August 18, 2015
Revenue Cycle 1: Minimizing Days in Accounts Receivable

Every day that a claim sits in a payor’s system is a day that your practice, physicians or facility doesn’t get paid. These claims awaiting payment are called accounts receivable (A/R), and there are a number of aspects to A/R you should consider.

The key metric is average days in A/R, which should be fewer than 50 — although 30 to 40 days is preferable. Some experts might say you should shoot for under 30 days in A/R, but that’s unrealistic for most care settings, particularly hospitals and emergency departments. The critical point to keep in mind is that, “Every one-day reduction equates to a one-day improvement in the time that a bill can be billed and potentially collected. A healthcare organization’s financial performance indicators, including days of revenue in accounts receivable and cash collected as a percentage of net revenue, will be improved as a result.”

Challenges to getting paid quickly abound — including barriers that aren’t entirely in your control. However, even in those tricky situations, there are still strategies for getting the payments you’re entitled to. Here are 5 ways to minimize the number of days claims spend in A/R.

1. Correct data from the front office

When patients register or are referred, it’s important that the front office correctly identify the insurance provider and plan, verify the patient’s eligibility for treatment and the reason for the visit, and ensure all billing address requirements are met. Doing so will ensure claims are not repeatedly sent back to what should be the front of the line for corrections.

2. Up-front co-pays where possible

Insurers aren’t the only ones responsible for paying on claims; patients are, by virtue of the way the system is set up, also a “payor”. One of the most effective means for improving days in A/R and, therefore revenue, is collecting some or all of the co-pay upon admission or before services are rendered, rather than sending a bill after the fact. Obviously, this isn’t possible in the case of many emergency room admissions, but it is for services such as elective surgeries. One expert estimates that only about 3% of hospitals collect a portion of co-pays up front from patients, and that this would be an ideal target for trimming A/R days.

3. Effective charge capture

This requires that you have an accurate charge master and that your documentation of services at the point of care be impeccable. For the former, work with your electronic health records (EHR) provider to integrate the charge master with your EHR system, and to make it quickly and easily updateable when changes occur. Using scribes to thoroughly document the patient encounter in real-time can ensure clear, concise documentation that makes coding easy for the back office or a third-party coding/billing company.

4. Use of information systems

Your EHR system should have modules or integrated features that provide order entry, billing and coding-decision support. If possible, it should interface with your coding and billing software to capture data on the revenue cycle, so that you can analyze days in A/R by factors such as procedure/service, physician and payor. Flagging outliers, such as slow-to-pay carriers, lets you drill down to find out why there are delays — and arms you with the necessary data to argue for better service. For example, if your average days in A/R is a shade over 45, but Medicaid claims are averaging 30 days more, this should be addressed. In addition, you or your billing company should follow up any unpaid claims after 30 days.

5. Generating clean code at the point of care

The importance of clean code, based on complete and accurate documentation, cannot be overstated. Now, there’s an option for generating service codes faster than ever: LiveCode Point of Service Coding is a real-time medical coding software platform that links the patient, physician, scribe and medical coder at the point of care. The real-time interactions between scribes and coders enabled by the system ensure that documentation clearly supports coding, and that accurate codes are generated. Claims can then be reviewed by physicians more quickly, and can be submitted to payors within 1 to 2 days, rather than the more customary 6 to 10 days. By quickly submitting well-supported claims, you’ll be able to improve accuracy of billing, shorten bill-drop times, and maximize reimbursement by avoiding delays due to documentation deficiencies.

Once you’ve seen the patient, the clock starts ticking. As noted at the beginning: every day you get back can result in fewer days in A/R, more revenue and improved profits. Why wait any longer?

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