Behavioral health organizations can be one of the most rewarding, but more importantly, fulfilling careers. Whereas the industry is growing and healthcare spending is projected to reach $4.3 trillion in 2023 collecting payments remains a challenge. 

In fact, according to Becker’s Hospital Review report, the top five challenges of running a medical practice today have something to do with revenue and collections. They are as follows: 

1. 1. Rising operating costs 
   2. Reimbursement models where the clinic carries greater financial risk 
   3. The uncertainty of Medicare reimbursement rates makes financial management challenging 
   4. Collecting from self-pay patients 
   5. Understanding each session’s total cost

 

With such issues, timely collections have become a huge problem for behavioral health organizations. In turn, clinics face cashflow challenges, which then affect other areas of your agency. This is why monitoring aging accounts receivable is a crucial part of running a successful practice.  

In this article, you’ll learn about the common accounts receivable issues, how accounts receivable aging can benefit your organization, and how BillCare, Procentive’s billing solution, can help you.

 

What are Accounts Receivable in Medical Billing? 

It is common practice in the healthcare industry to receive payments at a later date. Such monies owed to your clinic are referred to as accounts receivable (A/R). Ordinarily, accounts receivable are measured in days. If your clinic has not received payment for 15 days, then you are 15 days in A/R.  

To determine the impact of accounts receivable on your organization, there are A/R buckets used to reflect the duration. These are 0-30 days, 31-60 days, and 61-90 days. The longer accounts receivable remain outstanding, the less likely you are to receive the full amount. The key to avoiding cashflow challenges is to reduce the number of A/R and ensure a reduced balance on each bucket.

 

What Are the Common A/R Issues? 

Failure by patients and insurance companies to pay monies owed to clinics on time is the primary cause of the A/R issues practices face, and very common in the sphere of behavioral health. Such delays have a devastating impact on your organization. To begin with, it becomes challenging to replenish resources and honor obligations to credit companies and pay salaries. Even worse, after waiting for weeks, possibly months, for payment, its value decreases, and you are less likely to receive the full amount. Data suggests that any payment that remains outstanding for over 90 days loses value by half. Let’s take a closer look at these common delays.  

 

1. Insurance Claim Denial

Other than deductibles or patient copay, most of the payments you’ll receive will come from insurance companies. Ideally, patients with medical cover come and receive the necessary care for which you file a claim with their insurance provider. After assessing the claim, the insurance provider then disburses the funds to your clinic. 

Sounds simple and straightforward, but it rarely ever is. Such claims are usually denied, thus interrupting or even halting cashflow to your clinic. This is the main cause of the prevailing healthcare accounts receivables and the primary bone of contention in behavioral health billing. Claim denial occurs due to one or more of the following reasons: 

• • Uncovered procedures 

• • Inaccurate/missing information 

• • Duplicate submissions 

• • Coding errors 

• • Late filing 

The contributory factor to the high rate of claim denial is how medical billing regulations are skewed in favor of insurance companies. First, the billing process is complicated and unclear for most of the part. And, if they can find any error whatsoever in your claims, they can deny it. This is why your accounts receivables must be managed diligently to reduce insurance claim denial. 

 

2. Bad Debts

In recent years there have been some adjustments to medical billing and insurance coverage. This has seen an increase in deductibles and out-of-pocket payments by patients. Unfortunately, there’s a significant proportion of patients who are unable to pay their bills, leaving you with bad debts.  

According to a Transunion survey, there was an 11% increase in patient payment responsibility in 2017. As this trend continues, the amount of unpaid medical bills has also been increasing. Therefore, it is crucial to institute measures to protect your revenue. This is especially so for procedures such as plastic surgery that have high out-of-pocket averages. 

 

3. Excessive Write-offs

Write-offs in health care constitute the amount deducted by a health facility from a patient’s bill for services provided. For patients with medical insurance, each service covered has an allowable payment. This is the maximum amount the insurance company will pay for the particular procedure. If the total cost for a procedure is $500, but you can only claim $475, 25 dollars will have to be written off.  

Whereas there are such write-offs that are necessary, some aren’t. This is especially the case with write-offs for self-pay patients. If there are unpaid balances to medical bills that have been outstanding for some time, practices often write them off. This is also the case with denied claims. Some balances may seem minimal and inconsequential. However, if totaled over the year, such write-offs will have a significant impact.  

As such, it is crucial to have clear procedures for write-offs and a streamlined process that your billing team should follow. The objective is to ensure that write-offs outside the max allowable payment are eliminated or, at the very least, kept at a minimum.  

 

4. Collection Culture

As a behavioral health organization, offering care may be more important and satisfying than the payment you receive. This is why the collection culture of most facilities is very lenient on patients. While it is commendable, receiving payments is an integral component of your operational model. If patients do not pay today, you will not be available to serve them and countless more in the future. 

Therefore, it is essential to assess your collection culture and find the perfect balance between bedside manners and excellent customer service with payment collection. If well implemented, an efficient collection culture will increase patient satisfaction as they will understand that it is for their good. In this regard, invest in the right medical billing tools to ensure the process is done efficiently and timely. 

 

How to Improve Accounts Receivables and Cashflow 

As accounts receivables increase, so will your cash flow challenges. Some of the steps you can take to prevent this include: 

 

1. Run A/R Reports

A crucial aspect of the accounts receivable aging process is creating A/R reports. This should be done monthly to allow you to track older bills. Instead of using the billing date, run the reports from the service date. This will help identify issues with the billing schedule.  

 

2. Increase Billing Frequency

Bills can only be paid once they are received. Therefore, to avoid unnecessary cashflow challenges, switch from the monthly billing cycle to a weekly for patient invoices and biweekly for insurance claims. 

 

3. Make Follow-ups Part of the Billing Process

Setup procedures and timelines for following up with patients for outstanding bills. Begin by sending reminders for invoices and follow up with calls. If they choose to ignore the reminders and calls, utilize the services of a collection agency. 

 

4. Take a Close Look at Claims

Before sending out insurance claims, have your team assess each to ensure there are no errors. Such efforts can be significantly aided with billing software. 

 

5. Confirm Insurance Eligibility

As patients come to seek care, make it a habit to confirm that their medical insurance will cover the costs and to which extent. Depending on their deductibles and copay, determine how much they will owe and notify them in advance. 

 

6. Collect In-Office Payments

After rendering services, it is only fair to receive payment as soon as possible. It is for this reason and to decrease aged receivables that you should initiate in-office payments. Before a patient leaves, ask them to submit their copay. Have your staff submit these copies as soon as possible to identify possible delinquent payments.  

 

How Will Balancing Aging Healthcare Accounts Receivable Benefit You? 

Ultimately, the primary objective and most satisfying aspect of running a medical practice is improving people’s lives. For this to be sustainable in the long run, you must find solutions to dealing with aging accounts receivables. More importantly, you should help patients realize that it is in their best interest to clear their medical bills on time. 

 

Automation in Medical Billing 

Errors and inefficiencies in medical billing contribute significantly to denied claims and late payments. Fortunately, there are tools that you can use to streamline your billing process. Along with speeding up claims filing, they also eliminate human error, reducing the likelihood of a claim being denied. 

At Procentive, our billing solution, BillCare, is designed to remove the headaches from your medical billing process. Schedule a demo today to find out how you can improve your cashflow with BillCare.