Did you know that, on average, providers spend up to $8.6 billion every year on administrative
procedures to collect their due claims? Among these claims, around 9% of the claims usually face
denials from the insurance companies. This puts over 3% of the net revenue of the provider at risk
of loss. The cost of collection is on the rise with the overall increasing administrative costs.
Therefore providers should be on the lookout to optimize the healthcare billing services to ensure
that the clinics have a steady flow of cash.
Knowing and analyzing the root causes of increasing cost to collect is the foremost step to ensure
that it does not adversely affect the functioning of healthcare organizations. On average, each
appeal posted by the providers costs them over $110. With an increase in denied claims, the amount
spent to appeal them also increases. According to revenue cycle management leaders, having a
pre-defined strategy of analyzing key performance indicators is the best way to reduce the cost to
collect and rectify the issues in healthcare billing services.
Denial Rate Tracking
According to reports published by the Medical Group Management Association, the average denial rate
for clinics should be no greater than 5%.
However, the same report also found that the denial rates went up as high as more than 60% in
certain health systems with improper healthcare billing services.
Experts believe that clinicians and healthcare management teams should analyze the reasons for
frequent denials if the denial rate goes above 5%.
The best way to eliminate the denials is to get to the root cause and keep all other parameters in
check simultaneously.
The most frequent reasons for an increased number of denials could be patient eligibility
verification and prior authorization. Most of the time, errors in front-end processes lead to these
issues.
You should also check for incorrect or incomplete claim data and coding errors on your claim
submission.
Accounts Receivable Aging Report
The AR Aging Report is considered one of the crucial ways to keep the revenue cycle management in
check with lesser denials.
Billing teams and revenue cycle management teams should check for the days the accounts receivables
spend in the insurance panel’s office.
According to the parameters evaluated in most surveys, AR should not exceed 30 days if the clinic
has regular patient visits.
However, in the case of a multispecialty large health organization setup, the AR might go beyond 30
days but should not exceed 90 days to ensure on-time reimbursements.
Teams should focus on regular follow-ups with electronic remittance advice and other forms of
contact with the insurance company’s counterparts.
Posting charges regularly and automating the
payment posting procedure could help
you decrease the accounts receivable days and make your cash flow more stable.
Aged AR Management
Most clinics and provider organizations lose out on reimbursements due to AR days exceeding 120 days
without payment.
If you find that the revenue flow in your practice is slowing down or stuck at the same point
despite your efforts, you should analyze what percentage of your claims are sitting for more than
120 days in AR.
Experienced professionals should deal with aged AR to realize the due amount from the insurance
companies.
As the claim reimbursement gets delayed further, the greater is the financial risk for the clinic.
As the bills get delayed, the more difficult it gets to collect from the patients.
The 120-day mark in accounts receivable aging serves as a crucial parameter to look into the
financial health management of the provider organization.
Bringing automation to improve the revenue cycle workflow could also help in keeping track of the
different KPIs without investing in an increased workforce.
Patient Collection Rate
Patient collections are often the most difficult part of any revenue cycle management process, as
confessed by several medical billing executives.
The issue with patient non-payment has gotten worse with the significant increase in the percentage
of co-payments and deductibles for the patients.
The Healthcare Financial Management Association opines that every healthcare organization must
formulate a specific policy to collect the due amounts from the patients.
Their guidelines to form the policy suggest that communication between the patient and the accounts
management team at the healthcare organization should be particularly transparent.
Most of the healthcare organizations which practice such policies in their setup believe that
collecting the remainder charges at the point of service could also help in improving the patient
collection rate.
Some health systems also believe that incorporating different payment methodologies like text-to-pay
services can help in improving the system.
EHR Completion Lags
Delay in the completion of medical notes is one of the most underrated reasons for claim denials and
delays in cash inflow in a practice.
A section of the providers is not well-versed on how to complete their EHR requirements on time to
get the claim generated without delay.
Even if they do, the complicated nature of the entire process, along with increased pressure of
patient care, leaves the providers with little time to complete the paperwork.
In these cases, AI in healthcare can be a savior by automating and simplifying the entire system of
completing the notes and attaching them wherever required in the claims.
Healthcare organizations are also investing in advanced tools that help in automating clinicians’
paperwork and decreasing their administrative burden.
Having a well-versed and professional RCM partner through outsourcing can help the organizations to
overcome these issues and file the claims on time.
Outsourced revenue cycle management companies can help you evaluate these KPIs and improve the
workflow management in your organization. Get in touch with a leading RCM company today to get your
financial health evaluated.
We hope this article helped you understand the different ways you can optimize your healthcare
billing services to reduce your cost to collect. For any other queries, please write to us in the
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