How to Minimize Accounts Receivable

This article is from April 2006 and may contain outdated material.

It is hard to spend your accounts receivable. For although it represents money that belongs in your bank account, you may find that your insurance companies and patients have different ideas. Chasing those claims can be time-consuming, but there are ways to make that process more efficient (see “8 Tips for Working Claims” below). Better yet, you can increase the amount of money that gets paid first time around if you remind staff to focus on the issues below.

Get Paid the First Time Around

When on the phone with a new patient. It is crucial that patients’ demographic information is entered correctly into your computer system and that they’re assigned to the proper insurance. The appropriate assignment of primary and secondary insurances is especially critical in the case of a patient having both medical-surgical insurance and optical or vision insurance that covers routine eye exams or optical hardware. For pediatric patients, make sure you list the appropriate guarantor(s) in the system. Make sure you explain your financial policies (e.g., the practice expects copayments to be paid at time of service; both credit and debit cards are accepted) and see if patients are willing to provide their credit card number.

When on the phone with an established patient. If an established patient is asking for an appointment, you should 1) check that their demographic information is still the same, 2) check that their insurance has not changed, 3) tell them what their copayment will be, 4) tell them about any balance that they owe from previous visits and 5) remind them that they will need to pay the copayment and any balance at the time of service. If you call patients to remind them of their appointment, confirm that any outstanding balance or copayment should be paid at time of service.

When patients arrive at your office. With new patients, give them a copy of the practice’s financial policies and the agreements that you’re expecting them to sign. With established patients, ask to see their insurance card so you can confirm that the information in your computer system is up to date. For noncovered services, you should ask patients to sign an Advance Beneficiary Notice. This ensures they understand that their insurance may not cover that particular service. And collect any balance that is owed together with any fixed copayment —the $5, $10 or $20 that is defined and specified by the insurance plan. (In a lot of managed care contracts, the fine print often precludes billing a patient for a copayment after the time of service. Payers realize that, for some patients, even a small copayment can act as a big disincentive to using a service.)

Collect any variable copayments at patient check out. Suppose, for instance, a Medicare patient doesn’t have Medigap or supplemental insurance, you should collect the copayment—the 20 percent of the Medicare allowable—before he or she leaves the office. The front desk should have a list of those CPT codes, together with the amount of the 20 percent copayment.

8 Tips for Working Claims

If just a modicum of care is given to posting clean claims, about 70 to 85 percent of all the income that you ought to receive should come in automatically. The art of billing comes in getting that last 15 to 30 percent.

Working claims—insurance. This process will be more efficient if you post key data for staff (see box).

1. Know when to start chasing unpaid claims. Wait too long and your AR will build up unnecessarily; but since a payer won’t reimburse you any earlier than it has to, you’ll be wasting staff time if you start too soon. How soon is too soon? That depends on the payer. Medicare, for instance, is required to process electronic claims relatively quickly, whereas PPOs and HMOs can take longer. If, say, you expect Medicare to pay claims in 21 days and a particular PPO to pay in 30 days, then it would be reasonable to start contacting them about unpaid claims in 30 and 45 days, respectively. So for each payer, establish how soon staff should start chasing unpaid claims.

2. Know how to track claims. For each plan that you use, you should list what resources are available for tracking claims. Some plans have online claim tracking where you can use a password to look up the status of individual claims on the Internet; some have automated phone systems that allow you to track claims without speaking to anybody; and some plans still require you to phone a human being.

3. Prioritize claims. You ought to spend more time chasing after an unpaid cataract surgery than you do a $5 copayment. Some of the more sophisticated practice management systems will automatically assign AR work based on predefined criteria—whether it is by insurance or dollar amount. (For instance, if Medicare fails to pay a claim, on the 30th day the system will assign follow-up of that claim to a member of staff.)

4. Use your muscle. If a payer isn’t abiding by the promises that were made in the contract, what can you do about it? One resource is the relevant state agency. In California, for instance, the state insurance commissioner is responsible for all the insurance plans except for HMOs, which fall under a separate agency. For federal plans, complaints to the CMS regional office can bring results.

Another potential resource is your patients, particularly those who work for large companies. The benefit managers at such companies are influential in guiding employees to certain plans—so when one of those managers contacts an insurance company, the insurance company tends to take notice.

Working claims—patients. A measure of front-desk effectiveness is the number of patient statements sent each month. If this is high, the front-desk is not doing an adequate job of collecting copayments and refractions.

5. Send statements. When statements go out, phone calls come in—so most practices stagger their outgoing statements. Often the alphabet is divided into four sections, and a different section is mailed out each week.

6. Make sure phone calls are effective. Some practices start phoning patients if they don’t respond to the first statement. Phone calls should be prioritized by the size and age of the balance, and staff should be ready to take credit card numbers over the phone. When patients aren’t able to pay the whole balance at once, suggest a payment plan—even if it is just $5 or $10 a month. If you can get them to reliably pay this amount, it will save you the time and expense of sending repeat statements and making further phone calls. And it also trains patients to know that, ultimately, they will have to pay the bill. However, in talking to patients, you need to be aware of the laws in your state that relate to debt collection.

7. Limit your patient statements and calls. In many practices, when patients don’t respond to the first statement, they get a second statement and a phone call. If they don’t respond to a third statement, they are either sent to collection or the balance is written-off. There is virtually no financial yield after the third statement, making further statements and phone calls a waste of the practice’s resources.

8. Consider alternative methods of payment. Suppose a patient owes a $120 copayment on cataract surgery, has no Medigap insurance, has no savings and has maxed out his credit cards —how can he pay? There is another set of credit cards, essentially medical credit cards, for patients in such a situation. Normally, the practice has to cosign for the cards, though, which means that your practice may owe money back if the patient defaults on his or her financial obligations.

Another option for this patient would be to set up an automatic debit in his or her bank account.

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Mr. Rosenberg, founder of Practice Management Resource Group in San Rafael, Calif., regularly presents seminars for the AAOE. Check the Advance Program, which should arrive in the mail in June, to see what Instruction Courses he is presenting at this year’s Joint Meeting in Las Vegas.