Keeping Your Medical Practice’s Accounts Receivable on Track

As a general rule, your monthly A/R should never exceed 1.5 times your monthly charges. This is a great way to gauge how your billing company is operating - claims out, inflow in, and posted. If you find that your A/R is exceeding this calculation, it's time to roll up your sleeves and investigate.

You can look in the following areas for clues as to how to fix it:

• First look at your 0 to 30 days A/R which is considered your current A/R. Do a quick calculation to figure out what percent this category consists of your total A/R.
• Look then at your 30 to 60 days A/R - also do this percent of total calculation, but look secondly at the payer mix this category comprises. If you see any Medicare, that is an immediate red flag for you to call your billing company and have them look into those unpaid claims. Medicare is supposed to pay clean claims within 14 days.
• Moving forward to the 60+ days - this should be made up only of workers’ compensation or liens you take and perhaps some private insurances that are funded by specific states.
• Is your billing company receiving payment information from you in a detailed deposit log with corresponding EOBs?
• Are they posting within five days of receiving this information?

The next area you need to look at is your A/R organized by insurance class. On the AMA website, they share some information about how quickly different insurances pay. You can use this as an industry standard and then look at your A/R by insurance class and see where you are.

It's quite an interesting exercise to see how you are paid by the insurance companies, and if these timelines correspond to the contract you have with them. When you tally your results and find that you are falling outside of these timelines, it's again time to roll up the sleeves and take a closer look.

• Are you sending clean information to your billing company? This means, has it been double-checked internally for identical spelling of name from the insurance card, correct date of birth, accurate policy number, etc.
• Does your billing company have an organized system to follow up on any unpaid claim after 30 days?

The next report you need to always have is how many days in A/R are my claims sitting before they are paid. To calculate this, take your total A/R, divide that by your monthly charges and multiply that by the number of days in that particular month. Your overall goal should be under 30 days. Yes, it is possible. Most private practices are around 90 days. If this is the case with your business, more follow up is needed by your billing company and someone within your office.

By looking at these reports, you will always have a snapshot of your performance. Remember that you need to supply correct, clean information and your billing company must bill out quickly. Together you can get a major portion of your A/R paid under 30 days from the patient’s date of service.

Next week we will talk about what to do with all of the information, and how you can apply it to your growing medical practice.

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