CHRISTINE HOXHA
ENDO MASTERY PRACTICE COACH
One of the most important tasks of an Office Manager and administration team is ensuring that the practice’s accounts receivable is well-controlled and properly managed. A healthy accounts receivable is a sign of effective financial policies and procedures in the practice.
It is amazing how quickly an A/R can develop problems when guidelines are not met. Here are the primary factors that Endo Mastery coaches evaluate to determine if the practice’s accounts receivable is healthy:
-
Total A/R should not exceed 50% of monthly adjusted production
-
Collections (after refunds) should be 98% or higher of adjusted production
-
Over 90 Days A/R should not exceed 5 to 9% of total A/R
-
Credit balances should be close to $0 at the end of every month
Most software systems do not allow you to go back to previous months to find historical A/R balances, so it is vital to track and record these factor results at the end of each month. This allows you to build an ongoing record throughout the year that can reveal patterns or issues that may not be obvious when looking at the results of just one month.
When A/R problems are present, specific issues can be evaluated at a deeper level. For example, a concern about Over 90 Days A/R can be analyzed to determine what portion belongs to insurance vs. patients. This allows the admin team to focus where it is needed most, and to make effective improvements before they spiral out of control and potentially cause unnecessary write-offs and revenue losses.
Of course, the best way to prevent A/R problems and the hassle of collecting on accounts is to avoid the need for A/R balances with patients to begin with. Here are questions every Office Manager and administrative team should be asking themselves:
-
Are we quoting patients accurately before they arrive for treatment?
-
Are we effectively collecting at the time of service for all patients?
-
Are we offering payment methods, including credit cards and third-party financing, so the practice can avoid patient balances after the day of service?
One area that causes problems for many practices is when the patient’s insurance reimbursement is less than expected. This can result in balances that becomes difficult to collect after the fact. Properly estimating insurance benefits is vital to A/R control, especially when you have doubt about a patient’s limits, remaining benefits in the year, or potential outstanding claims from recent treatment in the GP’s practice.
It is always better to over-estimate how much of their benefits have been used so that you under-estimate the insurance payment expected in your practice. The golden rule for accounts receivable management with insurance patients is that it is always better to send a refund and check than to send a statement with a balance owing.