typical Days in A/R: This count means the usual time for patients or their insurers to pay your office after a visit. Experts say it's best to keep this number at 35 days or less.
ii. A/R over 90 Days: This mark shows how much of your receivables are over 90 days old, showing unpaid bills or claims for that long. The suggestion is to have this percentage at 10% or less for healthy cash flow.
How to Enhance Your Accounts Receivable in Healthcare?
If you see that your practice's accounts receivable is going up, don't worry. There are some good ways to increase cash flow and handle your accounts receivable more efficiently.
i. Simplify Insurance Verification
Get this incorrect patient insurance info can shake up your billing, your income flow, and your cash on hand pretty severely if you skip an insurance check before a patient's visit.
You might be looking at rejected claims and money missed.
How to fix it? Use a real-time eligibility (RTE) tool. This lets you validate every patient's insurance quickly and sharply, right before their appointment. Set up a once a week collection check. It spots and sorts out problems before the patient's visit.
ii. Provide Estimates and Collect Payments Upfront
Handling your A/R may be simple lower it with patient payments that come in early. By getting money when the service happens, you avoid having to bill after the appointment.
This often saves time spent on solving problems. If you advise patients of the cost before the visit, they can pay on time because they know what to expect. Not only does this clear method to patients, but it can also make them stay with you longer.
iii. Regularly Monitor A/R
It's essential to keep tabs on the money owed to your practices. Missed tracking can mean missed income and chances to grow what you collect. Checking your A/R regularly lets you spot trends with certain patients or insurance companies.
This can help you get paid faster and make your billing process better. For example, you notice payments from insurers take longer than from others. It might be time to check your billings and agreements with them.
iv. Automate the Claims Process
Lots of medical practices still use hand-done billing methods. They take a lot of time, and mistakes can happen.
Using automatic systems for sending claims and checking them can cut down on errors, denials, and claims getting rejected.
This is an intelligent way to make sure claims don't stay in Accounts Receivable too long. It leads to faster payments from insurance companies.
v. Get Expert Assistance for A/R Management
When your accounts receivable tasks start feeling too much, talking to an RCM professional could help. This biller notices several issues that can make your A/R tasks less complex. They make sure your practice gets its money and cuts down the total A/R days.
At AR Rescue, we have a highly skilled RCM team. Leveraging extensive industry expertise and a range of AI-powered tools, we will assist you in increasing collections and building a successful medical practice.
To learn more about AR Rescue's RCM and medical billing services, schedule a quick introductory call today.
Wrapping Up
What is accounts receivable in medical billing?
Effectively managing accounts receivable is crucial for the financial stability of any healthcare practice. By simplifying processes like insurance verification, initial payments, and claims automation, practices can reduce A/R and improve cash flow.
Regular monitoring and expert assistance can further optimize revenue cycle management.
At AR Rescue, our experienced team is here to help you enhance collections and build a successful practice.
Contact us today to learn more about our services.
FAQs
1. Why is managing A/R important for a healthcare practice?
Good A/R management is vital because it makes a difference to your cash flow and financial security. Swift A/R handling means faster payments, less risk of unpaid debt, and keeps your practice economically healthy.
2. What is a good benchmark for average days in A/R?
Those in the know suggest 35 days or less is best. This target ensures quick payment and keeps cash flowing smoothly.
3. What role does technology play in managing A/R?
Tech plays a big part in making A/R smooth. Like electronic health records (EHRs), immediate eligibility checks, and automatic billing can cut out mistakes, speed up claim handling, and make things more efficient overall.
