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AR in medical billing: What you need to know

With the continuous development in the healthcare industry, there are hardly any issues with medical billing. But with the increasing cost of care and the number of patients with high-deductible health package balloons, there is too much work to be done.  

The burgeoning accounts receivable (AR) in medical billing is becoming problematic for practitioners. Medical billers do everything they can to get the providers paid for the rendered care. 

However, insurance plans that have not been thoroughly discussed with patients cause major deficits in many healthcare institutions.  

The primary goal of managing AR in medical billing is to maximize the cash flow of health providers by shortening the collection period of care-related costs. 

Healthcare providers are in charge of keeping track of all AR. This commercial aspect of healthcare providers ensures the practice is operating, health professionals are getting their salaries, and regular overhead expenditures are paid regularly. 

But what makes AR in medical billing important? Why has it become too controversial in the last few years? And what is the impact of the increasing high deductible plans on the AR in the medical billing of healthcare professionals?

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What are accounts receivable in medical billing?

Accounts receivable in medical billing is often not a good thing. It translates to the money owed to healthcare providers and medical billing companies for patient care. 

What makes AR in medical billing worrisome is that it often leads to late payments and the increasing amount owed by the insured to the insurers and the latter to the providers. 

Moreover, the increasing responsibility is being shoved onto the shoulders of the patients rather than the insurance companies. It increases the risk of the providers not getting paid. In most cases, only one-fifth of what patients owe is paid

For healthcare providers, these outstanding debts can often lead to limited cash flows, bankruptcy, and the lack of capability to pay for operating expenses. 

This makes AR in medical billing crucial and integral to the operations of healthcare providers. 

What are accounts receivable in medical billing

3 best practices to manage AR in medical billing 

There are various best ways to manage AR in medical billing. Below are the three most common practices to maximize the revenue cycle of healthcare providers:

1. Collect payments after care is rendered

The best and easiest way to avoid tedious follow-ups and deficits is to collect the payment before patients are discharged. 

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This way, patients understand their responsibilities well. Doing a light background check to assess the patient’s ability to pay the bills will also be helpful. Consider giving incentives or discounts for early payments to encourage faster bill resolution. 

2. Always check with your patients and their insurance providers

This cannot be overemphasized enough. Building a good connection between patients and insurance companies is important.

It helps to vet the plan’s coverage easily and avoid costly operations that patients might have difficulty paying for. Creating an established system for this due diligence will better equip providers to be more diligent in providing care commensurate with covered rates. 

3. Automating AR in medical billing helps

Automated collection of patient information is the best and most practical way of tracking all the accounts receivable of a provider. It shows real-time any outstanding balances the patient has and makes it more efficient to validate their insurance coverage and plans. 

Hence, automation helps providers to be more diligent in their ARs, at the same time, manage patients who have outstanding balances with them. 

3 best practices to manage AR in medical billing

Calculating days of the release of AR in medical billing

AR days is a formula created to help providers track and identify the time ARs can be processed and received. Essentially, it refers to the days an invoice remains an outstanding balance before it can be collected. 

In calculating the AR days, it is important to get the average daily charges for the past several months. The sum of all the charges in the last six months will be divided by the total number of days in the covered period. 

After which, the quotient of the total accounts receivable and average daily charges is the days in AR. Normally, AR days can range between 30 and 70 days. Any AR that exceeds 50 days indicates problems that must be resolved as soon as possible.

Outsourcing AR in medical billing services

Clearly, AR in medical billing presents several challenges to healthcare providers’ financial wellness and overall growth. The lack of diligent tracking and follow-ups with insurance companies and patients can cause huge deficits in the practice. 

The good thing is that ARs can be effectively managed. There are a lot of software tools that can be used to track ARs better. At the same time, various professionals know how to handle difficult patients. 

Outsourcing AR in medical billing guarantees that care is consistently provided by well-compensated professionals. Outsourcing providers have all the necessary resources to ensure a successful AR process.  

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