How to Understand the Scope of Accounts Receivable (A/R)

The primary goal of accounts receivable (A/R) management is to have a collection period that is as short as possible.  Sometimes referred to as patient or client accounts, accounts receivables is revenue that has not been collected yet despite being generated. In order to ensure that cash flow is sufficient enough for productive and effective management, medical offices own the responsibility to meet their maximum revenue and sales potential.  Invoicing your customers, posting collections, aging accounts receivables is all part of accounting for physicians, their medical practices.  

A/R management encompasses and involves practically all areas of a medical office.  It follows that management of A/R is successful and largely necessitates a complete and comprehensive understanding of business areas and business departments and how they relate to each other.  Also key is an understanding as to how these departments influence a medical practice business’ revenue cycle and A/R period for collection.  Several other key areas can also have tremendous impacts on the same revenue cycles and collection periods.  At ProBooks, we have identified eight of these areas; let’s take a look:

1. Compliance

Creating and launching a robust compliance program entails establishing a written guide or manual which describes the compliance policy in question along with the Medical Office Code of Conduct. Almost every single compliance policy for a medical office includes both legal and ethical concepts. The Office of Inspector General (OIG) denotes seven components that provide a secure and solid basis for a medical office compliance program:

2. Internal monitoring & auditing
3. Having open lines of communication
4. Compliance and practice standards implementation
5. Carrying out disciplinary standards per widely dispersed guidelines.
6. Responding accordingly to uncovered offenses and developing corrective measures
7. A designated compliance officer or similar contact
8. Conducting and offering applicable training and education

2. Contract Negotiation

Contract negotiation includes the creation of a functional financial relationship with managed care organizations. Representing practically 50% of a medical establishment’s net revenue, managed care organizations require attention.  

Interacting and communicating with managed care organizations should result in well thought out and mutually agreeable managed care contracts.  Such a contract requires expert knowledge of contracting processes, which includes effective dates & termination dates, claim filing guidelines, reimbursement rates, and payment terms, just to name a few of the many provisions.

No two medical office contracts are the same, and no two negotiation strategies are identical.  What we do know is that three high-level concepts should be kept in mind:

1. Know the Market: If you do not have a sturdy knowledge about the percentages that correspond to client insurance, you need to learn them.  You should be able to recite the percentages of your client base that have Medicaid, Medicare, Blue Cross Blue Shield, Aetna, UnitedHealthcare or Cigna.  You should also know the percentage of your clients that have no insurance coverage at all.  If you do not have the data that contributes to these percentages, then you should consider launching a market survey to obtain the necessary data from which these percentages are calculated.

2. Use a Realistic Approach: Possessing the necessary data, and grasping the meaning of such data, will shed light on the numerous payment methods your clients use in the managed care environment.  A survey will also provide you with a strong knowledge base of information needed to make your negotiations actually realistic.

3. Employ a Consultant: Most organizations heavily depend on the skills and services rendered by consultants.  As contracts are extremely complex, consultants help provide and gather data associated with contracts and relevant legal aspects.

3. Legal Concepts

Legal counsel must review and consult on all contract issues; this step is where a majority of various and crucial exposures in an organization are found.  Some of these exposures are so intricate and complex that business leaders and top management don’t understand them.  When that scenario occurs it is best to use legal counsel to sort through and approve contracts.

The components of a contract’s legal areas usually surround strict adherence to state and federal regulations.  One area that typically involves a legal team is a practice’s potential vulnerability to fraud and abuse; federally-funded programs such as Medicaid and Medicare being the biggest culprits.

In order to be qualified as fraud, an action must have been knowingly and willfully committed.  In our experience, the most fraudulent activity happens in or during the billing process.  Unfortunately, patients have been known to file false medical billing claims in an effort to defraud the state or federally funded programs for money.  It is also unfortunate that abuse and fraud are committed by medical office staff members. Common forms of staff fraud and abuse include billing for services never performed, billing for equipment never provided and adjusting charges to get a larger reimbursement payout.

As a result of fraud and abuse, the OIG has created and dispersed special fraud alerts to the healthcare provider community.  These notifications are used to publicize trends in fraud to the public.  These alerts are also a mechanism to provide insight into fraudulent activities within the medical industry and to highlight any violations pertaining to the Medicare and Medicaid Anti-Kickback Law.

