This is an excerpt from our webinar “Prioritizing Patients Accounts Receivable”, part of Rivet’s Revenue Cycle Webinar Series. Watch the webinar on demand here.
Every practice has open patient balances that need attention. We get it. The trouble is, you can’t expect to be efficient in collecting on those balances if you don’t have a prioritization method in place with your team, and making a plan isn’t always easy. In many practices, a rep sits down with a large number of accounts and works them without a plan, which can result in suboptimal collection rates. While, in an ideal practice, a rep would start the day with their accounts in a queue based on the highest priority as determined by their team. We want to help make the ideal a reality, so, to help you determine what plan might be best to apply to your practice, we’ve outlined the pros and cons for potential options.
Below you will find the best practices for patient accounts receivable that you can prioritize for your practice.
With this option, reps would work the highest dollar accounts and work their way down, which would mean collecting larger sums of money. The hang-up here is that highest dollar balances are some of the hardest to collect and remain unpaid for a reason. It’s also the case that the amount of touchpoints and discounts often go up for these patients.
Working accounts by age helps practices get closer to the date of service, which is a great goal. You may find, however, that you still have low collection rates with this option.
This option generally has the most effective collection rates because your system has defined them as the most likely to collect. However, putting this system in place requires more upfront investment and is one of the most difficult to develop (What balance thresholds are you going to use?, Are you going to do a soft credit check?) and is the most work to maintain (typically requires a vendor).
(Hybrid of high dollar/age of account and developing a risk level) This system assigns a risk score to each account so there is a standard risk index and would require an internal discussion on balance threshold with your team (What do you want to optimize for? Dollar? Age?). Additionally, some accounts may not enter into a clear risk level that doesn’t hit the workflow frequently enough, which could result in older accounts.
Effective management of patient accounts receivable (A/R) is essential for maintaining a healthy cash flow and ensuring the financial success of your medical practice. Tracking key metrics can help identify inefficiencies, streamline processes, and improve overall collections. Here are five critical metrics to monitor in your A/R management process:
This metric measures the average number of days it takes for a claim or patient balance to be collected. A lower days in A/R indicates efficient collections and cash flow. Aim for fewer than 40 days to maintain financial health.
Segment your outstanding balances into aging buckets, such as 0–30, 31–60, 61–90, and over 90 days. This allows you to identify and prioritize older outstanding payments, which are harder to collect as time passes.
This metric shows the percentage of collectible revenue you’ve received out of the total allowed charges. A high net collection rate (typically above 95%) reflects strong receivable management practices.
Monitoring the percentage of write-offs due to uncollectable balances helps you evaluate your collection process and identify areas where additional resources or strategies may be needed to minimize losses.
With the rise of high-deductible health plans, tracking the percentage of patient payments collected upfront or at the time of service is crucial. Collecting upfront can reduce the risk of outstanding balances and improve patient financial responsibility.
With these options in mind, the question becomes, how do you make the transition from the way you are working accounts today to your ideal patient-collections process? A good place to start would be to set reasonable expectations. These will not be overnight changes, and can be painful to apply at times, so, setting clear, reasonable expectations can help eliminate some of the stress that comes with this type of transition. From there, ensure that all stakeholders involved align on the problem to be solved (i.e. We want to be better at patient collections, We want to be better at open patient A/R, etc.). Then, set a collection rate target. Where do you want to be? (i.e. Improve collection rate %, Reduce cost to collect, etc.) Set goals to achieve this target.
Once goals have been set, get your team onboard. Communicate the goals with them, ensure that they align with your goals, and then, start small. Lay the foundation of achieving your targets brick by brick, keeping in mind what you want to achieve eventually while considering what you need to do to get there. Test different strategies, and then standardize the most effective processes across the entire team, making sure you are consistent.
When prepping to make a transition into a new workflow model, you’ll want to do some “spring cleaning” first. We recommend employing a few tactics to help you quickly clean up A/R components, and to avoid bringing dormant, non-collectable accounts into the new work flow model.
Some ideas for A/R hygiene include:
We understand that making systematic changes can be challenging, even daunting to consider. However, by setting reasonable expectations and goals, communicating those goals with your team, and making smart, thoughtful changes, the ideal can become a reality for your practice.
For more tips and resources during this transition:
When did it become so difficult to collect patient A/R?
Greasing the wheels of patient collection
Patient accounts receivable (A/R) refers to the balances owed to a healthcare provider by patients for services rendered. These balances may include copays, deductibles, and out-of-pocket expenses not covered by insurance.
Effective A/R management ensures steady cash flow, reduces bad debt, and improves the financial stability of the healthcare organization. It also minimizes delays in receiving payments from patients and insurance companies.
Challenges include collecting timely payments, managing bad debt, dealing with insurance claim denials, and handling outstanding balances. Inefficient workflows and coding errors can further complicate the process.
Practices can reduce days in A/R by verifying insurance eligibility upfront, implementing payment plans, collecting patient responsibility at the time of service, and using automated tools to streamline claim submission and follow-ups.
Bad debt from uncollected balances can negatively impact a practice’s financial health, reduce profitability, and hinder investments in patient care and technology upgrades. Monitoring and minimizing bad debt is crucial for sustainability.
Automation tools, such as revenue cycle management (RCM) platforms, can streamline claim submission, track outstanding balances, and provide real-time insights into accounts receivable. These tools improve efficiency and reduce manual errors.
Quick wins include reconciling credit balances, writing off low-dollar accounts, offering grouped balance settlements, and creating priority worklists to focus on high-risk or high-value accounts.
Transparent communication about financial responsibility, offering flexible payment plans, and using patient-friendly payment portals can improve patient satisfaction while ensuring timely payments.
Insurance companies are a significant factor in accounts receivable. Delays in claim adjudication, denials, or underpayments can lead to outstanding balances. Practices must work closely with payers to resolve issues and ensure timely reimbursement.
Collecting patient payments upfront or at the time of service significantly reduces the risk of overdue balances, improves cash flow, and ensures that patients understand their financial responsibility.
