The demand for effective accounts receivable management for medical practices has spawned a large service market called Revenue Cycle Management (RCM). RCM adequately addresses the complex regulations medical providers face in receiving payment for routine or critical healthcare services. To ensure cash flow in an industry where reimbursement is highly regulated, doctors and dentists must hire people with specific RCM skills.

Effective management of medical accounts receivable is made possible by hiring competent professional firms. Medicare and the big insurance companies pay for most of the health care in the United States, about 65% – 70%. The other 30% – 35% comes out of the pockets of the patients. With continued growth in High Deductible Health Plan (HDHP) utilization, patient out-of-pocket balances tend to increase. Both components of accounts receivable must be managed through a comprehensive and time-sensitive process.

Medical accounts receivable management doesn’t start after a patient’s visit ends, or even when the patient checks in for the visit. Effective RCM begins when the patient calls for an appointment and ends when the patient has paid any balances not covered by insurance or prior agreement with the provider.

There are five key components of RCM, and each one is important to the cash flow of your medical practice. They are the following:

1. Insurance Verification: When the patient calls to make an appointment, the front desk must verify insurance coverage online while the patient is on the phone. Copayment amounts must be requested from the patient at the time of registration, before the patient sees a provider.

2. Claim Submission – The insurance claim, with the appropriate codes for diagnostic and treatment procedures, is submitted electronically to the appropriate payer via established submission standards (EDI). If there are any errors in the claim preparation or submission process, flagged claims must be resubmitted as soon as they are corrected.

3. Payment Processing. When claims are paid, the primary payer (insurance company) will send a remittance advice, allowing billers to post payments electronically and transfer balances due to a secondary insurance claim or patient responsibility for timely presentation of payment automatically.

4. Accounts Receivable Tracking – This is the key to effective accounts receivable management. The provider must alert the billing office about denied claims, partial payments, and even claims that had no errors but have not yet been paid after a specified period of time. By prioritizing these unpaid claims by dollar amount, payer, and reason, accounts receivable representatives can review and contact payers or patients accordingly to request status or payment.

5. Patient Payable Balances – Once all insurance payments have been tracked and applied to the claim balance, any remaining balances should be billed to the patient via statement printing immediately and statements sent immediately with the request for payment. If no response is received within a specified time period, a series of pre-collection letters and/or phone calls should begin and continue until payment is made or the account is deemed ready to be transferred to a collection agency for the legal collection of a debt. .

If these RCM steps are properly and consistently executed, physician AR days (the average time it takes to pay a claim) will be minimized, and an absolute minimum number of patient accounts will need collection agency involvement. . Effective RCM ensures excellent cash flow and good patient relations for all physicians who value repeat business from their patients as well as patient referrals.

What happens when you don’t have the resources or expertise to effectively manage your revenue cycle management process? It’s time to contact the experts.