In a perfect world, your mid-size independent practice would maintain 100% of medical billing A/R in the 30 days or less category. However, we all know the world is not perfect. Many clinics in Minnesota, Iowa and Wisconsin, and across the Midwest have 25% + A/R sitting in 60-90 and 90+ hampering your cash flow when compared to traditional accounts receivables. When A/R get’s out of control it complicates the business of running your clinic efficiently. Moreover, when A/R is uncontrolled during periods of industry transition such as ICD-10 the entire practices financial stability can be put at risk.
So how can your medical office maintain a consistent cash flow when your claims take time to get paid?
In reality, your office will probably never get to a place when all of your claims are paid within 30 days of service, but you can and should continue to work to get your average days in A/R to 30 -45 days.
Budgeting for your cash flow can be done at a very basic level. You should calculate how many charges you had the last 3 months and what your average recovery rate is. You should know what your average receipts were for the same months in previous years. Calculate what a days average payments will be based on the previous 1-3 months payments by divide by the number of business days in the month. You can add or subtract receipts depending on normal business cycles and whether the charge volume met your expectation. Once you have a daily receipt average just calculate using the number of days in the month to get your estimated monthly receipts. Other important factors that contribute are how many Mondays you will have in the month as Mondays (and Fridays) tend to be big receipt days. Secondly, what are your scheduled government payment dates? For example, if your Minnesota practice has a large volume of Medical Assistance patients then the number of MA pay dates is a huge factor to consider. Track these metrics daily to understand where you are at in relation to your goals for the month.
Unfortunately, if you don’t work the rejects, denials and accounts receivables on a daily basis these calculation can lead you to believe money will be in the bank when in reality you may have another 30 to 45 days until actual payments are processed. So why does it take so long to get paid in this business? There are many factors affecting the timeliness of your payments and some are within your control.
Examples of things you can control to improve your cash flow include:
- Proper medical coding and 48 hour turn-around on all claims
- Verifying insurance coverage before service with electronic eligiblity
- Having a clear self-pay policy and educating front desk staff and patients on your policies
- Knowing your top payer timely filing limits and having a review process to ensure all claims are completed timely
- Proper set up of addresses with payers, clearinghouses setup and EDI 835s and EFT for all payers possible
- Having a case management system to manage your more difficult claims
What can you do to improve your practice’s cash flow?
At Outsource Receivable Inc. we work with our clients daily on improving their medical office’s cash flow. Some of the biggest factors that impede payment include:
Timely filing. If you don’t submit your bill to insurance in a timely fashion, you are increasing your risk of non-payment or late payment. The more time that passes between your patient’s visit and the time they receive their bill increases your chance that the self-pay portion won’t get paid. If you don’t make the bill a priority, why should they?
Global mistakes. Is your office continually receiving rejected claims? You may have global mistakes in coding or translation of insurance plans that are causing the rejections. Taking a small amount of time to look for global reasons as to why claims are being rejected can ultimately save you time and improve your receivables.
Technology. Technology truly can be a help and also a hindrance. Setting up a clearinghouse properly is extremely important when filing insurance claims. You should have a practice management system administrator to monitor the system and ensure updates are made timely.
Lack of Upfront Education on Self-Pay Expectations. If you don’t set the parameters for self-pay and help your patients see paying their bill as a priority, then who will? Medical bills tend to be some of the last ones paid typically because service has already been rendered. Collecting self-pay portions of the bill, at the time of service, and setting payment expectations can significantly help your cash flow.
You’re in the business to help people. Getting paid is important and keeping your cash flow flowing keeps your doors open. When there are potentially challenging transitions like ICD-10 or seasonal lull’s like deductible season the hit can hurt. That’s why we are in the business of getting clinics paid. Our experienced professionals work with your office to create better cash flow and efficiency in medical billing as well as provide monthly projections and daily tracking which all lead to patient satisfaction. For help with medical billing, contact Outsource Receivables Inc. We work with mid-sized independent practices across the Midwest including Minnesota, Iowa and Wisconsin.