4. Patient Rights

The US Office of Personnel Management has noted three goals for the development and launching of patient rights.  The first goal is to elevate consumer confidence by guaranteeing that the health care system is accurate and reliable enough to meet consumer needs.  A medical establishment’s patient rights should also address client concerns, and encourage consumers to partake in bettering and ensuring their own health.  The second goal is to reaffirm the relevance of a good relationship between healthcare professionals and their patients. The third goal is to emphasize, as much as possible, the crucial role that consumers have in protecting their own health.  This goal is attained by developing and disseminating both consumer and responsibilities.

Within a medical office, there are eight important areas to focus on surrounding patient rights:

1. Patient Information: Patients have the right to obtain timely and accurate information regarding medical providers, health care facilities and their overall health plan.
2. Choice of Providers: Patients have the right to pick and utilize health care providers when they need them.
3. Access to Emergency Services: Patients have the right to emergency treatment of medical nature, even if they are unable to afford it.
4. Informed Consent: It is recommended to patients that they only consent to treatment if they have adequate information about their conditions and are informed of all options for treatment available.
5. Respect and Non-discrimination: Patients have the right to health care that is respectful when it is provided by any health care professionals; discrimination is absolutely out of the question.
6. Confidentiality: Patients have the right to communicate privately and confidentially with their healthcare service provider, knowing that their information is protected.
7. Complaints and Appeals: Patients have the right to have their complaints addressed in a timely and considerate fashion.
8. Patient Responsibilities: patients have responsibilities to medical offices and are expected to actively participate in their treatment plan, have a timely resolution of any monetary obligations and treatment by a staff that is respectful.

5 . Patient Access

The performance of your medical office depends tremendously on how well patient access services perform. The cycle of a consumer account begins with the first entry of patient demographic data. Assembling a great patient access team is a critical step in the direction toward improvement in collections and billing areas. The typical reasons why most patient access services teams have a low-performance rate are the lack of proper resources, inadequate training, and insufficient staffing levels. Fortunately, these can be resolved quickly and without huge expenses.

6. Patient Financial Services

Consumer and client financial services is primarily responsible for the accurate and on-time billing and collection in a medical office’s A/R.  A fundamental and complex billing process in a medical office makes knowledge of healthcare industry regulations and guidelines very important.  Billers in a medical office own the responsibility of the billing process, from start to finish, and are required to offer timely submission of technical or professional medical claims.

Reliable collections follow-up promotes speedy solutions of medical office claims. Follow-up needs to start as soon as seven to ten days after a claim has been submitted for payment. This allows for an increase in cash flow and a reduction in A/R days.

7. Health Information Management

Health Information Management is the steps taken to maintain, retrieve and store patient health information, all in accordance with state, federal and accredited agencies’ requirements. Within the framework of health information, ten patient responsibilities can be identified:

1. Privacy and Security
2. Medical Coding
3. Medical Transcription
4. Medical Staff Support
5. Assembly of Medical Records
6. Release of Information
7. Maintenance of Medical Records
8. Filing and Retrieval
9. Maintaining Confidentiality
10. Medical Necessity

8. Capturing Charge

All departments and employees should be aware of the gravity and crucial nature of charge capture.  Charge capture involves link development between medical codes to procedures and services performed during a client’s office visit.  Each and every clinical area has a critical role in charge capture as far as accurate billing, accurate upcoding, and accurate documentation are concerned. A significant number of areas come together to form a company or business, with each one contributing to charge capture; these areas include, but are not limited to the areas of:

• Pediatric
• Ambulatory Care
• Wound Care
• Case Management
• Nuclear Medicine
• Critical Care
• Laboratory
• Maternity
• Medical-Surgical Unit
• Mental Health
• Pain Management
• Nuclear Medicine
• Pharmaceutical
• Radiology

Conclusion

Collaboration and cooperation among these eight areas are critical characteristics that allow a company to have success with A/R management.  If unexpected obstacles surface that impact a collection period for A/R, management and leadership teams should be prepared to identify these roadblocks so they can adjust areas of the business accordingly and further the success of their organization.  Contact ProBooks for a consultation and more information on successful accounts receivable management.