Backlog of Collections Leaves Hospital Unable to Pay Employees—this statement is the reality as the majority of hospitals are struggling today. The report shows how Ellwood City Hospital, a small hospital near Pittsburgh had been struggling for over two weeks due to a massive backlog in accounts receivable. Being the one and only hospital within 30 miles, where the community fought to run a successful business, it only became worse. With tons of aging accounts receivable and frustrated staff waiting for their salaries, running operations in Ellwood City Hospital was indeed a challenge no one was up for and thus ended up closing.
Today understanding the complexities of accounts receivable is really important for hospitals and to know how to manage their large accounts receivable.
All about hospital Accounts Receivable challenges:
Managing a large accounts receivable backlog starts with analysis. As patient-paid accounts receivable has grown, running reports is the key to solving the problem. The next step is to separate patient accounts receivable from insurance accounts receivable. However, clearing a large accounts receivable backlog takes teamwork. It needs speed and dedicated teams, including claim processors, auditors, adjustment analysts, constant follow –ups and more. A clear strategy with a step-by-step plan is the key to solving the problem. In fact, below here are some critical strategies that one must follow to streamline the perfect hospital accounts receivable solution.
Strategies to implement the perfect hospital AR management process:
1) Knowledgeable Accounts Receivable management team:
Handling denials, fixing claims, and taking corrective steps are key tasks. In revenue cycle management, every team member must understand data analysis and have strong accounts receivable calling skills. A strong accounts receivable team is the key to effective accounts receivable management. Their job includes calling insurance companies, following up on claims, and updating claim status.
A skilled accounts receivable team focuses on all parts of claim management. Colburnhill.com notes that low-balance claims are often ignored. Some organizations even skip claims with balances up to $5,000. These claims seem small but together it can be a huge amount for the hospital’s net revenue. Yet, they don’t get enough attention. To maximize accounts receivable recovery, it’s important to understand these challenges, assess the issue, and find the right solutions.
2) Set up your benchmarks as per the standards rolled out by HMBA:
Setting billing benchmarks using HBMA standards helps improve workflow, especially in accounts receivable. For example, aging categories for accounts receivable should follow MGMA benchmarks. This helps the accounts receivable team track and improve collections by comparing them to set standards.
Kristina B. Ziehler from MGMA says, accounts receivable aging is the key to HBMA standards. Most receivables should be in the 0-30 day category. The older the AR is, the lower the percentage should be. Billing teams should compare their numbers to MGMA benchmarks. They should focus on improving 0–30 day collections and work on reducing 120+ day receivables, which are often lost and that is why early collection efforts are crucial.
3) Expertise in handling a wide spectrum of specialties:
An accounts receivable team must handle many specialties. They should spot issues with unpaid insurance and patient balances. They must also create and apply strategies to ensure timely payments.
A study on NCBI.com found that billing and insurance costs make up most U.S. healthcare expenses. About 62% of costs come from billing, as each specialty relied on in-house experts instead of multi-specialty billing teams. A study in a large hospital found billing costs ranged from $20 for a primary care visit to $215 for a surgery. Understanding these costs can help find ways to reduce expenses.
4) Sound understanding of payer policies:
Healthcare reimbursement is complex. Thus, the accounts receivable teams must know payer rules and understand patient health plans. Health insurance plans vary widely. Payers sign contracts with practices and health systems. These contracts are updated over time. Fees for services can differ within a contracted healthcare system. A different price may apply if the service is outside the system.
A Forbes article states that insurers have a list of “covered procedures.” If a treatment isn’t on the list, it’s denied. If a patient needs a procedure or refill too soon, it’s also denied. Doctors spend 15–20% of their time fighting these denials. After a denial, accounts receivable teams should request a “peer-to-peer” call. Insurers quote policies but don’t make the final decision. AR teams must stay updated on coverage changes to ensure maximum reimbursement.
5) Streamline a robust credentialing process:
Provider credentialing is key to getting paid. Errors in enrollment can hurt revenue. Accounts receivable teams must know credentialing well. Each insurer has different rules.
Beckershospitalreview.com says credentialing and enrollment can be a big challenge. Different payer rules and slow, paper-based processes cause delays. This affects hospital revenue, increasing accounts receivable days and write-offs. Delays also prevent doctors from seeing patients. A one-month delay can cost a physician over $30,000. The loss is even higher for specialties like orthopedics in a hospital. Expert consultants help hospitals streamline credentialing and avoid revenue loss.
6) Focus on improving your charge-capturing process:
Charge capture is often overlooked in hospitals. This leads to lost revenue. All departments must understand their role in accounts receivable. Proper documentation is key to avoiding losses.
During a patient visit, all services must be coded correctly. Accurate billing depends on clear communication between clinical and billing teams. Now, you must know the reason why charge capture is critical for your hospital accounts receivable. It is mainly linking medical codes to services. Each clinical area helps ensure timely coding and accurate billing.
7) Offer Multiple Payment Options to Your Patients
Giving patients more ways to pay can help reduce the accounts receivable backlog. Many hospitals struggle with collections, leading to financial crises. For example, Ellwood City Hospital faced payroll issues due to unpaid balances. Offering multiple payment options can help prevent such problems.
Hospitals should provide flexible payment plans, online payment portals, and automated billing reminders. Some patients may prefer credit card payments, while others might need installment plans. Always remember that clear and easy-to-understand payment methods always allow you to receive faster payments and reduce your overall outstanding balances.
Unfortunately, most small and medium-sized hospitals do not have adequate administrative staff members to handle hospital accounts receivable management. To avoid all the hassles of managing delinquent accounts, most hospitals prefer to outsource their accounts receivable processes to third-party accounts receivable management companies to enjoy steady cash flow and strong fiscal revenue. An experienced AR management partner knows what it takes to work on your aged accounts on a priority basis so that you can always keep your cash flow seamless while giving your utmost attention to patient care. So, what are you waiting for? Hire a perfect hospital accounts receivable company and see the difference!
