Improve Days In Accounts Receivable - 5 Tips for OBGYN Medical Centers
Accounts Receivable in healthcare and efficient management are vital for the financial health of medical centers, including Obstetrics and Gynecology (OBGYN) specialties. The term “Days in AR” represents the average number of days it takes for a medical practice to collect payment after providing services to patients. It is a crucial Key Performance Indicator (KPI) because it directly impacts the practice’s cash flow. In the realm of OBGYN, specific tips for Accounts Receivable and strategies can help improve Days in Accounts Receivable in OBGYN.
How to Calculate Days In Accounts Receivable (AR) in Healthcare for OBGYN Medical Centers?
Divide your total accounts receivable (AR) by the practice’s average daily charge amount. To determine the average daily charge, divide the total charges for the last three months by 90 days, representing three months.
For instance, if your total outstanding account receivable in medical billing stands at $350,000 and the average daily charge is $6,200, the days in AR can be calculated as $350,000 / $6,200, which equals 56 days. This means that, on average, it takes 56 days to receive payment for a claim or service. Clearly, as an independent medical practice, waiting 56 days for payment is not an ideal situation, is it?
In this article, we will explore the top 5 tips to enhance the efficiency of your OBGYN practice’s AR management.
Tip #1: Implement a Front-End Driven Revenue Cycle Process
One effective approach for Obstetrics and Gynecology medical centers to streamline their accounts receivable in OBGNY is to shift certain back-end functions to the front-end. This includes tasks such as verifying insurance eligibility, seeking pre-authorization if necessary, and estimating patient liabilities before services are provided.
Performing these actions on the front end gives patients the opportunity to pre-pay, cuts down the collection cost, and reduces exposure to bad debt. Obtaining pre-authorization upfront is a good practice to prevent rejected claims and helps keep Days in AR under control.
Tip #2: Adopt Best Practices in Your Billing & Coding Management
We call this the preventive therapy! You need to prevent rejections, delays & denials to minimize the time to reimbursement & also minimize the lost revenue opportunities.
48-Hour Turnaround Time: From receipt of charges to submission of the claim, aim for a 48-hour turnaround time.
Set Clean Claim Goals: Aim for a clean claim rate of 97% or more, clean claim rates help in analyzing the errors made in the front end.
Work EDI Rejections Same Day: Work your EDI rejections on a same-day basis & collect data to further fine-tune your claims scrubber/rules engine.
Use Certified Coders: Hire 100% AAPC-certified medical coders experienced in the OBGYN specialty.
Use Appropriate Modifiers: Coding appropriate modifiers for services such as left (LT), right (RT), bilateral (50), etc is essential in OBGYN.
Factor in Payer Guidelines: Factor in payer guidelines while coding to stay clear of rejections & denials.
Avoid Undercoding/Overcoding: Do not under code! Do not overcode! Just code it right!
The quicker you submit a clean claim to the right payer, the quicker you get paid!
Tip #3: Manage Your Denials Effectively
Adopting best practices in billing & coding will help you minimize rejections & denials but not fully eliminate them. So, effective denial management is crucial to reduce your Days in the AR cycle. According to industry sources, 50% of the denials never get reworked and this results in a 5-7% net loss of revenue.
Define Your Denial Strategy: Some denials would need disputed/appealed with the payer. Define your dispute strategy clearly. What is worthy of dispute versus what is acceptable; not every denial needs to be appealed.
Standard Appeal Templates: The appeal success rate is highly dependent on the content of the appeal, having standard appeal templates with approved verbiage is a must.
Preventive Denial Analysis: Use preventive denial analysis for the root cause study. The time & effort that goes into this exercise is totally worth it because it has the potential to reduce your future denial rate.
Tip #4: Understand and Define your AR Ageing Benchmarks Clearly
In the example above, 56 days in AR does tell a story; however, it does not give you the full picture. First, it does not talk about the patient & payer breakup. Also, if the days in AR are higher than your expectations:
Analyze Your Payer Breakup: Are all payers more or less on the same average? Or is it because a couple of big payers from your payer mix are not paying claims on time?
Set Aging Thresholds: Hence, it is important to run detailed reports with payer breakup to understand the overall aging of your AR.
Compare with Industry Benchmarks: Always compare your thresholds with the industry benchmarks to ensure you are going after the right target.
Minimize Credit Balances: It is critical that your open AR has as minimum credit balances as possible. Having credit balances in the AR can throw off your calculations & mislead you.
Monitor Aging Closely: Monitor your aging closely to see if the goals are being met.
Tip #5: Perform AR Follow-up and Keep up your Follow-up Promises
If you have done all of the above, then by now you should have a list of claims that need to be followed up on either with the payer or with the patient. You should also be able to set a priority level based on the above analysis & recommendations.
Sort Your Payer Follow-up List: Sort your payer follow-up list based on priority. The oldest claims & biggest $$ value would seem like two of the natural priorities. However, working on trends is also recommended as it may impact a lot of current as well as future claims.
Define No-Response Threshold: Define your no-response threshold & initiate follow-up immediately on any claims outside of this threshold.
Document All Follow-ups: Document all follow-ups to keep a track record; something that didn’t get documented never happened!
Develop Well-Defined Follow-up Actions: Develop well-defined follow-up actions with built-in next follow-up date. Make sure these are standard across the board.
Create Filters for Follow-up Promises: Create filters to identify follow-up promises & stick to your follow-up promises. It is critical in order to be able to close the loop on the case & resolve claims to bring in payment.
As OBGYN medical centers deal with the ever-changing financial environment, managing the accounts receivable in healthcare efficiently is one of the most crucial aspects of managing a healthcare business. Cash-starved medical centers and hospitals are the victims of a declining AR turnover rate & a deteriorating AR aging schedule.
It is easier said than done to turn around a troubled revenue cycle. You need to be able to determine what is wrong with the framework of your revenue cycle & then put together a workflow mechanism that will help you meet your goals & drive the flow of cash.
By implementing best practices throughout your revenue cycle, you can substantially shorten it. By decreasing the payment cycle by 5-7 days the cash flow can increase significantly & it will allow you to run a successful practice.
BillingParadise has helped many OBGYN Medical Centers in successfully identifying gap areas but also implementing workflows that optimized their OBGYN account receivable services collections cycle & therefore tremendously improved their cash flow. Check out our OBGYN account receivable services.