Understand when to let go of the old Accounts Receivable (AR), create a plan for bad debt and keep your credit balances in check to set your practice for success.
Starting a new year can be a good reason to review your practice´s processes and analyze your KPIs to determine strategies moving forward. To get in 2022, it is important that you let go of some old things to make room for the new.
One area to have a cleaned-up start is your practice’s accounts receivable (AR). Days in AR (DAR) stands for how many days it takes your practice to be paid on a claim. The lower your DAR, the better. Keeping this metric low is critical to improve your revenue process results. Any lag in working denials will lengthen DAR and be detrimental to your cash flow.
Reviewing your aging AR and letting go the old AR will help you get a fresher start and focus your energies on the current AR.
Let´s review some important DAR information:
Industry Average
45 – 60 days.
Goal
Under 50 days minimally,
optimal is 30 – 40 days.
If your account is not meeting your AR goals, it is important that you consider making changes. Read more about how to reduce your Days in AR in our blog How to reduce your Days in AR – Health Prime (hpiinc.com).
One strategy to monitor your Aged AR is reviewing your Accounts Receivables (by aging) report. This document shows outstanding insurance claims based on aging totals. By knowing how much is still outstanding, you will be able to adjust your bad debt, set up an action plan and define some benchmarks.
Speak with your accountant to learn how these losses could possibly benefit you when filling your practice´s taxes.
Create a plan for bad debt
First, run your report to review your AR and set goals with your billing team to create projects. Then meet regularly to discuss the progress and any challenges that may arise.
Here are some steps to create a plan for bad debt:
Consider some situations for bad debt adjustments such as claims older than 1-2 years, claims passed timely filling, claims with exhausted/failed appeal attempts, secondary balances where the primary EOB is not available and secondary balances where the primary allows more than the secondary.
Credit balances in check
Much time and effort are devoted to collecting information, creating charges, submitting claims, and collecting payments. Sometimes, spending additional time and energy trying to return this money seems like a bottom list task.
Processing and returning credit balances, or “overpayments” as the government calls them, is not optional but mandatory.
It’s not uncommon for providers to keep such overpayments until specifically asked to return them or until payers have withheld them from subsequent payments. Some providers may not only keep the overpayments but continue to bill inappropriately, thus creating even more overpayments.
Credit balance procedures need to be straightforward and should include:
Outsourcing your medical billing, including your credit balances, can help you relieve your staff from this administrative burden and make sure there´s a team focused on this specific task for your medical practice.
Make sure your credit balance´s team has an in-depth understanding of your internal processes and specific objectives. They need to have overall flexibility to customize an approach that fits your medical practice´s needs.
Health Prime´s Credit Balances Team will help you examine your billing data to pinpoint erroneous patterns that lead to overpayments.
Read more about the importance of paying attention to your credit balances in our blog Why is it important to be on top of your Credit Balances? – Health Prime (hpiinc.com)
For more information on how to create a plan for bad debt and keep your credit balances in check to start the new year right, contact our team of billing experts at Home – Health Prime (hpiinc.com) or email us at [email protected]. Our team will set up a meeting to discuss how Health Prime can maximize your revenue by cutting costs, saving you time, and collecting more!
Check our first blog on this series to learn more about which End of the Year (EoY) reports you should run this 2022 to set your practice to succeed.
The third and last part of our three-part “Get your Medical Practice Ready for 2022” blog series will highlight the importance of setting up goals to improve your medical practice and increase revenue for the new year.
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