AR Daze
It’s one of the most widely used Key Performance Indicators (KPIs) in the Revenue Cycle industry.
A snapshot of AR Days can give executives an idea of how efficiently their revenue cycle is performing.
By measuring the average time that it takes to collect on outstanding patient accounts, the measure of AR Days provides key insight. However, it is important to understand that this is just one of many KPIs that should be used in assessing the overall health of your revenue cycle.
All too frequently, organization leaders place too much stock in the measure of their AR Days. The pressure to keep AR Days in line can lead to inefficient practices. In assessing many facilities with a variety of Revenue Cycle related issues, here are three things that I have seen Business Office staff do in order to keep AR Days in check.
Payment Posting Errors
No facility is immune to errors in the payment posting process. Even when automated, this process is constantly in need of fine tuning.
One of the most frequent errors that we discover involves incorrect posting of contractual adjustments. Interim denials that need to be reworked commonly get adjusted. Secondary claims are posted with a contractual adjustment as though they are primary, resulting in credit balances. These two issues technically result in a lower AR figure.
Now ask yourself, if your staff feels pressure to keep AR Days as low as possible, how motivated will they be to reverse a posted adjustment that moves their key indicator in the other direction? How driven will they be to work credit balances?
It is imperative to utilize a variety of KPIs in order to ensure that all areas are worked thoroughly and appropriately.
Post-payment Adjustments
This is another key area where staff can lower the AR Days KPI. We have encountered facilities that are quick to adjust claims that are still collectible in order to keep their KPI in line. Denial rates and productivity should be measured in order to ensure that adjustments only occur as a last resort, when a claim is deemed truly uncollectible. Dollars are left on the table, and essentially in the pockets of insurers, when facilities have a quick trigger on account adjustments.
Account Resolution Mentality
The first two areas that I mentioned show that being shortsighted in the valuation of KPIs can create a deeper issue – a mentality that prioritizes zero balances over collections.
Staff can become more enamored with “cleaning up” their accounts, which means that collecting on every account in their assigned area doesn’t necessarily come first. While there aren’t any ill intentions in most cases, your staff understands what is being used to measure their success and they are simply trying to produce what is expected of them.
Measures that incorporate collections, in addition to AR related KPIs, can be a safeguard against these aforementioned practices and bring collections back into focus.
When viewed as a part of the overall measure of Revenue Cycle performance, AR Days can provide key insight into your facility’s performance. If you and your facility need assistance in identifying the additional KPIs that you should be measuring, reach out to the people in your professional network to see what they are using and how you may be able to adapt new measures to your facility.
Don’t let your AR Daze give you a false sense of success at your facility.
