Accounts receivable (AR) is one aspect of the practice that no one really likes. Practice owners generally agree that far too much money is owed to the practice by insurance companies, the federal government and patients. Staff members given the job of reviewing accounts receivable aging reports are not always sure what to do when people or insurance plans don’t pay. Given this unpleasant scenario, it is common for doctors and staff to procrastinate about managing AR. A few months could easily pass before anyone looks at the AR reports. If that describes your office, let’s turn over a new leaf and develop better habits with AR; it will save you thousands of dollars.
Diligence and a calendar
Many of the problems with accounts receivable can be overcome with basic organization. The task of managing the AR aging reports must be assigned to a competent staff person who understands the importance of the job, and that person should be supervised by the practice owner or a manager to be sure the job is done on an ongoing basis. The best way to accomplish this is to have meetings scheduled on the calendar to meet and review AR aging reports. I suggest twice per month as the optimum interval, but one of those meetings could be very brief if procedures are followed.
As a review, accounts receivable is the term used for all fees that are owed to your practice. If your office management system is used properly to enter all charges and accept payments, then the system will produce a current AR aging report at any time. The AR aging report shows who owes money and how long it has been due. There is typically one AR report for patients and another report for insurance plans. I think it is best to print both of these reports so they can be reviewed at the meetings and notes can be written.
Insurance AR research
Before the meetings, it is the staff person’s job to research every account that has a balance of over 30 days old. This research asks the question: why was this balance not paid yet? If the money is owed by an insurance plan, here are some steps to take:
Was the claim submitted and did the practice receive any payment and an explanation of benefits (EOB) statement? If so, read the EOB and see if any amounts were rejected and if so, why? Take the time to read the comment codes on each line item that refers to a reason.
For purposes of the meeting with the manager or doctor, make notes on each account about the reason why the balance was not paid.
The reasons may be administrative, such as the provider is not known or a form was not completed properly.
The reasons could be that the diagnosis code does not match with the procedure performed.
There might be an insurance deductible that was applied and the insurance will not pay.
The insurance AR is where you can really learn a lot about medical billing and coding. Find out what you did wrong in each case that did not pay and don’t make the mistake again.
Resubmit claims with corrections whenever possible.
Transfer balances that are now payable by the patient (like deductible amounts) to the patient’s personal account.
Keep a log book about insurance plan rules and what they pay and don’t pay.
Implement office policies as needed to prevent payment problems in the future. Discuss these policies at staff meetings.
Patient AR research
A different research effort should be made on the patient AR report for balances over 30 days.
Did the patient pick up their glasses or contacts? The balance may by quite normal and will be paid at dispensing, but why is it taking so long? Are the optical materials on back order? Was the order placed? Was the patient notified?
Were invoices or statements mailed so the patient is aware of the balance due? When? It is usual practice to allow the patient 30 days to pay a bill from the time they receive it.
Was the balance transferred back to the patient from insurance that did not pay as expected?
Why did the patient not pay for services and products at the time of service?
If you find that the patient owes the money and has not paid, a staff member should call and speak to the person directly. But go easy on this call; your office could have made a mistake. Look at the first call as fact finding. Is the patient aware of the balance? Is there some reason why the office has not received payment? If the patient has no complaint and acknowledges he owes the balance, find out when it will be paid.
If there is a complaint, the staff members can handle it according to office policy or note it for discussion at the meetings.
Make notes in a log book about all phone calls and letters sent and promises made. Follow-up as needed.
Collections and write-offs
Once you get accounts receivable under control, you will see that managing it is not so bad after all. I’ve never had good luck with collection agencies, so I usually manage the collection effort with my staff in house. In some cases, either by decision or because it just not-collectable, you can choose to simply write off a balance. When we write-off a balance in my practice, we place a notation in the patient’s record about the amount and if the patient ever wants to be seen again, we require payment of the past due amount. It happens more often than you might think.