Managing Accounts Receivable: Collecting What You Have Already Earned
September 20th, 2006
I host a monthly medical-legal discussion group in which physician practices gather to discuss issues that are important to their organization. Almost unanimously, the request for next month’s topic was how to better manage accounts receivable. This makes sense with reimbursement declining and practices operating on much tighter margins. Other businesses are not satisfied with collecting only a fraction of their accounts receivable. Why should the medical industry be satisfied when that money is owed for services already performed?
Many practices have found they can drastically improve their percentages of collections by putting some thought into what is and what is not working. A small increase can turn a struggling practice into a healthy one. A large increase can mean more time off or earlier retirement.
The Bill
If you have control over the format of your bill, examine it closely. If it is like most medical bills, it difficult to read and contains information that is not helpful to the patient. The typeface should be large enough for older patients to see. There should be clear directions on what action needs to be taken by the patient. (Note that some practices have stopped sending out the notice advising patients of charges and insurance pending that “is not a bill” because it is costly, confusing, and seems to slow down payment later on.) If possible, use simple descriptions of the services rendered rather than CPT codes or medical terminology that a patient does not understand. An unambiguous summary of payments and what the patient still owes should also be included. Train staff to provide good customer service if a patient calls with questions regarding a bill. A patient-friendly bill can go a long way in the successful collections effort.
The Process
Practices vary widely in both the staff resources they dedicate to billing and the actual process. A 2001 MGMA survey reported that on average, for every physician in a multi-specialty practice, there was three-quarters of a billing staffer allocated. If you have a large billing staff, it is a good idea to assign each person distinct duties. Ideally, this can be divided by payors so that staff can become familiar with an insurance company’s methods and have better success managing the accounts.
Any staff member who collects from payors must be persistent and understand the procedures. Someone also needs to be responsible for collecting from patients. Always collect a copayment upfront, unless a patient can supply proof of indigence. If a patient has an outstanding balance, prior to their next appointment call and remind them to bring their payment. Those patients that can afford to pay but don’t should be terminated according to practice policy, always allowing for adequate continuity of care.
Outsourcing
A billing company may be a better option for some practices, but that decision should be made thoughtfully and analytically. Weigh the long-term costs versus the benefits of building a good in-house team. If you are a good candidate for a billing service, be sure to choose a company that has good collection results. Find out the specialties of their other clients and whether they have adequate staff and knowledge to service everyone. Always ask if the billing company has a compliance program based on the OIG’s suggested guidelines. Remember too, that the government frowns on paying billing companies a percentage of collections due to increasing the incentive to upcode.
In summary, make the time to analyze your accounts receivable and collections process. It may be the quickest way to make a significant positive impact on your practice.
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