What is Accounts Receivable in Medical Billing

Definition of Accounts Receivable

In medical billing, the term accounts receivable (A/R) refers to the money that you are yet to receive from your client(s) for the services you have billed or rendered. The list of clients who owe you money may include patients and insurance payers.

A/R Measures and Tips

Your accounts receivable play an important role in boosting your revenue cycle as it ensures reimbursement. However, in order to maximize the rate of reimbursement, you must take some measures to minimize the number of accounts receivable from various clients. Here are a few tips to help you with A/R:

• Cross-check insurance eligibility of each patient: A lot of patients claiming to have health care insurance are likely to visit your hospital for medical services. This means the payment for the billed services will come from the insurance payers. But what if a patient makes a false claim of having a health care insurance plan? Then in such a case, you’ll lose your money and chance for compensation. Therefore, you must ask the patient for the details of the insurance plan and verify his/her eligibility with insurance payer. This step will help you in avoiding any unfavorable event that may cause harm to your revenue cycle.

• A/R follow-up: It is vital to follow-up your accounts receivable to run your practice smoothly and efficiently. You must keep track of denied/rejected claims and reopen these claims to get maximum reimbursement. You may outsource A/R follow-up services to a medical billing company to make the process hassle-free and quick. The benefit of outsourcing A/R follow-up services is that you have a team of professionals dedicated to performing A/R follow-up with more focus, and efficiency. This will also allow your staff to focus on their practice due to reduced administrative work.
• Minimum A/R days: It is important that you keep track of the average length of your A/R days. If your A/R days are over 35 then you should try to reduce A/R days by getting the payment on time. This can only be done by reviewing A/R days on a monthly basis and maintaining regular A/R follow-up. There are three benchmarks to measure A/R days:
  • 35 or less A/R days = High Performance
  • 35-50 A/R days = Average Performance
  • 50 or more A/R days = Poor Performance
• Review A/R aging report: The A/R team must review the aging report on a monthly basis and compare it to the prior year. This step is important to understand the shift in numbers by looking for trends.

Benefits of A/R follow-up

Here are a few major benefits or A/R follow up:

• Stable Revenue Cycle: A/R follow ensures cash inflow from all the billed clients. This helps you to maintain a stable revenue cycle in order to compensate your physicians, and invest in medical equipment and supplies.
• Less Overdue Payments: With a team performing A/R follow-up regularly you get maximum reimbursement leaving you with fewer overdue payments.
• Never Miss a Claim: By sending claims electronically you’ll stay notified whether the claim has been denied or accepted. In case of a denied claim, you can resend another request for the claim.