Welcome to Part 2 of Billing No-Nos: Ignoring Your A/R. In Part 1, we discussed the need for every practice owner and manager to know their accounts receivable, and we hope you’ve taken steps to review those reports. The next most logical question is, “Now that I know, what do I do about the issues?” That’s what we’re going to discuss today.

In addition to your fee schedule, which impacts your revenue and A/R, we can’t underestimate the impact of your internal billing processes, which can support or harm your payment efforts.

Denial of Insurance claims. When a claim is denied by a payor, the practice suffers in two ways: revenue is delayed (or lost) and your practice incurs the costs of appealing the denial. The most common causes of denials are: 1) missing or inaccurate insurance information 2) lack of pre-authorization for procedures (if required) 3) missing filing deadlines. You can attack all three by verifying patient insurance coverage at every visit (a quick, “Is your insurance still ______?”) and assuring your billers review claims before submission.

The office or billing manager should know the top reasons for claims denials in your practice, which can reveal processes requiring correction or staff members who need additional training. Finally, the manager must make sure denials are being worked and corrected so you receive the payment you earned for services provided. The industry standard for denials is not more than 5%. What’s your denial rate?

Write-offs. One of our pet peeves is the unregulated nature of write-offs in many practices. What is your policy, and who has the authority to write off balances? It helps the discussion to distinguish between a write off and an adjustment.

Adjustments occur for many reasons, most of which have to do with the insurer paying a contracted amount which is less than your fee schedule. In that case, the “balance” after the payment is adjusted to bring the patient account to a zero balance. A write-off is the elimination of a patient balance that was the patient’s financial responsibility. Only someone in a position of authority (practice owner, administrator) should be able to make a patient balance disappear. We suggest an office policy for the reasons and dollar amounts that can be written off as a norm. It’s also important monitor the write-off pattern over a time period to see if there are hidden issues with your payments or billing procedures.

High bad debts and patient responsibility. Since your practice is verifying insurance at every visit as explained above, you will have actionable info for billing purposes. Next, it’s crucial to make sure the upfront costs (deductibles, copayments) are collected at the time of the visit, certainly before the patient leaves the office. If your staff knows the patient’s out of pocket expenses before the visit, they could remind the patient or caregiver of the required payment prior to the visit. Take the time to properly train your billers so, for example, if the patient is having a procedure, they can provide clear and detailed billing information to the patient that hopefully reduces the likelihood he or she will renege on any financial responsibilities.

Collecting Unpaid Balances. When you have provided services to the patient, you’re entitled to be paid. Part of A/R management is establishing and monitoring the collection process, and holding your staff to the established guidelines in following up on outstanding payments. For example, at what point is there any follow up? How many calls are made to collect unpaid balances? Where are notes of any communications kept? How many patient statements do you send, and what happens after the last unpaid statement? Some practices are reluctant to use collection agencies, and that is certainly your preference. But consider that if you don’t value your services by requiring fair payment, how will your patients value them?

We hope this two-part series is helpful to your practice in putting in place the processes that will bring your continued financial success.