Accounts receivable or A/R is a term used to denote money owed to your practice for services you have rendered and billed. Any payments due from patients, payers, or other guarantors are considered A/R. A goal of every practice (indeed, every business) is to manage its A/R to ensure that it gets paid correctly in a timely manner. An increase in A/R from one period to another is often a sign that monies such as copays (and increasingly, deductibles for those patients with high-deductible health plans) are not being collected upfront. It portends cash flow troubles if not corrected. One common measurement of A/R is "days in A/R," which is calculated by dividing the total A/R by the average daily charges for the practice. For instance, "40 days …show more content…
In the above example, this practice has done a much better job of collecting money upfront, a goal of every practice. However, they have lapsed in working accounts that were not paid promptly. Numerous studies have proven that the longer an account goes unpaid, the less likely it is that it will ever get paid. You can expect to get only 10 cents of every dollar that remains unpaid after 120 days—no kidding. It behooves every practice to collect at the time of …show more content…
More patients will have high deductible health plans, including many of those offered under the federal and state health insurance exchanges. Though we are doing much better, vigilance remains essential. There are several guidelines that every practice should follow: Recommendations 1. Set a goal of collecting 100 percent of all copays at the time of service. If you ask for a daily report that identifies any outliers and why each copay was not collected, copay collections should remain high. 2. Check insurance eligibility on every patient prior to every visit to: 1) Identify what copay and/or deductible is due; and 2) Ensure the patient's insurance is active. 3. After checking insurance eligibility, use appointment-reminder calls to let patients know in advance how much they are expected to pay at time of service. 4. Eliminate the aging buckets from the bottom of your patient statements. They suggest to patients that payments can be postponed. Replace them with a simple "due now." 5. Find out how often bills are sent out. Billing insurance just once a week, and patients just once a month, slows cash
Accounts receivable ending balance= Beginning balance +sales on Account - cash receipts -sales returns and allowances- charge of uncollectible account
The purpose of financial measurement in healthcare is to provide the community with the services it needs, at a clinically acceptable level of quality, at a publicly responsive level of amenity, at the least possible cost. This is done by providing healthcare finance managers with accounting and finance information to help accomplish the purpose of the organization (Nowicki, 2015). When making accounting decisions about budgeting and inventory control, an understanding of economics, statistics, and operations research is needed. Major Financial Measures
First, let us analyze General Practice Affiliates’ current financial position. The income and expenses report shows a net revenue of $230,250. The net revenue is obtained after expenses, including taxes, of the company have been subtracted from revenue (Paterson, 2014, p. 124). The balance sheet shows a $306,180 in retained earnings. Retained earnings represent stakeholders’ equity (Paterson, 2014, p. 128). Retained earnings are usually invested back in the form of inventory or debt payments (Albrecht, Stice, Stice , & Swain, 2008). General Practice Affiliates’ cash flow analysis shows that the practice invests in new equipment. However, General Practice Affiliates mainly used cash during 2012. The main source of cash from operations came from depreciation expense, which is not a reliable source of funding (Paterson, 2014, p. 130). Accounts receivable increased by $50,000, while accounts payable only increased by $10,000. In addition, cash flow analysis shows a balance sheet data that is affected by future transactions (Paterson, 2014, p. 128). General Practice Affiliates choose to stretch the time to pay suppliers instead of paying its bills. ...
The billing process is important because is crucial in maintaining the financial stability, the hospital must have an efficient process for obtaining reimbursement from patients and third-party payers. Alongside the billing process Accounts Receivable (A/R) Management is responsible for monitor outstanding accounts from patients the government, and other payers to ensure that payments are received in a timely manner.
Ghosh, C. (2013). Affordable Care Act: Strategies to Tame the Future. Physician Executive, 39(6), 68-70.
Insurance companies monitor the average fees for doctors, medical services, and general healthcare related services in each area. When your claim comes in, they use your local data to determine if the fees are usual customary or reasonable. If they determine your services exceed the normal rates for the area, they might pass the additional cost to you. It’s a good practice for you to read your policy to determine when you might incur additional fees, ask your provider questions, and ask your doctor’s office for a list of fees.
Health care costs affect family finances in two major ways: out-of-pocket spending, such as co-pays, deductibles, and prescriptions, and the family’s share of the health insurance premium. The United States health care spending growth continues to annually increase in expenditures that have stabilized at less than 4% per year. Rising cost-sharing is largely at...
