Turning submitted medical claims into actual payments is a crucial phase for any healthcare practice. The time it takes to receive these payments directly impacts your financial health and operational efficiency. To maintain a healthy revenue cycle, it’s essential to reduce AR turnaround time and aim to clear your Accounts Receivable (AR) within a 30-day cycle. However, various factors can extend this timeline, leading to potential cash flow challenges.
What Factors Lengthen Your Payment Turnaround Time?
Several roadblocks can delay payments from payers (insurance companies, government programs like Medicare and Medicaid, etc.):
- Claim Errors: Inaccurate or incomplete claims are a primary cause of delays. Mistakes in patient information, coding, or billing details can lead to rejection or denial.
- Multiple Denial Appeals: When a claim is denied, the appeals process can be lengthy and complex, significantly extending the time before payment is received, if at all. Each appeal adds more time to the AR cycle.
- Missing Filing Deadlines: Payers often have specific timeframes within which claims must be submitted. Missing these deadlines can result in claim denial or delayed processing.
- Payer Processing Issues: Sometimes, delays are on the payer’s end due to their internal processes, system issues, or high claim volumes. While less controllable, understanding typical payer timelines is important.
- Lack of Clear Communication: Insufficient or delayed communication between your practice and the payer regarding claim status or required information can stall the payment process.
- Inadequate Documentation: Missing or insufficient supporting documentation for procedures or diagnoses can lead to claim scrutiny and delays.
Proactive Strategies to Accelerate Your Accounts Receivable:
Implementing effective strategies to reduce AR turnaround time is essential for maintaining a healthy cash flow. Here are actionable strategies to achieve this:
- Prioritize Prompt Claim Submission: The sooner a clean claim reaches the payer, the quicker you can expect payment. Streamline your internal processes to ensure claims are submitted electronically and without delay, ideally within 24-48 hours of service. For larger healthcare facilities, aiming for claim submission within two weeks might be a benchmark, but for smaller practices, faster submission is often achievable and beneficial. Remember that payers often aim to process clean claims within 15 days of receipt. Optimizing your submission process directly translates to improved cash flow.
- Invest in Error Prevention – Submit Clean Claims: Implement robust systems and technologies to minimize claim errors before submission. This includes:
- Eligibility Verification: Verify patient insurance coverage before services are rendered to avoid claims being sent to the wrong payer or being denied due to ineligibility.
- Accurate Coding: Ensure precise and up-to-date coding (CPT, ICD-10, HCPCS) by well-trained staff. Utilize coding software and regular audits to maintain accuracy.
- Thorough Documentation: Ensure that all services rendered are thoroughly and accurately documented in patient records, supporting the submitted codes.
- Claim Scrubbing Software: Employ software that checks claims for potential errors and inconsistencies before they are sent to the payer.
- Address Denials Swiftly and Systematically: Despite your best efforts, claim denials will occur. Establish a clear and efficient workflow for handling denials:
- Immediate Action: Don’t let denials accumulate. Analyze each denial to understand the reason for rejection.
- Organized Tracking: Maintain a system to track all denied claims, reasons for denial, and the status of appeals.
- Prompt Appeals: If the denial is incorrect, file a well-documented appeal immediately within the payer’s specified timeframe. Be prepared to provide any additional information requested.
- Trend Analysis: Identify recurring denial reasons to pinpoint systemic issues in your billing process and implement corrective actions to prevent future denials. Keep in mind that appealing denials can take approximately 90 days, emphasizing the importance of preventing them in the first place.
- Regularly Monitor Your Aged Trial Balance (ATB): The ATB provides a snapshot of your outstanding receivables, categorized by the age of the debt (e.g., 0-30 days, 31-60 days, 61-90 days, and over 90 days). Reviewing this report at least monthly allows you to:
- Identify Delinquent Accounts: Focus collection efforts on accounts that are nearing or exceeding 45 days old.
- Pinpoint Payment Issues: Investigate patterns in older receivables to identify potential payer issues or internal process bottlenecks.
- Proactive Intervention: Address potential problems before they significantly impact your cash flow.
- Analyze Key Performance Indicators (KPIs): Regularly reviewing specific metrics provides valuable insights into your billing and collection performance. At least semi-annually, track and analyze:
- Denial Rate: A high denial rate signals underlying issues in your claim submission process that need to be addressed.
- Days in Accounts Receivable (DAR): This metric represents the average number of days it takes to collect payment after a claim is submitted. A rising DAR indicates potential problems in your billing cycle.
- Collection Rate: This is the percentage of billable charges that you actually collect. A low collection rate may indicate issues with billing accuracy, payer relations, or patient payment processes.
Beyond these core strategies, consider these additional tips:
- Foster Strong Payer Relationships: Maintain open communication with payer representatives to understand their processes and address issues proactively.
- Offer Patient Payment Options: Providing various payment methods (e.g., online portals, credit card processing) can expedite patient payments, which contribute to your overall receivables.
- Implement Electronic Funds Transfer (EFT): Encourage payers to remit payments electronically directly to your bank account for faster and more secure processing.
- Consider Outsourcing Billing: For practices facing significant billing challenges, outsourcing to a reputable medical billing company can bring expertise and efficiency.
- Invest in Staff Training: Ensure your billing staff is well-trained on coding guidelines, payer rules, and best practices for claim submission and denial management.
By implementing these comprehensive strategies, your medical practice can effectively reduce AR turnaround time, leading to improved cash flow, enhanced financial stability, and ultimately, a healthier bottom line.