What Is Accounts Receivable Management in Healthcare?

Accounts receivable drive the medical billing and reimbursement processes of healthcare organizations. There are various steps and methods involved in implementing an optimized environment for accounts receivable management.

This blog will explore those steps and methods in detail and determine how hospitals and clinics can ensure effective accounts receivable management. Continue reading further and learn how you can successfully navigate through your accounts receivable. 

What Is Accounts Receivable Management?

Accounts receivable management is a process in healthcare organizations that manages pending reimbursements for their medical services. These receivable accounts are reserved for unpaid payments of outstanding patient invoices and insurer reimbursements. 

The accounts receivable process is initiated once you submit reimbursement claims to insurance companies for your healthcare procedures and treatments. It is completed once those companies reimburse you for the services availed by your patients.

Steps in Healthcare Accounts Receivable Management

Steps in Healthcare Accounts Receivable Management

Accounts receivable management in healthcare is a step-by-step process in which you must implement certain steps to optimize your medical billing. 

The steps involved comprise claim submission, claim follow-ups and patient collections. There are other steps included as well like payment posting and collection management.

    1. Claim Submission

Claim Submission in Healthcare

The first step in medical AR management is claim submission in which you generate medical bills and submit their reimbursement claims. These claims are primarily submitted to the insurance providers of your patients.

The purpose of claim submission is to receive appropriate reimbursements from those providers for your medical services. You must ensure that accurate details are provided in complete and accurate reimbursement claims to prevent denials.

In addition, the medical codes assigned to your healthcare procedures and treatments should also be accurate. You may also provide any supporting documentation to facilitate the relevant insurance companies in approving your claim submission.

    2. Claim Follow-ups

Claim Follow-ups in AR Management

Healthcare organizations should also focus on following up with insurance companies about their reimbursement claims. This step can enable you to identify and fix any irregularities or discrepancies before your claims are denied.

Furthermore, you can also prevent partial and unpaid payments within the timeframe conveyed by the insurers. You should also monitor your accounts receivable so that you are always in a better position to address overdue payments.

You can implement additional follow-up measures like reviewing the aging reports of your patients to identify any overlooked collections. Hospitals and clinics also tend to consistently reach out to their patients to optimize collection efforts which maximizes their revenue.

    3. Patient Collections

Patient Data Collections in Medical Billing

Accounts receivable management involves patient collections as well as collecting sufficient reimbursements for medical services. This step is only applicable if the relevant patients have any deductibles, co-pays or any other out-of-pocket expenses.

These options enable you to directly bill your patients and you can report it by involving any third party for insurance verification. You can work with such patients to ease the reimbursement process for them by providing flexible options and payment statements.

You must include key details in those statements about viable payment methods including the recipient of reimbursement checks. Moreover, you should consistently communicate with your patients about their overdue payments to enable timely reimbursements.

    4. Payment Posting

Payment Posting in Medical Billing

The process of accounts receivable management continues in healthcare organizations even after they receive the appropriate reimbursements from insurance providers. You have to post them to their respective accounts in your medical billing system.

Payment posting involves reconciling the reimbursed payments with their relevant claims. This step enables you to make appropriate adjustments and offer discounts to your patients. You can use it to accurately record your reimbursed payments and address any discrepancies.

In this way, you can consistently review your payments to maintain records about their reimbursements and other financial elements. You can also efficiently manage your accounts receivable so that your medical services are appropriately reimbursed in the future.

    5. Collection Management

Collection Management

This step includes a constant review of your accounts receivable to analyze their aging and identify the overdue ones among them. You can use several conventional methods to review them like letters and phone calls.

You can also work with specific collection agencies that specialize in collecting pending reimbursements from patients. They can also convey the payment terms on your behalf and follow up with your patients to speed up their payments.

These measures can simultaneously ensure timely payments and patient satisfaction for hospitals and clinics. They also put you in a better position to appeal any denied claims so that they can be reimbursed in a timely manner as well.

How to Optimize Accounts Receivable Management?

Optimize Accounts Receivable Management

You can implement several techniques to elevate your accounts receivable and optimize their management. Some of the prominent ones comprise perfecting claim submissions, verifying patient information and validating insurance coverage.

Healthcare organizations can also focus on setting payment expectations, collecting upfront payments and tracking your accounts receivable. There are some secondary measures as well that can be executed to boost your accounts receivable.

    1. Perfecting Claims Submissions

Perfecting Claims Submissions

You must ensure that your first attempt at recording details to submit reimbursement claims is perfect. In this way, you can minimize discrepancies to prevent claim denials and reduce your accounts receivable cycles.

A short AR cycle refers to a high turnover ratio and increased revenue as accounts receivable are swiftly reimbursed. It also enables healthcare organizations to maximize their collections on pending accounts.

    2. Verifying Patient Demographics

Verifying Patient Demographics in Medical Billing

Hospitals and clinics can also prioritize the verification of demographic entries to optimize their reimbursement process. You can also focus on verifying accurate details of key medical processes like patient registration and scheduling.

It is beneficial for your revenue cycle as you can efficiently bill and collect your reimbursement claims. It also enables you to close your accounts receivable and generate organizational revenue quickly.

    3. Validating Insurance Coverage

Validating Insurance Coverage in Medical Billing RCM

You can allocate resources towards validating the insurance coverage of your patients. Any discrepancies can elongate the duration of your revenue cycle. This change is likely to impact your cash flow and accounts receivable as you may lose revenue due to claim denials.

Healthcare organizations can set up an automated eligibility system with which they can accurately validate the insurance details of their patients. This function can be executed before appointments are given to patients so that patient insurance is checked in batches every week.

In this way, you are in a better position to identify any issues before you meet your patients. You can use this advantage to communicate with them better and clarify all insurance matters.

    4. Setting Payment Expectations

Setting Payment Expectations

Hospitals and clinics can also set up payment expectations from their patients. These expectations can reduce the instances of overdue payments by constantly revising the financial responsibility of your patients with them.

You may risk your accounts receivable if you do not keep a check on your patients and collect their co-pays. Your revenue may also take a hit if their insurers take longer to reimburse you after the medical services are availed.

You can also focus on establishing a collection process for your customer invoices. Such a process can quickly release your reimbursements so that you can quickly collect those payments. This outcome results in better accounts receivable management for you.

    5. Collecting Upfront Payments

Collecting Upfront Payments

You can elevate your accounts receivable management by introducing an upfront payment system for your medical services. In this way, you are able to receive your reimbursements at the time of service and prevent post-appointment invoicing.

Healthcare organizations can send the cost estimates for their medical services to insurance companies. They are sent before patients avail themselves of the relevant healthcare procedures and treatments. This policy increases timely payments as patients are well-informed beforehand.

    6. Tracking Accounts Receivable

Tracking Accounts Receivable in RCM Medical Billing

This process is one of the best ways to optimize your medical accounts receivable. You must constantly execute AR tracking for its logs and validate the relevant transactions. These methods open up new opportunities on their own for you to increase your revenue flow.

These opportunities can include new trends and practices that can be implemented on patients and their insurance providers. In this way, you can optimize the processing of your reimbursement claims and minimize the prevalence of overdue payments. 

You can compare the duration of the accounts receivable of your patients. The comparison can be used to identify patients who have overdue payments. Moreover, you can also determine ways to decrease the duration of their accounts receivable.

    7. Automating Claims Processing

Automating Claims Processing in Medical Billing

The manual medical billing process of healthcare organizations is a major reason for the slow management of their AR process. It makes the AR billing process more time-consuming which increases the duration of your revenue cycle.

You may make more errors with the manual processing of your reimbursement claims. Hospitals and clinics can counter it by automating the process and extensively scrubbing their claims. Scrubbing minimizes organizational rejections and mistakes in the form of claim denials.

These benefits are also effectively received by insurance companies which are more likely to process your reimbursement claims.

The Bottom Line

This blog examined the intricacies of AR management in healthcare in detail. We comprehensively analyzed the steps involved in this process and the measures that can be taken to optimize it.

Our accounts receivable experts are specifically trained to manage the medical billing and reimbursement processes of healthcare organizations. Contact us today to learn the best ways to elevate our accounts receivable and streamline their management.

Frequently Asked Questions (FAQs)

    1. What is accounts receivable management in medical terms?

Accounts receivable management is a process implemented to manage outstanding medical reimbursements in medical terms. Patients and their insurers have to reimburse healthcare organizations for their treatments and procedures.

    2. What is the role of accounts receivable management?

The role of accounts receivable management is to establish an effective credit policy that can minimize revenue losses. It manages credit lines which may get reduced if patients fail to make timely payments.

    3. What are the five steps to managing accounts receivable?

The five steps to managing accounts receivable in healthcare comprise setting up payment terms, monitoring reimbursement invoices and establishing strict payment policies. They also include resolving financial disputes with patients and offering alternative options to them.

    4. What is AR recovery in medical billing?

AR recovery in medical billing is a process in which healthcare organizations consistently follow up with insurers about their claim denials. It also covers the recovery of the aging accounts in terms of overdue payments.

    5. What is a KPI in medical billing?

A Key Performance Indicator is a statistical metric used to track the performance of medical billing practices. It is used to measure the duration of revenue cycles to determine the financial status of healthcare organizations.

    6. How do medical practices ensure a healthy cash flow in the healthcare industry?

Medical practices can maintain a healthy cash flow by ensuring timely collection of outstanding payments and reducing overdue balances. Adopting effective management and workflow automation can reduce administrative costs and ensure efficient patient care.

    7. How can a healthcare facility improve its collection rate and reduce bad debt?

To improve the collection rate, a healthcare facility should adopt updated collection processes, make timely collection calls, and review their collection policy regularly. Addressing unpaid accounts and ensuring strong relationships with patients can minimize bad debt and late payments.

    8. What role do medical billing companies play in managing insurance claims?

Medical billing companies help streamline the submission of medical claims to insurance companies, reduce coding errors, and handle insurance claim denials. Their involvement ensures faster reimbursements, reducing the financial burden on healthcare practices.

    9. How can customer service impact the financial health of a healthcare facility?

Excellent customer service can ensure individual patient satisfaction, leading to timely settlements of patient balances. On the other hand, poor service might result in late payments, increasing outstanding balances and affecting the financial health of the facility.

   10. Why is managing Days in Accounts essential for healthcare practices?

Managing Days in Accounts effectively helps healthcare practices monitor unpaid balances, aged accounts, and overall outstanding accounts. This, in turn, ensures a timely collection, minimizing operating costs and maintaining a healthy cash flow.

    11. What challenges arise from Manual AR and how can workflow automation assist?

Manual AR can lead to errors, delayed processing of insurance claims, and increased outstanding payments. Workflow automation helps streamline processes, reduces the risk of coding errors, and ensures more efficient and timely collection practices.

    12. How do insurance plan variations and the involvement of insurance companies impact the collection service of a healthcare facility?

Variations in insurance plans can lead to misunderstandings, unpaid or denied claims, and prolonged days in outstanding accounts. The active involvement of insurance companies, coupled with a clear understanding of each individual patient’s insurance plan, can ensure timely and accurate reimbursements, reducing the financial strain on the healthcare facility.