9 Proven Strategies to Reduce Bad Debt in Medical Accounts Receivable

A healthcare provider’s primary responsibility is to ensure the swift and complete recovery of their patients. They put maximum effort into planning and offering an effective treatment plan at the quickest possible time, so patients don’t suffer much. Now, in many cases, we have observed that providers fail to collect their payments due to payer denials and patient disputes. These outstanding amounts pile up as accounts receivable (AR) and silently drain their hard-earned revenues.

It’s frustrating and exhausting at the same time for medical accounts receivable companies. Following up and collecting outstanding accounts usually shifts their attention from patient care to accounting responsibilities. As a result, patients suffer and often deny treatment due to a long wait. Still, without proper debt management, even the most successful practice may face financial downfall.

Why Medical Debt Hits Providers Hard?

Most people have a common conception that medical debt is a burden on patients and payers. However, it actually heavily affects the revenue collection of providers. They lose a substantial amount every year in the form of uncollected accounts receivable, which finally goes into their bad debt bucket.

Small practices, especially in underserved areas, may get crushed under the sky-high outstanding accounts receivable. Consequently, they sometimes face closure or are forced to cut services due to financial shortages. Over time, financial stress gradually drives away their attention from healthcare services. Staff become burned out while continuously following up with patients and payers.

The Hidden Cost of Ignoring Medical Accounts Receivable

Accounts receivable (AR) should be addressed immediately. The older an outstanding balance gets, the accounts receivable collection becomes relatively tough. Healthcare accounts receivable services can seamlessly collect outstanding accounts if it is less than 30 days old. They get a fighting chance to collect AR between 30 and 60 days old.

However, collecting accounts more than 60 days old presents a significant challenge, and the collection rates also notably drop. When the age of accounts receivable crosses 120 days, medical debt collection experts can only collect a fraction of the total outstanding amount. This way, they not only lose the money, but their staff becomes pretty exhausted.

On top of that, when staff stay busy in collection, they cannot focus perfectly on patient care. As a result, patient relationships and satisfaction are worsened. Hence, it is pretty clear that poor accounts receivable management doesn’t just cost dollars. Rather, it hampers the efficiency of healthcare staff and hinders overall growth.

Top 9 Proven Strategies to Get Ahead of Bad Debt

Bad debts are the worst nightmare for healthcare providers. As mentioned, it silently erodes the practice’s financial health due to a significant revenue loss and hampered patient care. Now the question is how healthcare providers can devise the right strategies to eradicate or minimize bad debts. Here are some result-driven solutions for healthcare accounts receivable staff.

1. Be Transparent and Talk to Patients Early

Often, outstanding accounts accumulate as patients dispute to clear the bills after treatment, or have misconception about their co-pays and responsibilities. Patients usually disagree to pay when they receive a surprise bill. At that point in time, both patients and providers become helpless, submerged under piled-up outstanding accounts.

Here, internal healthcare staff should discuss tentative costs upfront, at the initial time of the patient’s registration. A straightforward cost discussion will clarify patients, and their families regarding the tentative medical expenses. This way, they won’t dispute after receiving the final invoice. In addition to that, a clear cost explanation before treatment enables providers to gain patient trust.

2. Tighten Revenue Cycle Management (RCM)

Healthcare providers should manage their revenue cycle to ensure streamlined cash flow. They should ensure their accounts receivable bucket remains shorter. Piling up accounts receivable due to payment delays and denials makes the revenue cycle longer. Now, if the provider fails to collect their outstanding accounts on time, it will elongate their revenue cycle.

Now, a strong RCM process means fewer coding and documentation errors, as well as faster claim submissions. It also ensures quicker turnarounds from payers. If the denial rate is high or accounts receivable are aged enough, providers should refine their RCM process. A well-maintained RCM not only uplifts a provider’s financial health. At the same time, it also enables providers to deliver unparalleled patient care.

3. Sort AR by Payer and Age

Healthcare accounts receivable specialists should classify each outstanding account based on their payers and ages. Different insurance payers have separate policies for reimbursements. Hence, medical accounts receivable services must sort their accounts receivable by payer. This way, they can devise the right strategies for accounts receivable collection focused on particular payers.

Furthermore, categorizing AR based on their ages is also essential. As we have observed, collecting accounts receivable under 30 days old is comparatively easy and requires less effort. Alternatively, claims older than 90 or 120 days become very hard to collect. These often end up as bad debts. Hence, sorting accounts receivable from the medical debt credit report will guide the team to chase the promising accounts first and ensure swift collections.