American people look at their insurance bills, co-pays and drug costs, and can't understand why they continue to increase. The insured should consider all of these reasons before getting upset. In 2004, employee health care premiums increased over 11 percent, four times more than the rate of inflation. In 2003, premiums rose 10.1 percent and in 2002 they rose 15 percent. Employee spending for coverage increased 126 percent between 2000 and 2004. Those increases were lower than expected. (National Coalition on Health Care, 2005, Facts on health care costs). Premiums have risen five times faster than workers wages, on average. If medical spending continues to rise by just two percent more than personal income, by 2040 Medicare and Medicaid would hit 18.5 percent of the gross domestic product, leading the federal deficit to be 20.7 of the gross domestic product. (Melcer, R., 2004, St Louis Post-Dispatch, Rising Costs of healthcare pose huge challenges).
Managed care reimbursement models have contributed to risk avoidance by negotiating discounts, discouraging use, and denying payments for charges that appear to be false. Health care reform has increased awareness to the quality of care providers give, thus shifting the responsibility onto the provider to provide quality care or else be forced to receive reduced reimbursements (Buff & Terrell,
The medical cost coverage depends on the insurance plan one buys which includes bronze, silver, gold, and, platinum levels, and the high the premium equaling larger benefits and more coverage of medical costs (Blumenthal & Collins, 2014). Since the ACA has passed the direct affect was the increase of insurance coverage resulting in the uninsured rate falling to 13.4% in May 2012 with more than 20 million more people covered (Blumenthal & Collins, 2014). Even though the uninsured rate is at the lowest in recent history it is important to consider that the ACA does not replace existing private and public coverage, it is not universal coverage but a stepping stone to better healthcare, and the ACA market place is only open for the previously
The chargemaster is an integral element of the revenue cycle. It is used in generating charges for services that are rendered to patients in real time, the absence of functioning chargemaster can result in potential collapse of the revenue cycle. Hence, the process to optimize revenue cycle must include optimizing the chargemaster and all services that is associated with it. The negative consequences of nonfunctioning chargemaster can include excessive payment/overcharging, inaccurate billing to patients; and can result in stiff penalties and fines (Bielby et al,
The United States health care system ranks 37th in the world. Statistically, it’s bizarre how United States is amongst one of the most advanced nations in the world and the fact that it spends more on its healthcare than any other country, yet its standards are incomparable to other European nations. Unlike most countries, America doesn’t have universal coverage for health care. This means that it is the responsibility of an average American to obtain health insurance either through private insurance companies or through their employer. Under this system, there is a notion of a certain premium due at regular intervals of time but the insured may need to “co-pay” or pay a certain deductible for their treatment before their insurance takes care of the rest.
The diagnoses associated with the hospital stay are placed into groups requiring a similar intensity of services. The DRG reimbursement, similar to the system used by the federal Medicare program, is based on the average cost of providing services for the specific diagnosis group, regardless of how long a specific client may have actually been in the hospital. The department does adjust payments for exceptionally long stays or exceptionally high costs. It also pays hospitals for the capital costs associated with the Medicaid inpatient
There are several factors that contribute to the complexity of the revenue cycle. Frequent changes in contracts with payers, legislative mandates, and managed care are just a few examples of reasons why revenue cycle in the healthcare industry is so complex. Furthermore, the problems that arise in the steps of the revenue cycle further complicate the whole process. For example, going through the steps of the revenue cycle efficiently is extremely difficult when it is managed by poorly trained personnel. Furthermore, if a healthcare provider does not have the proper information system to track patient records and billing, receiving reimbursement can become difficult. In addition, one of the main factors that delay payments is denial from the insurance companies. The reason for Denial includes incorrect coding, the certain sequence of care and medical necessity or even delay in submitting claims. Lastly, inefficient patient correspondence can not only hinder the process of revenue cycle but also result in many patient complaints (Wolper, 2004).
Is your addiction treatment facility struggling with cash flow shortages resulting from too many past due accounts and a denial ratio that makes you cringe? Perhaps it's time to examine your revenue cycle management (RCM) strategy. Not really sure what RCM can do for you? Below are some frequently asked questions, and their answers, that will clear up the confusion.