As a Practice Advisor for FPC, I enjoy teaching a practice how to manage their accounts receivable. This can be a dreaded task each month if the AR is growing instead of turning. If the office is producing but not collecting efficiently on that production, cash flow will be limited. When this happens, bills won’t get paid, supplies are restricted and payroll is affected.
Why do some offices struggle with month-to-month collections? Some of the reasons may be:
- Insurance does not pay what is estimated.
- The patient walks out without paying in full or their co-pay, resulting in an outstanding balance.
- The patient defaults on an agreed upon payment plan.
- The Insurance was not billed in a timely manner or was billed without the proper documentation, causing a delay in payment.
Together with FPC patient billing and OTC (over the counter) office collections, an ideal collection ratio is 95-99%. The AR should not include anything over 30 days. This would mean that the AR should be no higher than the average monthly production. If your office is struggling with collections, here are some suggestions:
- Develop and implement a strong financial policy and stick to it. If you need to replace your current one, make sure all patients are notified at their next appointment and require a signature of acknowledgment. Make sure your staff fully understands the financial policy they will be enforcing which includes collecting the patient’s portion at the time of service.
- Use the insurance estimation feature in Aspire to provide your patients with a clear “estimate” of what their insurance will pay and what they will owe. All patients who are presented with a treatment plan need to sign and date it for future reference.
- All insurance claims need to be submitted in a timely manner with all proper documentation and attachments. If you are not currently using the NEA fast attach feature in Aspire, ask your Practice Advisor to help you with setting this up.
- Aspire aging and insurance tracking reports need be ran consistently every month. Refer to the FPC Success Calendar for suggested schedule. Make sure all outstanding patient balances are being paid for as agreed upon. If there is a missed payment, call the patient.
I can’t stress enough how important consistent account follow-up is to the revenue recovery process. Of course, FPC is helping you with this as well. Together we make a great team!
- Properly train your staff how to collect and answer billing questions should they arise. If your staff is knowledgeable, your patients will trust their collection efforts.
When running your aging report, insurance tracking, or referring to the CARA report (found in E-Tools), I recommend focusing on the “Largest” and “Oldest” accounts first.
Largest-These accounts owe the practice the largest amount of money and will most likely not pay in full.
- Play detective. Find out why the balance is so large. Maybe there is an outstanding insurance claim needing attention or the insurance denied the claim due to no coverage. Know exactly what you’re talking about before calling the patient. If you make sense when explaining their balance, they are more likely to understand your request for payment.
- Set up a payment plan that will both benefit the patient and your office. Getting the balance paid sooner will help the patient save on finance charges and lower the AR sooner. As a last resort, offer payoff incentives such as a cash discount. Getting at least 80-90% of the balance paid in full is better than nothing and will still result in lowering the AR.
Oldest-These accounts are over 90 days.
- Once again, play detective. There is a reason for every balance. If you are cross-referencing with your insurance tracking report, you can see if there is an outstanding claim. Remember, there is a time limit for filing claims after the treatment is completed. These claims must be taken care of before they expire.
- If the balance is the patient’s responsibility, find out why they haven’t paid. Sometimes, a friendly phone call is all it takes. For those patients avoiding payment, the worst thing you can do is avoid communication. If you’re not comfortable discussing collection options with your patients, delegate the task to someone who is. The longer these old balances sit there, the harder they are to collect.
- Now run your 60 day and 30 day overdue reports and repeat the process, but only if you have finished the 90 days. The more recent the treatment, the easier it is to collect.
Start now! Even the largest AR can be cleaned up and managed. Once systems are in place, collections will become routine and part of your everyday effort to increase cash flow and profitability.