4. Use Automation for Billing and Follow-Up

In this age of smart technologies and AI, most medical billing services are relying on customized software to ease their administrative tasks. Moreover, technologies cut down on the time required for manually creating an invoice, mailing it to payers, etc. Most software can also catch billing errors to ensure no claims end up rejected.

Smart technologies can showcase accounts receivable in real time. It offers a deep insight to providers to help them recognize accounts that are easy to collect. So, accounts receivable staff can chase those accounts fast to collect the expected revenue. In addition to that, several software sends automated gentle reminders to patients. They remind them to clear their outstanding.

5. Verify Insurance and Eligibility Upfront

For swift and accurate reimbursement right after care, proper patient insurance verification is non-negotiable. When patients initially visit the healthcare providers, the billing staff must take the patient’s demographics accurately. They should contact the payers to verify whether the patient’s insurance plan(s) is still active. Moreover, they must ensure the insurance plan covers the prescribed treatment.

It will reduce the chances of payer denials and payment delays due to that. A quick eligibility check before the visit saves billing staff from the hectic process of appealing denied claims later. This way, accounts receivable will be stopped from rising and going into the bucket of bad debts.

6. Offer Payment Options That Show Empathy

If providers suddenly ask patients to clear their outstanding accounts on the spot, most patients lack that much cash in hand. As a result, they can’t pay even if they have the intention to clear their outstanding bills. To ensure collection, providers should offer flexible payment options. It will help patients settle their medical bills.

Here, providers should create customized payment plans after evaluating the patient’s ability to pay. They can divide the outstanding amount into multiple installments. That will save patients from paying a hefty price up front, and they can clear bills at their convenience. Patients once they get a comfortable payment plan, far more likely to cooperate and clear outstanding.

7. Consider Outsourcing AR or Billing

Qualified and professional medical debt collection experts are not easily available. Moreover, they are pretty expensive, especially for small and medium-scale practices. Here, medical accounts receivable outsourcing ensures optimum success in debt collection.

The third-party healthcare accounts receivable company have the experience to recover outstanding accounts seamlessly. They can accurately categorize the accounts receivable and pay attention to each pending claim to streamline collection. On top of that, when an outsourced medical bill collection company takes care of accounts receivable collection, internal staff get the time to improve patient care.

8. Train the People at the Front Line

Front desk staff are the first point of contact and have a significant responsibility to identify the claims, which might go to bad debts. Moreover, if the front desk staff don’t discuss expenses clearly with patients, they might dispute in paying the bills later.

Hence, providers should train their front desk staff on the standardized RCM procedure. They must accurately verify the patient’s insurance. Also, clearly explaining co-pays (If any) is pretty crucial. It will reduce the risk of unpaid balances. This way, practices can keep their cash flow steady.

9. Track Metrics and Keep Adjusting

Data-driven insights enable medical accounts receivable services to devise informed collection strategies. Hence, they must closely track the key metrics to improve their rate of collection. The crucial indicators are:

• Days in AR
• Denial percentages
• Collection rates

These metrics will enable them to identify collectable accounts. Moreover, they can plan on following up with payers and patients to keep their accounts receivable low. Continuous monitoring lets accounts receivable experts eradicate billing problems before they cause financial damage.

Bad debt management is a pretty hectic job, and it requires precise planning. However, internal staff of healthcare providers usually stay busy in patient care and lack the time to focus on AR collection. Here, an outsourced medical bill collection company like SunKnowledge offers a welcome solution.

Read More:

5 Mistakes in Healthcare Accounts Receivable That Drain Your Profits

How SunKnowledge Stands Out as an Efficient Healthcare Accounts Receivable Company

SunKnowledge Inc. has an exceptional track record for the last two decades, handling healthcare accounts receivable. We combine deep medical billing expertise and commitment of accuracy into every claim we touch. Our top-notch accounts receivable service offers the following benefits.

• We maintain a minimum 93% first-pass acceptance rate.
• We ensure to reduce cost-to-collect by up to 80%.
• Our team ensures about 97% growth in collections.
• Our medical accounts receivable experts efficiently follow up with payers and patients to collect accounts receivable at the earliest.
• Our medical billing efficiency ensures maximum claim accuracy. That stops accounts receivable from accumulating.

Moreover, by outsourcing to us, providers don’t just get a medical accounts receivable specialist; rather, they gain a partner who works like an extension of their administrative team. So, if your revenue is affected due to piled-up outstanding accounts, contact us. Our medical accounts receivable collection experts will reach out to you with an effective solution to enhance your revenue collection and improve your financial health.

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