After the country witnessed some remarkable medical reforms, healthcare providers and US medical billing companies found it extremely difficult to come up with new challenges. Despite their efforts to adapt to these changes, the impact was significant enough that US medical billing companies are struggling to manage medical Billing services. Managing AR (Accounts Receivable) has become a tough job as operating costs rise and the number of patients with high-deductible health plans increases. So let’s discuss in detail what is Accounts Receivable (AR) in Medical Billing?
The primary goal of healthcare accounts receivable management is to maximize cash flow into the medical or dental practice by minimizing the collection period and associated costs. In the Medical Billing Process, every business must track and obtain its Accounts Receivable (AR). An account receivable is the amount owed by a customer to a business after its services have been rendered and billed. This is a critical commercial aspect of medical institutions such as hospitals, clinics, and private practices. A large number of medical organizations rely on expert medical billing services to ensure that these payments are filed, processed, and received correctly.
Zee Medical Billing Services provides a wide range of healthcare billing services for a variety of healthcare providers, ranging from hospitals to small practices. We aim to ease our clients’ administrative burdens so that they can focus on what is most important: a patient’s health and recovery.
Accounts Receivable (AR) in Medical Billing
Accounts Receivable (AR) is the money owed to Providers or medical billing companies for medical care provided to patients. The generated invoices are sent to insurance companies or patients for payment. It is essential that staff monitor the AR and ensure that payments are received on time.
Billing in accounts receivable
If your business provides goods or services without requiring full payment upfront, this unpaid money is categorized as accounts receivable (AR). The process of sending invoices, collecting payments, and pursuing unpaid balances makes up the AR billing system the company most likely already follows.
What is Accounts Receivable (AR) process?
It is recommended that a company establish an AR process to determine which customers have already paid and to identify any payments that are unpaid. The procedure is a straightforward sequence of events that makes Receivables traceable and manageable. The AR Process is also known as the O2R Process, which stands for Order to Receive.
Four Main Steps for AR Process:
- Establishing Credit Practices
- Invoicing Customers
- Tracking Payments Received and Payments Due
- Accounting for Accounts Receivables
What is the role of an AR?
An Accounts Receivable employee’s primary responsibility is to ensure that their company receives payments for goods and services and that these transactions are properly recorded. A job description for Accounts Receivable will include securing revenue by verifying and posting receipts and resolving any anomalies.
How Accounts Receivable (AR) in Medical Billing is calculated?
The first measure is the “Calculating Days in accounts receivable” – the average number of days it takes to collect the payments due to the practice.
To calculate days in Accounts Receivable (AR):
- Calculate the average daily charges for the past several months – add up the charges posted for the last six months and divide by the total number of days in those months.
- Divide the total accounts receivable by the average daily charges. The result is the Days in Accounts Receivable.
Medicare usually pays about 14 days after receiving a claim. Some Health Maintenance organizations (HMOs) pay claims at 45 days after receipt, the time allowed by law in some states.
Following figures as benchmarks for medical billing and collections:
- 30 days or less for a High performing
- 40-50 days for an Average performing
- 60 days or more for a Below Average
How to collect Accounts Receivable (AR)?
There are some tips to Improve Accounts Receivable Collection
- Create an A/R Aging Report and Calculate Your ART.
- Be Proactive in Your Invoicing and Collections Effort.
- Move Fast on Past-Due Receivables.
- Consider Offering an Early Payment Discount.
- Consider Offering a Payment Plan.
- Diversify Your Client Base.
Best Practices for Managing Medical Accounts Receivable
Although challenges may appear to be a huge task, there are some tested best practices to help improve your medical AR process: