10 Tips to Improve Your Average Days in A/R

By Lisa Eramo  |  March 7, 2016

Days in accounts receivable (A/R) is the average number of days it takes a practice to collect payments due. This metric provides valuable insight into the overall efficiency of your revenue cycle. A lower A/R implies faster payment—a necessity in today’s self-pay and high-deductible health plan environment. Physicians need to collect every dollar that’s due to them as quickly as possible. All practices should strive for an average 40-day A/R cycle to ensure smooth cash flow and operations.

To determine your average A/R, divide your total accounts receivable by your average daily gross charge. Your average daily gross charge is your total gross charges for the past year divided by 365 days.

What are some strategies that practices can use to stay within the 30-40 day A/R timeframe? Consider the following 10 tips: Tweet this Kareo story

1. Verify insurance eligibility and demographic information prior to each visit. Does you have the correct address, phone number, and email address on file? Is the patient’s insurance active? Will a copayment and/or deductible be due? If so, what is the amount? Let patients know this information in advance.

2. Consider a batch eligibility system. This system provides a report showing each patient’s current coverage and eligibility status. Run this report two days before each patient appointment to identify potential errors in data input as well as any undetected gaps in coverage. The system ensures up-to-date information, and it helps practices catch any changes that might occur between the booking of the appointment and the actual date of service.

3. Collect 100% of all copayments at the time of service—when the patient checks in for his or her appointment. Let patients know in advance of this expectation.

4. Revise patient statements to communicate effectively with patients. Include the dates of service as well as a detailed breakdown of the services rendered, insurance payments, fees collected at the time of service, and a total amount due.

5. Send two patient statements and then follow up with a phone call for 90-day past due balances. Then decide whether to send the account to collections or write off the amount.  Sending more than two statements is typically unfruitful, and it wastes valuable time and resources.

6. Send bills to patients and/or insurers as soon as possible (i.e., weekly rather than monthly). Lengthening the time between the date of service and the date of billing oftentimes causes downstream effects in terms of payment delays. Patients are more likely to pay their bill when it arrives as close as possible to the date of their appointment.

7. Offer credit card or online bill pay to make it easier for patients to comply. These options are particularly important for patients with high-deductible health plans and/or health savings accounts who are covering the majority of the bill.

8. Hire a certified coder. This individual can:

  • Ensure accurate assignment of ICD-10-CM diagnosis and CPT procedure codes
  • Help physicians improve documentation to meet specific payer requirements and accurately reflect patient severity as well as the care provided
  • Stay on top of industry trends and regulatory requirements
  • Answer patients’ questions about copayments and deductibles

9. Get a good picture of your data. Consider these tips to enhance performance:

  • Calculate overall average days in A/R as well as average days in A/R by payer. Does one payer, in particular, continually cause problems? If so, address the issue directly with this payer.
  • Calculate days in A/R with and without accounts sent to collections to get a truer picture of performance.
  • Don’t forget about older aging buckets (i.e., past 90 or 120 days). Your overall average A/R days might be satisfactory even when these buckets are elevated. Monitor these statistics separately.

10. Strive for constant improvement. Monitor your data and compare it with previous quarters and/or years. A/R suffers the most when practices remain complacent and don’t address balances from month to month. Tackle the problem head-on. With a little effort, you A/R can improve significantly.

If you are looking for ways to improve you medical billing, use this Billing Best Practice Checklist to establish goals for best practices.
 

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