This is an excerpt from our webinar “Prioritizing Patients Accounts Receivable”, part of Rivet’s Revenue Cycle Webinar Series. Watch the webinar on demand here.
Every practice has open patient balances that need attention. We get it. The trouble is, you can’t expect to be efficient in collecting on accounts receivable if you don’t have a prioritization method in place with your team, and making a plan isn’t always easy.
In many practices, a rep sits down with a large number of accounts and works them without a plan, which can result in suboptimal collection rates. While, in an ideal practice, a rep would start the day with their accounts in a queue based on the highest priority as determined by their team. We want to help make the ideal a reality, so, to help you determine what plan might be best to apply to your practice, we’ve outlined the pros and cons for potential strategies to reduce accounts receivable.
Traditional medical billing practices don’t account for the current state of the healthcare insurance market. Payers are placing additional out-of-pocket requirements on patients, which means it’s important to collect payments at the point-of-care (POC). When you incorporate POC payments into your practice management strategy, you can:
POC is not only beneficial for your collection strategies, but it also gives you a chance to educate and build rapport with patients. When your practice is transparent with patients about their financial responsibilities, it builds trust and promotes faster payments.
When exploring how to add POC to your patient accounts collections and practice management plan, make sure you identify commonly used payment methods among your patient population. Common options include:
Many practices have moved away from cash payments due to the additional overhead it creates in patient accounts collections and practice management. A fully digital payment experience allows you to track every dollar and monitor the speed of registration processes.
However, no amount of point-of-care payment collections will eliminate accounts receivable altogether. Instead, your goal should be to offer a variety of payment options, collect up front when possible, and build efficient A/R processes so that you can efficiently recoup revenue on the back end.
All practices will have to deal with A/R, but building holistic payment collection workflows will create a healthier revenue cycle management process. In turn, you can boost your bottom line and reduce cash flow disruptions.
Below you will find the best practices for patient accounts receivable that you can prioritize for your practice.
With this option, reps would work the highest dollar accounts and work their way down, which would mean collecting larger sums of money. The hang-up here is that highest dollar balances are some of the hardest to collect and remain unpaid for a reason. It’s also the case that the amount of touchpoints and discounts often go up for these patients.
Working accounts receivable by age helps practices get closer to the date of service, which is a great goal. You may find, however, that you still have low collection rates with this option.
This option generally has the most effective accounts receivable collection rates because your system has defined them as the most likely to collect. However, putting this system in place requires more upfront investment and is one of the most difficult to develop. Here are some questions to answer so that you can build your propensity to pay system:
You may need to partner with a third-party vendor to effectively address these topics and promote compliance, especially when running credit checks as part of your patient accounts collections and practice management processes.
Targeting accounts based on a patient’s propensity to pay will result in less wasted time for your collections team and better response rates. However, you must still close the transaction with this patient demographic by making the patient process efficient and user-friendly. Here are a few ways to remove friction from collections:
Once you implement this approach, you can recoup more revenue from patients and reduce the number of delinquent accounts in your revenue cycle. The result is more effective patient accounts collections and practice management.
A hybrid system combines the high dollar and high age of account metrics to develop a risk level. Each account receives a risk score so that you have a standard risk index. Creating a standardized risk index requires internal collaboration among your team. One of the biggest challenges involves setting a balance threshold with your team.
Is the dollar amount more important than the age of the account? You may also find that some accounts don’t hit a clear risk level. Over time, that can lead to older accounts slipping through your process.
A hybrid approach may be more complex to set up and orchestrate. However, once you get it up and running, it allows you to systematically identify target accounts so that you can engage in more efficient collections. The older accounts become, the less likely patients are to pay, which hurts your bottom line.
Despite your best efforts, you won’t be able to predict all of a patient’s out-of-pocket expenses up front. Therefore, you’ll need to adopt post-visit patient collection strategies to help you bridge the gap. Here are some tips for effectively collecting from patients after services have been rendered:
When patients are aware of their financial obligations early and feel like they have options for paying them, they may be more open to payment plans or other arrangements. The key is to be transparent and communicate using a patient’s preferred channel, whether it be email, SMS, or phone calls.
With that in mind, it’s vital to obtain valid contact information for each patient and identify their preferred method of communication. You should also verify this data at each visit so that you can make changes to a patient’s records in a timely manner.
Want more tips on collecting revenue from patients after the visit? View a more detailed breakdown in our blog, Greasing the Wheels of Patient Collections.
Effective management of patient accounts receivable (A/R) is essential for maintaining a healthy cash flow and ensuring the financial success of your medical practice. Tracking key metrics can help identify inefficiencies, streamline processes, and improve overall collections. Here are five critical metrics to monitor in your A/R management process:
This metric measures the average number of days it takes for a claim or patient balance to be collected. A lower days in A/R indicates efficient collections and cash flow. Aim for fewer than 40 days to maintain financial health.
