Why Are Your Accounts Receivable Aging? Two Likely Culprits

Wine. Cheese. George Clooney. All proof that aging can cause positive maturation that brings about a better version of something (or someone). Unfortunately, we aren’t talking about meals and movies here. As if you weren’t already aware, your accounts receivable ages about as well as a 7-day weather forecast.

As a revenue cycle vendor, we frequently receive calls from facilities that require assistance with their accounts receivable. In many cases, we find hospitals losing at least six figures of reimbursement monthly – and these are mostly small, rural facilities. When we present this type of information to CEOs and CFOs, they struggle to hide the looks of disgust.

The risk of losing dollars increases with the age of a patient account. Your facility cannot afford to lose reimbursable revenue due to disfunction on the back end of your revenue cycle. We work in a world where nearly all claims should be submitted electronically. A high percentage of follow-up can take place online via payer portals, and most payments can be posted electronically.

Excuses are dwindling for claims that remain in accounts receivable beyond 90 days. The presence of consistent aged A/R, especially beyond the 90-day threshold, should be sufficient evidence that your revenue cycle team has left work undone. We will look at a couple of areas that leadership should start with when determining how to fix the problems.

First off, the presence of broken processes is evident in these situations. Maybe there are issues with the initial claim submission process. Are the proper edits set up in the clearinghouse to ensure a clean claim? Perhaps the procedures for claim follow-up need to be re-examined. Did someone check the claim status promptly? What about denial management? Is someone working the denied claim, or are they just pushing the claim back out to be denied again?

Management within the Business Office needs to examine these three areas. If you have problems with aging A/R, you will inevitably find that something is broken when it comes to submitting the claim, follow-up, or denial management. If you’re unsure whether your manager is capable of adequately assessing how these areas are functioning, you may need to identify a vendor that you can contract with to provide an independent assessment.

Speaking of your employees’ capabilities, do they have the expertise necessary to identify the functional issues that are causing your A/R to age? Healthcare is constantly changing (I’m going to assume you’ve heard that before). Is your staff receiving continuing education to keep up? Was your billing staff qualified to begin with, or did you promote your best registration clerk? Don’t get me wrong, sometimes the best person for the job is already in the building.

The right person should be knowledgeable about billing, but these days, they need to be at least somewhat tech-savvy to work efficiently within the systems that your facility has in place. If you have given your staff the tools necessary to be successful and your process still isn’t working, then maybe it’s time to examine whether you have the right people in-house.

Processes and people. While this is certainly not an all-inclusive list, beginning with these areas will provide a great start in determining how to repair the back end of your revenue cycle. Aged A/R is an area that can balloon rather quickly and have a significant negative impact on your cash. Keeping it under control should always be a top priority.