Sound familiar? Are you even certain that you’re collecting all the money you think/hope was submitted? If this worry hits close to home, you need to take a hard look at your insurance claims process.
You must understand three key variables and one nasty life issue in your revenue cycle management process.
Accounts receivable (AR) days: This is the average time from services rendered to the money is posted. It is calculated by dividing total AR by the annual gross revenue, divided by 365. Management Business Academy (MBA) states the median is 17 AR days. If the number is less than 9, things may be in great shape, but greater than 24 can point to a big problem.
Accounts aging: How long has the claims submission been in process—unpaid? Many look at “buckets”—30, 60, 90, 120 days—but 60 days or greater is key. Per MBA, the median percentage of claims in the 60 days or greater bucket is 20%. Less than 15% indicates that you may be doing great; over 30 days means you could have a real problem.
Although your metrics might be incredible, we say you may be doing great because of these two potential hiccups.
Insurance write-offs: How much money that you submitted for reimbursement was not paid and “written off” or taken off your AR? There is no standard value. If you submit amounts close to insurance allowables, this metric should be very low. If you submit amounts well over allowables, the value will be much higher. The key is establishing an expectation for your office, and it should have a very low variability.
Embezzlement: It’s sad, but this is pervasive. Some experts argue that business owners either know they have been stolen from or they haven’t figured it out yet. Watch your metrics and your cost of goods. Monitor everything, and have a zero-tolerance policy for theft.
Metrics can fail you. If you are not tracking down unpaid claims and simply “writing off” unpaid amounts, metrics can look great, but your expected gross receivables can suffer by 5%-30%. Damage from theft can be immeasurable.
Here are six ways your AR process can fail you.
1. Lack of expertise. The pool of billing experts—even across the entire U.S.—is relatively small.
2. Turnover. Keeping employees has become increasingly difficult. Down time, time for training and a sparse group of experts to choose from all lead to lost revenue.
3. Untimely processing. If a practice is not submitting all claims within 48 hours of the service, it is already behind the eight ball. Every day that a claim is not submitted, a payment is not processed or a rejected claim is not corrected, your potential for collecting your money goes down.
4. Lack of attention to detail. Revenue cycle management (RCM) is tedious. If your front desk personnel is submitting claims, entering payments in between checking patients in, answering the phone and obtaining patient insurance information, it is almost definite that you have RCM problems.
5. A focus on data submission instead of RCM. Is your billing person/company “scrubbing” your claims for accuracy before submission, watching for lost revenue, accurately posting monies and almost never writing off unpaid money? If not, you have a data entry system, not an RCM process.
6. Outsourcing beyond the U.S. Contracting with billing agents outside the U.S. is not wrong but can create issues. Few remote worker companies have legal HR and HIPAA compliance. There can be problems with work delays, expertise and/or communication. We too often hear that remote billers provide a data entry system instead of a robust RCM system.
Outsourcing can be an excellent decision for many practices. A good rule: “Concentrate on your expertise and outsource the rest.”
www.practicecompliancesolutions.com 844.626.6579
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