You can segment your outstanding balances into time frames, such as 0–30, 31–60, 61–90, and over 90 days old. This allows you to identify and prioritize older outstanding payments, which are harder to collect as time passes.
This metric shows the percentage of collectible revenue you’ve received out of the total allowed charges. A high net collection rate (typically above 95%) reflects strong receivable management practices.
Monitoring the percentage of write-offs due to uncollectable balances helps you evaluate your collection process and identify areas where additional resources or strategies may be needed to minimize losses.
With the rise of high-deductible health plans, tracking the percentage of patient payments collected upfront or at the time of service is crucial. Collecting from patients upfront can reduce the risk of outstanding balances and improve patient financial responsibility.
With these options for reducing accounts receivable in mind, the question becomes, how do you make the transition from the way you are working accounts today to your ideal patient-collections process?
These will not be overnight changes, and can be painful to apply at times, so, setting clear, reasonable expectations for systematically improving your patient payments system can help eliminate some of the stress that comes with this type of transition.
From there, ensure that all stakeholders involved align on the problem to be solved (i.e. We want to be better at patient collections, We want to be better at open patient A/R, etc.).
Then, set a patient collection rate target. Where do you want to be? (i.e. Improve collection rate %, Reduce cost to collect, etc.) Set goals to achieve this target.
Once goals have been set, get your team onboard. Communicate the goals with them, ensure that they align with your goals, and then, start small. Lay the foundation of achieving your targets brick by brick, keeping in mind what you want to achieve eventually while considering what you need to do to get there. Test different strategies, and then standardize the most effective processes across the entire team, making sure you are consistent.
Most importantly, make sure that you are equipping your team to be successful. You cannot give your team loads of new tools and implement different strategies without also providing staff training. Training sessions should boost employees’ confidence so that they know how to use the resources you are providing.
When planning training sessions, focus on presenting content that is relevant based on each person’s role. While you should cross-train to make team members versatile, you don’t want to inundate your staff with new information.
Collaborate with the employees who will be using the new technology and strategies when creating the training program so that it speaks to their unique needs.
When prepping to make a transition into a new workflow model, you’ll want to do some “spring cleaning” first. We recommend employing a few tactics to help you quickly clean up accounts receivable components, and to avoid bringing dormant, non-collectable accounts into the new workflow model.
Some strategies for reducing accounts receivable include:
We understand that making systematic changes can be challenging, even daunting to consider. However, by setting reasonable expectations and goals, communicating those goals with your team, and making smart, thoughtful changes, the ideal can become a reality for your practice.
While the bulk of your revenue comes from payer reimbursements, a notable amount also comes directly from patients. Building better processes and supporting those workflows with new technology and employee training will help you capture more revenue.
Rivet Health delivers powerful revenue diagnostics and RCM optimization solutions for healthcare organizations. Our technologies give you the tools and insights necessary to capture more revenue at every stage of the patient journey.
Additionally, you can unlock usable intelligence to create better contracts, improve patient billing transparency, and support your bottom line.
For more tips and resources during this transition:
We also invite you to book a demo with Rivet Health.
Patient accounts receivable (A/R) refers to the balances owed to a healthcare provider by patients for services rendered. These balances may include copays, deductibles, and out-of-pocket expenses not covered by insurance.
Effective A/R management ensures steady cash flow, reduces bad debt, and improves the financial stability of the healthcare organization. It also minimizes delays in receiving payments from patients and insurance companies.
Challenges include collecting timely payments, managing bad debt, dealing with insurance claim denials, and handling outstanding balances. Inefficient workflows and coding errors can further complicate the process.
Practices can reduce days in A/R by verifying insurance eligibility upfront, implementing payment plans, collecting patient responsibility at the time of service, and using automated tools to streamline claim submission and follow-ups.
Bad debt from uncollected balances can negatively impact a practice’s financial health, reduce profitability, and hinder investments in patient care and technology upgrades. Monitoring and minimizing bad debt is crucial for sustainability.
Automation tools, such as revenue cycle management (RCM) platforms, can streamline claim submission, track outstanding balances, and provide real-time insights into accounts receivable. These tools improve efficiency and reduce manual errors.
Quick wins include reconciling credit balances, writing off low-dollar accounts, offering grouped balance settlements, and creating priority worklists to focus on high-risk or high-value accounts.
Transparent communication about financial responsibility, offering flexible payment plans, and using patient-friendly payment portals can improve patient satisfaction while ensuring timely payments.
Insurance companies are a significant factor in accounts receivable. Delays in claim adjudication, denials, or underpayments can lead to outstanding balances. Practices must work closely with payers to resolve issues and ensure timely reimbursement.
Collecting patient payments upfront or at the time of service significantly reduces the risk of overdue balances, improves cash flow, and ensures that patients understand their financial responsibility.