How to Ensure You Get Paid: Understanding Hospital Accounts Receivable

September 24, 2024
Posted by: David Smith
Category: Hospital AR

We all know that hospital accounts receivable is one of the most critical parts of your hospital billing as the strength of your overall revenue substantially depends on it. However, managing hospital accounts receivable is not a cakewalk for everyone as a hospital includes multiple specialties where providing clinical care is the first and foremost priority. Still, you cannot ignore the administrative components, especially when your accounts receivable and hospital billing tasks are concerned. To enjoy a healthy and streamlined cash flow, you must manage hospital accounts receivable services efficiently. Before you know about the importance of AR follow ups and the challenges of collecting from hospital AR, you must understand what hospital accounts receivable is.

Accounts receivable is the key to keeping money coming into your hospital. It’s the payment patients and insurance companies owe you. It also includes unpaid bills or overdue accounts. Hospital accounts receivable can also be defined as pending invoices or delinquent accounts.

Managing AR well is important for your financial health and the smooth running of your practice. Since AR can be complicated, the way you handle it can have a serious impact on your hospital’s financial stability.

Understanding the Complexities of Hospital Accounts Receivable Solutions

You should aim to submit a medical claim within 72 hours after providing a service. Clean claims sent electronically could be paid within two weeks. However, many factors can delay payment. Based on findings by American Hospital Association in 2022, more than half of the mid and small-sized hospitals accumulated more than six months of unpaid claims worth of almost $100 million. This is exactly why a good hospital accounts receivable management plan enables you to get paid on time and prevent revenue leakage.

If your payments are delayed and overdue bills are stacking up, it increases your days in AR i.e. how long it takes, on average, for claims to get paid. To understand your practice’s financial health and see where you can improve, you need to track your days in AR.

You can calculate days in AR by dividing your total accounts receivable by your practice’s average daily charges. The American Academy of Family Physicians (AAFP) suggests keeping days in AR under 50 days, with 30 to 40 days being even better. Tracking this helps you see how long it takes, on average, to collect payments, so you can improve your collections and boost your revenue cycle.

It is always important to know about the frequent reasons that cause increased AR days. These include:

Claim filing delays
Inefficient patient insurance-eligibility verification
Coding errors
Data-entry mistake
Frequent claim rejections
Poor appeal process
Lengthy credentialing process
Incorrect payment posting process
Increased out-of-pocket expenses and downfall of payment collections

In your hospital accounts receivable management process, having a dedicated AR follow up team is crucial. In your hospital, your accounts receivable follow-up team is in charge of managing denied claims and reworking them to help you collect the maximum money from your patients and insurance companies.

However, handling medical billing A/R and revenue cycle management with an in-house, non-specialized team is fast getting outdated. Nowadays, you need skilled billing professionals to effectively manage A/R follow-ups.

Here are some critical reasons why AR follow-up services for hospitals are crucial.

1) Overall financial stability of your hospital:

Your healthcare service’s financial stability depends on keeping a positive cash flow. You need a steady revenue stream to cover expenses and continue providing patient care. Your A/R department plays a key role in making sure this happens.

2) Efficient recovery of overdue amount:

Accumulated outstanding payments are like sitting on a goldmine. A/R follow-up helps you recover overdue payments without any hassle. With a team dedicated to claims follow-up, it’s much easier for you to unlock that revenue and get paid.

3) Minimized time for addressing delinquent accounts:

The main goal of A/R management is to cut down the time your accounts stay unpaid. Your team watches for unpaid accounts, figures out the best way to collect payments, and sets up steps to ensure you get paid. With a good A/R process, you’re not leaving any money on the table.

4) Zero chance of missing claims:

The main reason payments get delayed is because claims aren’t received on time or get lost in transit, a common fate for paper-based claims. To prevent this, it’s a smarter option to send claims electronically. If you’ve followed up and know a claim has not been received, it is easier for you to send another request quickly.

5) Follow up for managing denied claims:

Depending on the reason for the denial, you can send a new claim request with the necessary corrections. By calling the insurance companies to find out the reason for denial instead of waiting for it in the mail, your A/R department can make sure all claims are followed through until they are paid.

6) Manage claims that are still in “Pending” mode for information:

Sometimes claims are put on hold because more information is needed. By following up properly, your A/R team can keep you updated on the situation and take the right steps to speed up the process.

It’s important to understand the 3 most common challenges with hospital accounts receivable so you can create a plan to address them effectively.

1) Navigating the intricate nature of insurance claims:

To manage your hospital accounts receivable efficiently, you need to navigate the complex world of medical billing and insurance claims. This means handling many medical codes and complying to claim submission rules, which can make the process tricky for you.

2) Hampered cash flow:

Most hospitals face cash flow problems because payments from patients and insurance companies are delayed. This gap between when you provide services and when you get paid can result in higher accounts receivable for you.

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3) Compliance and regulation hurdles:

The healthcare industry has many rules and regulations. It is important for you to follow these laws and policies to collect payments effectively.

Unfortunately, many hospitals don’t have an experienced team for managing accounts receivable, which is a major reason why they choose to outsource their billing and AR tasks to a third-party hospital AR management company. By outsourcing your AR collection to Sunknowledge, you can focus fully on your patients while experts handle your entire AR process and boost your revenue. For us, no bill is too old.

If you need great support in hospital AR management services, Sunknowledge Services Inc. is where you will find it. Our team offers efficient, coordinated help to ensure all your payments flow smoothly. We provide customized support and high productivity to maximize your return on investment, even for large operations.