Don’t Let Your Accounts Receivable Become The Forgotten Middle Child!
By Janice Jacobs, CPC, CPCO
The average physician practice is very aware of steps that must be taken to ensure compliant, accurate claims submission, and there is always staff assigned to post payments and reconcile cash. However, the very important middle step of accounts receivable (AR) management is frequently overlooked. In a perfect world, submission of a claim will result in reimbursement between 14 and 30 days, depending on the payer. However, we don’t live in that perfect world; therefore many claims end up on the practice’s aged trial balance (ATB) and are not worked sufficiently to receive the appropriate reimbursement in a timely manner.
Your practice’s ATB should show aging balances as far left as possible (0-30 days) with very few balances in the far right categories (150-180 days), because the older the account is, the harder it will be to collect. Claims should be worked on a consistent basis by designated individuals that understand third-party reimbursements and (AR) follow up should occur 15 to 31 days after claim submission depending on the payer. For example, a Medicare clean claim would be paid 14 days after submission, whereas a commercial payer may pay a clean claim 30 days after submission. Practices need to develop an AR policy for managing outstanding claims along with specific procedures that must be followed. Generally, AR should be worked as follows:
• High dollar high age – high priority because of timely filing limits
• High dollar low age – high probability of collection and usually less volume
• Low dollar low age – high probability of collection but labor intensive due to volume
• Low dollar high age – less probability of collection and more resources needed to work them
As AR is worked, attention should be given to high volume errors as they may be systemic and correcting them on the front end can fix the issue going forward, thus eliminating significant AR backlog.
Outstanding claims should never be automatically resubmitted without appropriate follow up as this can result in duplicate claims. Attempts to bill the same claim multiple times can be considered a violation of the Federal False Claims Act. Each outstanding claim requires research to determine whether a denial was received and what specific information is necessary to further adjudicate the claims. Common examples of errors that lead to denial management are incorrect insurance information, incorrect subscriber information, lack of medical necessity, incorrect or invalid ICD-9-CM codes, late filing, CPT/ICD-9 code mismatch, etc. Denials should be tracked and monitored to identify any abhorrent patterns and/or inconsistencies in documentation, coding or billing that contribute to denials and addressed accordingly with the appropriate responsible party. Not every denial is appropriate. Appealing denied claims should be standard practice. Many denials are automatically generated without any human intervention. It is important to develop and foster relationships with representatives from your major payers. Inappropriately denied claims may require a letter to the payer explaining the situation along with any pertinent medical record documentation. Having a liaison on the payer side to whom this information can be sent directly can streamline the process tremendously.
Designated AR staff should continually monitor payer correspondence and bulletins to keep abreast of any changes that may impact claims submissions. AR staff should communicate information with physicians and other appropriate staff on a regular basis.
Some physicians argue that the cost of a designated AR resource is too expensive, however if your practice’s AR continues to range over $100,000, assigning an individual to follow up on outstanding claims makes sense and the increase in cash flow will more than cover the cost of that resource over time. This very important, and often overlooked middle step, can prove to be very costly to the long-term financial health of your practice.
Latest posts by Janice Jacobs (see all)
- Coding Chemotherapy Administration - July 18, 2016
- Don’t Let Your Accounts Receivable Become The Forgotten Middle Child! - May 7, 2015
- Help Your Patients Avoid Unexpected Bills For Out-of-Network Studies - April 6, 2015