3 steps to keeping accounts receivable in order

Question: My associate and I are starting a new private urology practice after being employees of a large practice for five years.

One of the billers from the practice will be coming with us so that we can set up an in-house billing department.

We plan on hiring at least one person to perform the accounts receivable management function at our new practice.

At this time we do not have a business manager and are uncertain about to how to organize the accounts receivable process and prioritize the tasks. Can you provide any guidance?

Answer: There are three main areas associated with accounts receivable management. They are prioritized in this order: insurance follow-up, patient follow-up and credit balance management.

How one organizes the staff to address these areas depends on the practice's patient volume, payer mix, and number and qualifications of staff assigned to the accounts receivable management function.

The following describes each of the areas and gives guidance on how to prioritize the work within each one.

The first area, insurance follow-up, begins shortly after the claim has been transmitted to the insurance company. There are two categories: claims that have been denied or paid incorrectly, and open claims (claims for which no explanation of benefits has been received).

The first category, denied or incorrectly paid claims, must be worked on daily. The follow-up should be prioritized by the date the EOB was received and by payer.

Focus on those payers with the shorter appeal deadlines first. There are different levels of appeals. Sometimes the appeal process is as simple as conducting a telephone conference, sending additional supporting documentation or rebilling the claim with the correct information. When doing the latter, it is important to specify on the claim that it is an authorized re-bill and should not be treated like a duplicate claim.

Higher-level appeals require following the insurance company's appeals guidelines and may take weeks or even months to resolve.

The billing employee should document the conversation on an insurance follow-up tracking form and be sure to include the date and time of the call, the name of the insurance company representative, instructions provided to reverse denial and action taken.

Managing the second insurance follow-up category, open claims, requires a structured process that emphasizes results and accountability. Most practice management systems can generate an "open claims report" and an "insurance aging report."

An initial follow-up time period should be established. For example, all claims that are 30 to 45 days old should be worked on a regular basis. Follow-up activity includes contacting the insurance company to ensure that the claim was received and to inquire when payment will be made.

If the claim has not been processed, then the practice employee should find out if there is any additional information required to process the payment. Most states have prompt-payment laws that allow practices to collect lost interest from insurance companies who have not processed clean claims on a timely basis.

Once those open claims have been worked, the next priority is to address the older claims. We recommend working the larger accounts first, as there is more to lose if the practice cannot collect on them.

Analyze the older accounts to determine if there is a pattern, such as the same payer or services provided. If this is the case, the issue of no payment or slow payment may have to be elevated to a supervisor in the insurance company's claims processing department. An insurance tracking log should also be used for category of insurance follow-up.

The next area to focus on, patient follow-up, actually begins when a patient first comes to the practice and is given a copy of the practice's financial policy to read and sign.

The purpose of the signature, which is placed in the patient's chart, is to acknowledge that the patient has read and understands the policy.

The policy should outline the patient's responsibility to assist the practice staff in making sure the insurance company has the most accurate information to reimburse the practice, and to make good on outstanding patient balances.

An important key to obtaining payment from patients is to make sure that the statements are easy to read and understand. We recommend sending monthly statements to patients.

After the first statement, prewritten dunning messages should be printed on the statement showing the account is more than 30 days past due.

Once an account is 90 days past due, the statement should be printed on a different color paper and include a dunning message that lack of action on the patient's part could result in referral to a collection agency.

A procedure should be implemented to alert the appointment scheduling and front desk staff that a patient calling for an appointment has an outstanding balance that must be paid upon arrival.

This request for payment should be repeated when the patient arrives for the appointment and prior to receiving additional services.

Many practices will have their trained billing staff contact the patient by telephone to attempt to collect the payment before sending an account to the collection agency. As with the insurance follow-up, calls should be prioritized based on the age of the account and the amount due.

All calls should be documented with pertinent information: date and time of call, patient name, name of person on the telephone, telephone number, address, problem resolution and follow-up actions.

Many practices have a "small balance adjustment policy." This is used to help make the accounts receivable management process easier. The policy indicates a small balance amount that the billing staff may automatically adjust off the patient's account.

When this is done, a notation is made on the patient's account to collect it the next time the patient comes to the office. When the payment is made, the adjustment is reversed.

In other words, it doesn't relieve the patient of his responsibility, but it does make it easier to manage outstanding accounts and focus on the meaningful ones that will bring in more revenue.

Managing credit balances

The last area in accounts receivable management is credit balance management.

Credit balances and unapplied credits should be worked on a weekly basis to correct payment posting errors and ensure that refunds are sent to the patient and payer. All credit balances should be researched thoroughly prior to processing a refund. Overpayments should be returned within 60 days from when the credit balance occurred.

(This assumes you know how much an insurer might have overpaid you -- not always a safe assumption when insurers increasingly try to recoup long-past payments to physicians on services whose payments were not spelled out in the contract.)

Medicare and Medicaid, as well asthe insurance companies, have their own policies and procedures for handling overpayments. Contact your insurance provider representatives or review the provider handbook to learn the refund procedures.