BUSINESS: Coding Strategy

Clean Up Billing

Develop processes to better manage accounts receivable

“There is a giant difference between knowing a thing and knowing the data behind that thing,” says Chris McChesney, co-author of the “4 Disciplines of Execution.” The things we know today: We need to increase cash flow, and managing accounts receivable (AR) is one of the biggest obstacles to cash flow.

Mr. McChesney goes on to say in his book, co-authored by Sean Covey and Jim Huling, that no matter what you are trying to achieve, your success will be based on two kinds of measures: lag and lead. Lag numbers measure what you’ve done, for example, a benchmark. Lead measures are those you put in place to achieve a goal. Once you set your lead measures, you use lag measures to track your success.

Now, let’s apply this to cash flow.


Your lead measure for AR, or the amount owed to the practice by a patient or insurance company for services provided, could be 20%, or less, that has been due 30 days or less. Your lag measure is what your AR is now. If the number does not put a smile on your face, then address it by creating processes to keep it from being that high ever again.

In a practice that grosses $1 million a year, or $83,000 a month, that means they are doing well if they have less than $17,000 due to them at this moment. The reality is that most practices grossing $1 million have a minimum of 30% ($25,000) in AR and much of it, unfortunately, is over 30 days, which means the chance of collecting on that portion of it is small.


Why is AR in so many practices out of control? For a few reasons, in my experience:

  1. The practice has no system in place to verify insurance prior to patient visits and collect co-pays at the time of service.
  2. Insurance claims are denied for fixable issues: missing or in-accurate information, duplicate submission, service not covered (no one verified ahead of time to find this out), late filing (every insurance has rules about timely filing, and many are different from each other).
  3. Unpaid amounts are written off by someone in the practice.
  4. Patients truly are unable to pay for the services provided and didn’t know the cost ahead of time.
  5. Practices are afraid to send patients bills, as it is thought doing so will result in negative online reviews.


To do today (that means now):

  1. Review all insurance claims for opportunities to correct and resubmit and, if needed, call and find out why old claims remain unpaid. Start with the past three months, and then go to a year.
  2. Look for claims never submitted, and resubmit before the time limit is up.
  3. Call patients about product unclaimed and unpaid for, and offer to ship to them at no charge if they pay their balance.

When we are back to business as usual:

  1. Verify all insurance, both medical and vision, prior to the patient’s visit.
  2. Let patients know of costs before testing, and collect all copays at the time of visit.
  3. Self audit claims. Auto-write-offs are frequently viewed as an illegal inducement to patients.
  4. Send claims daily to insurance companies. Your delay reduces the time you have to file and correct, if needed.
  5. Run AR reports weekly; assign team members to act on the outstanding amounts quickly.
  6. Follow up with outstanding accounts, both patients and insurance companies. I have found that being consistent with sending patients bills — once a week — is as effective as sending to collections, and much kinder.


I have found that lead measures make me much happier in the short term and long term than lag measures do. Act on this now, and put some much-needed cash back in your pocket. OM