Billing problems can be a real pain, but let’s not forget that they can also hit your practice’s revenue where it hurts. If your practice regularly experiences billing issues, you need to keep an eye out for these warning signs and make decisions before your revenue cycle takes a turn for the worse. Luckily, your EMR can come to the rescue by helping you identify and resolve these red flags. However, if your billing software for physical therapy is adding to your billing woes or failing to provide the data you need to take action, it’s high time to give your system a much-needed evaluation.
Your Accounts Receivable (A/R) Over 90 Days Old Make Up 20% Or More Of Total A/R
So, what does this mean? Simply put, your A/R is the money you should be receiving. Because of the complexity and length of the insurance reimbursement cycle, in the healthcare industry, the average payment collection time is around 45 to 50 days after service. If it takes longer than that, you might start running into some bad debt. The longer people go without paying, the less likely they are to do so. After 90 days, your collection rate drops to a measly 10-15%.
Now, let’s break it down a bit further. If more than 20% of your expected income is stuck in A/R over 90 days old, you’ll only be able to collect 10-15% of that amount. Still a bit confusing? Let’s use a simplified example to illustrate.
Imagine your monthly revenue is $30,000. If your A/R over 90 days is 20%, you’re still waiting to collect $6,000, a whopping 90 days after providing the services. But at this point, you’ll be lucky to collect $900.
Aim to keep your A/R over 90 days old under 20% (or, even better, 15% if you can).
How Your EMR Should Help:
- Automated billing and claim submission features can help reduce the number of errors and delays that lead to unpaid accounts receivable.
- Your physical therapy billing software should provide real-time data on claim status for quick issue identification and resolution, preventing payment delays.
- Use your billing software for physical therapy for effective client communication to reduce unpaid accounts and overdue balances. Automated reminders, patient portals, and secure messaging help patients stay on track with bills.
- Avoid claim denials and delays with an EMR that manages authorizations and provides reminders.
Get a free demo of Fusion today!
Your Claim Denial Rates Are Over 5%
This number may seem quite low but claim denials mean that instead of working toward current revenue, you’re playing catch up. Once you accumulate a backlog, it becomes extremely challenging to catch up. Denials and missed deadlines can inflict significant harm on your practice. Avoiding denials is crucial because unworked, rejected, or denied claims result in financial losses. Let’s consider a scenario where you submit 100 claims, and unfortunately, 50 of them are denied. Shockingly, 50 to 65% of these denied claims will never be reworked, which makes it incredibly challenging to catch up if you fall behind. This represents the average cost of revenue leakage in your revenue cycle and hinders your growth potential.
Now, here’s the thing: adjusting claims isn’t free. The average cost of processing your initial claim is $6.25. Seems reasonable, right? But if you need to rework a denied claim, your average costs shoot up to $32. That’s not a typo.
How Your EMR Should Help:
- Use an EMR that thoroughly and accurately documents client encounters, including assessment findings, treatment plans, and progress notes. This comprehensive record supports the validity of the claims and the therapeutic services provided.
- Use an AMA-licensed EMR to select appropriate billing codes for services.
- Using billing software for physical therapy that helps track verifications (like Fusion) can save you time before appointments by sending reminders to check coverage when creating a client profile.
- Save time with an EMR that checks claims for errors or missing information before submission, helping you improve claim accuracy.
Track claim status and promptly address rejections or denials using your EMR to maximize reimbursement.
Your Cash as a Percentage of Net Revenue is Under 95%
Your practice’s revenue-to-payment ratio measures how effectively you generate operating cash from your services within a specific timeframe. It reflects the efficiency of your practice in converting revenue into cash flow. It should be around 95%. If your rate is too low, it means you’re spending your time and money providing services that don’t get paid or reimbursed.
How Your EMR Should Help:
- Ensure fully integrated EMR billing to streamline your billing process by automating claim creation and alerting you to missing documentation.
- In addition to stock reporting and analytics capabilities that allow providers to generate financial reports and monitor KPIs, use an EMR that lets you create custom reports so you can monitor the KPIs that matter to you.
- Your billing software for physical therapy can automatically calculate financial metrics, including cash as a percentage of net revenue, by capturing data from claims, payments, and expenses, providing insights into the practice’s financial health.
- EMR software tracks payments from patients and insurance, helping you understand their financial position and collect payments faster to reduce accounts receivable.
Outsourcing Billing Could Help
If you’re facing challenges with your billing cycle and struggling to achieve satisfactory KPIs, it’s time to seek assistance. Fusion offers revenue cycle management services that empower our clients to collect 95% or more of their projected net revenue. Our expertise also extends to efficiently managing accounts receivable over 90 days old, ensuring they remain below 20% of the total insurance accounts receivable. Get Started with RCM.
Need help tracking KPIs and improving your billing cycle? Fusion’s therapy EMR and billing software are here to rescue occupational, speech, and physical therapists, helping them save precious time on billing and documentation. With our assistance, you can effortlessly serve more clients and watch your practice thrive. Don’t miss out on this opportunity; schedule a demo today and witness the growth we can bring to your practice.