3 reasons your accounts receivable are too high and how to reduce them
Many home health and hospice organizations struggle with high accounts receivable (AR), which can negatively impact cash flow and profitability. But often, high AR is a symptom of a deeper issue in your organization’s revenue cycle. It’s important to understand why AR is high so you can keep it from spiraling out of control and wreaking havoc on your bottom line. This cheat sheet for hospice and home health accounts receivable explains three common reasons for high AR and how to resolve them.
1. Claims are aging out beyond 60 days
High AR is expected and normal immediately after billing. But when it comes to Medicare, things get complex. In fact, Medicare billing is one of the more complicated tasks your organization can undertake. Claims take on average up to 14 days to adjudicate. And commercial payers, which include Medicare and Medicaid advantage plans, can take up to 30-45 days. Your billed aging report will usually reflect these payment cycles. But if you aren’t seeing 95% or more of your Medicare and commercial payer claims adjudicating during this time frame, it’s time to take a closer look.
When claims are aging out beyond 60 days, there may be an issue with payer rejections, so you’ll need to follow up. Billing for services is just one part of the collections process. You also need to make sure the payer accepts the claims and enters them into their system for processing. And the longer it takes for the rejection to be detected and resolved, the longer it takes the claim to adjudicate.
Solution: Bill your claims through a professional clearinghouse
A clearinghouse allows you to track and resolve billing rejections within three days of receiving them. As experts in revenue cycle management, we include clearinghouse services free of charge as part of our service agreement.
2. Denied claims aren’t resolved in a timely way
Resolving denials takes time — especially when it comes to commercial payers, including Medicare and Medicare Advantage. Payers differ in their requirements for submitting a corrected claim. So, resolving denials may entail lengthy phone calls to clarify payer requirements, or may call for specific expertise to correctly set up and update payer information in your EHR. Untimely cash posting can also have an impact on high AR, resulting in rework or a falsely inflated AR. It can also be an indicator of denials that aren’t being reviewed and worked efficiently.
It all means your staff needs to take the time to judiciously review denials every day, working to resolve them so you can resubmit claims in a timely way. But with so many staffing shortages in healthcare right now, that’s precious time your team likely can’t afford. It also robs your team of time that can be better spent caring for patients.
Solution: Outsource your AR management to a professional service
Relying on experts can do more than reduce your accounts receivable. Professional AR management can protect your cash flow and your bottom line, while giving your staff more time to focus on patient care. For example, we offer billing services based on your revenue cycle, helping you maintain your financial equilibrium and a healthier bottom line. And with deep knowledge of payer billing requirements, our experts can provide timely resolution of denials and alert you to internal processes you need to address to reduce the number of denied claims.
3. Services are left unbilled
It might surprise you to find that unbilled services are often a contributing factor reduced cash flow. Unbilled services, just like a high AR, are an indication of underlying issues in your revenue cycle processes. The fact is, when services are left unbilled, you’re leaving money on the table. What’s more, unbilled AR might be a sign of process issues or slow follow up. Or it could be that staff isn’t sure why services haven’t been billed and don’t know how to resolve the issue, so billing just doesn’t happen.
Solution: Engage an expert billing service
Professional billing services, like those offered by our team of experts, can help you work through any non-clinical errors or issues that might be preventing services from being billed, and can help your team identify clinical issues that may be affecting billing. We can also monitor the payer’s filing limits to make sure you’re billing for services in a timely way — including posting all contractual adjustments to provide you with an accurate picture of your outstanding AR.
Take control of your AR now
It doesn’t take long for AR to spiral out of control. Left unchecked, high AR can lead to a backlog of unpaid claims as filing dates and appeal deadlines expire. Issues in your revenue cycle are likely to continue undetected, negatively impacting your cash flow, and eventually, your bottom line. You don’t need to go it alone. Look to our trusted revenue cycle management experts to gain control and drive a healthier bottom line.
Request a consultation today for a closer look at MatrixCare.
Nancy Cary
Nancy possesses a wide range of experience in the Home Health and Hospice field, including direct involvement in managing various aspects of the revenue cycle such as intake, authorizations, medical records, accounts receivable, and other related positions within Home Care and Hospice agencies. As a Senior Implementation Consultant, Nancy has successfully overseen complex software implementations for McKesson and Netsmart Home Health and Hospice. Her expertise extends to working with payors, particularly Medicare, and she is highly knowledgeable in the specific billing rules and regulations pertaining to Home Health and Hospice.
Before assuming her current managerial role, Nancy served as an A/R Consultant in the Revenue Cycle Division of HEALTHCAREfirst. In this capacity, she utilized her skills and knowledge to implement RCM services for unique and large clients, as well as assisting customers in resolving intricate A/R and billing issues. Nancy's notable strengths lie in her exceptional ability to train, develop, and efficiently manage effective teams.
See MatrixCare in action
Start by having a call with one of our experts to see our platform in action.
MatrixCare offers industry-leading software solutions. Thousands of facility-based and home-based care organizations trust us to help them improve efficiency and provide exceptional care.
© 2024 MatrixCare is a registered trademark of MatrixCare. All rights reserved.