If unresolved, consistently high accounts receivable (AR) can quickly become major outstanding dues for the DME/HME. Outstanding dues is payment that is owed for services already consumed but not paid for. This unpaid amount is written off by businesses as bad debt but leaves behind a negative financial impact.
A Becker’s Hospital review report cites overall cost reduction and efficiency as top financial priorities for health system decision makers. To ensure more money flows into the DME/HME, it is important to streamline the revenue and collection process. The report recommends that executives faced with shrinking revenue and increasing expenses should employ technological solutions, including automation, to increase efficiency and expedite recovery of outstanding dues before they turn into bad debt.
Here’s why high AR is unfavorable
AR is the money owed to the DME/HME or any other healthcare practice by patients. Payment is received after services – in this case, healthcare – are rendered. When payments are delayed or not made on time, the AR on the business ledger increases, eventually becoming unpaid dues to be written off as bad debt.
The ramifications of consistent unpaid dues or high AR include reduced availability of money for the business and the risk of business sustainability due to the continued cash constraint.
The solution, to some extent, lies in efficient bookkeeping and accounting and streamlined financial management.
Consistently high AR: Defining the issue
Understanding what causes non-payment is central to efficient DME/HME AR management. AR can easily slip into unpaid debt unless they are tracked diligently. It is important to identify and define the reasons for non-payment of invoices.
A number of factors that can influence insurance claim processing, leading to high AR include:
- Lack of data processing accuracy
Data accuracy is an essence of medical billing. The patient data needs to be recorded and processed without any flaws to avoid denials. For a hassle-free claim processing data needs to be processed correctly. All information needs to be explicit and precise. For this the staff needs to be focused on data entry and processing to avoid errors. Distractions can prevent clean and accurate data processing of patient orders leading to loss of focus on intakes, thus causing decreased collections, and increasing outstanding AR.
- Lack of trained staff
Staff that is not trained and updated about the latest regulations will not be able to catch medical orders and insurance issues, leading to denials. If the staff has no training on correct data entry, maintain error-free records, processing data accurately, and the mandates set by the insurance companies, they will not be able to process claims accurately. With lack of trained staff trained to call insurance companies and correcting claims, denials and non-payment can become a norm, leading to high AR.
- Lack of QC in claim submission
Before submitting claims, like in any other process that demands accuracy, adequate quality check is needed. If adequate QC is not performed before submitting the claims non-payment and denial have to be faced by the DME/HME, thereby making the process more cost intensive and increasing the AR in the process.
Dealing with the challenges: Streamlining tracking
Consistently high AR leading to unavailability of funds can disrupt the business and cause interruption in operations. A DME/HME needs to focus on its healthcare delivery if it is pursuing new revenue. For many new businesses, this can lead to vital business operations and management getting sidelined. Partnering up with an outsourced provider of medical billing services can help DME/HME to:
- Assess the business accurately and pinpoint challenges faced.
- Outline potential solutions, in the context of challenges faced by the business.
- Process data accurately.
- Provide trained staff.
- Offer adequate QC checks in claim submissions.
- Deploy intelligent automation; support in-house efforts with skilled, professional expertise and business acumen.
- Utilize professional bookkeeping to streamline accounts payable and receivable.
- Track and manage income and payment obligations more efficiently.
- Ensure better managed AR and increased cash availability.
Partnerships can help DMEs/HMEs access infrastructure and software without hassles, helping ensure the first step towards ensuring better managed financials, especially AR.