The Process of Accounts Receivable Management

Accounts receivable management is the art of keeping track of how much credit the company has given its customers, and when the company can expect back. Usually these involve an amount that a customer owes to the company regarding the sale of any product or service. Doctors provide patients with the best care possible and expect to be paid for their services from the insurance company and patients. The healthcare insurance system works in a curious way where the provider delivers service and is re-imbursed at a much later stage.

Whether we like it or not, the insurance model is here to stay and it is imperative for both small providers like doctors offices and physician groups and large providers like big hospitals to diligently follow up on payments that are due. The accounts receivable management has developed in to the most significant department in these organizations as they help in recovering the money from patients and insurance companies and help to keep the business running.

The task of accounts receivable management has evolved from a mere departmental activity to a specialized skill center by itself and requires professionals so that doctors can focus on delivering the best care to their patients. This activity has become an important and integral part of the overall billing services that are offered by medical billing companies. The process of accounts receivable follow up is preceded by charge entry, verification, and claim posting. The process of entering the charge codes into the healthcare claim sheet is called charge entry. This involves determining the procedure codes and diagnosis codes based on the treatment performed by the doctor. There are specific rules defined by the insurance companies on what constitutes a valid claim and there are hundreds of rules some simple and others complex to determine the validity of a claim. The audit team typically reviews the claim based on the rules and approves the claim for submission. This is a very important step as this significantly lowers the risk of claim denials. The claims are then submitted to the insurance company for processing. The insurance company processes the claim and sends a payment remittance to the billing company but the response time is unpredictable and hence the requirement of an exclusive accounts receivable team. The AR team takes over the claim and follows up with the insurance company for payments.

The AR team analyzes the claim for denials, partial payments and non-payments and if the claim has been filed incorrectly, the claim is corrected and re-submitted. The AR team develops a constant communication mechanism with the insurance company, patient and the medical office and meticulously follows up to ensure quick and complete payment. The skill sets and qualities expected from members of the accounts receivable management team are good analytical skills, attention to detail, diligence and above all, patience. Team members with these qualities are valuable assets to the organization and will ensure that the medical office receives their payments promptly.

The aging report is the most common tool to measure the efficiency of the accounts receivable team. This shows the amount that is due to the provider and is broken down into different periods – 0 to 30 days, 31 to 60 days, 61 to 90 days and more than 90 days. An aging report that has less than 5% of total amount pending for more than 30 days is considered very efficient.

In conclusion, the accounts receivable management is THE most important service offered by medical billing companies and the effectiveness of this team will determine the financial health of the billing company as well as the medical practice. If you have any questions regarding accounts receivable and how to receive prompt payments from insurance companies.