Did you know that approximately 20% of all medical claims are denied by payers? Besides, 60% of these rejected claims are never resubmitted!
These numbers are not just an insight, but a wake-up call for healthcare organizations. Why? Because they most probably are leaving money on the table by not appealing for preventable denials.
That’s where AR follow-up in medical billing steps in. It is a core billing function that helps you track and resolve non-payments and outstanding balances from patients and payers.
So, what are you waiting for? Continue reading to learn everything about this essential process!
3 Stages in the AR Follow-Up Process
Let’s learn about the process to better understand its significance in the next section:
1. Initial Evaluation
You initiate the AR follow-up process by performing a thorough evaluation of claims listed on the AR aging report. Here’s what it involves:
- Identify claims whose expected payment date has passed.
- Analyze the claims against the payer contracts and the healthcare provider’s internal policies.
- Determine which claims should be adjusted off. That is, deduct the uncollectible claims from the total AR due to low-balance write-offs or uncovered services.
The Outcome: At the end of this stage, you should have an actionable list of outstanding claims that are owed to you either by the patient or the payer.
2. Analysis and Prioritizing
The next stage of the AR follow-up focuses on claims that have already passed the initial grace period. That is, identify the claims that are difficult to collect and may require active intervention.
Below are the key steps it involves:
Understand the Trigger
Sort the claims into two categories:
(1) Uncollectible: Denied by the payer.
(2) Underpaid: Paid less than the contracted rate.
Perform Root Cause Analysis
Investigate the reason behind non-payment. These may include authorization issues, coding errors, etc.
Prioritize the List
Prioritize the claims based on their dollar amount. It is an integral step that helps you address the largest outstanding payments first, optimizing your practice’s cash flow.
The Outcome: When you complete this phase, you will know the specific reason for non-payment. Hence, you can take the appropriate corrective measure, e.g., resubmission, correction, or appeal.
3. Collection
Once you have the prioritized list and actionable insights, you can confidently execute the final stage of AR follow-up.
Here’s what you need to do:
Payer Follow-Up
You must correct the insurance claims that are within the filing limit with all relevant information and resubmit them. Review details, such as supporting documentation, missing modifiers, provider credentials, etc.
Patient Billing
Once the payer clears the outstanding payment, generate patient bills for the remaining balances, e.g., coinsurance, copayments, and deductibles.
Patient Follow-Up
Proactively follow up with the patient to secure the final portion of the account balance.
The Outcome: At this stage, you should achieve final payment resolution either by: (1) correcting an error, (2) overturning a denial, or (3) collecting the patient’s responsibility.
Significance of AR Follow-Up in Medical Billing
The following are some of the main reasons why you should never take the follow-up process for granted:
1. Improved Financial Stability and a Steady Cash Flow
Proactive AR follow-up helps healthcare facilities ensure financial stability and a positive cash flow.
Here’s how:
Accelerated Revenue
Recall the stages 1 and 2 we discussed in the previous section. They ensure you receive timely reimbursements, leading to reduced AR days.
Shorter Revenue Cycle = Quick Access to Cash
As a result, you become stress-free and can easily process the operating expenses of your practice.
Lower Bad Debt
The higher the days in AR, the more challenging it becomes to collect the payment. For instance, claims that are past 90-120 days are most likely to be written off as bad debt.
However, timely AR follow-up in medical billing helps you reduce write-offs, ultimately resulting in a healthier revenue cycle.
Efficient Budgeting
When you have a predictable cash flow, it becomes easier to budget for capital expenditures and expansion.
2. Higher Net Revenue
Is your practice in loss due to underpayments and denials? Take a step back and implement AR follow-up best practices. It is the only mechanism that ensures recovery of lost revenue.
Let’s review how it helps:
Ability to Overturn Denials
Stage 3 of the AR follow-up process is the key to effective denial management. It enables healthcare providers to appeal denials using actionable insights.
If you skip this stage, it will result in a complete loss of revenue for the practice. Why? Because you will not be able to appeal for even a simple claim rejection due to minor errors, like a missing modifier, etc.
As per a research study, as many as two-thirds of denied claims are recoverable.
Identification of Underpayments
Since the AR specialists review payments against the contracted rates, the chances of underpayments become minimal.
3. Identify Coding Errors and Ensure Compliance
It offers invaluable feedback, helping you prevent instances of revenue loss in the future.
Here’s how AR follow-up in medical billing helps:
Feedback Loop
The AR team identifies common errors by analyzing denial trends, e.g., frequent denial for modifier 59 or a specific CPT code. They then flag these for coders and clinicians to review so that the same mistakes can be avoided.
As a result, it becomes easier to streamline the entire claim creation and submission process.
Payer Audits
Moreover, following up on unpaid claims helps you remain current on changing payer requirements and audits. Thus, ensuring compliance becomes seamless for federal programs (Medicare, Medicaid) and commercial payers.
4. Enhanced Patient Experience and Trust
AR follow-up is primarily a financial function, but it also impacts the overall patient experience.
Learn how:
Accurate Patient Billing
When you ensure that the payer pays their portion of payment first, the patient’s responsibility reduces. That is, you can send them the rightful overdue balance promptly.
Reduced Confusion
That’s not all, it becomes easier to send on-time account statements to the patient. As a result, their trust in the billing process improves.
Common AR Follow-Up Challenges
Discussed below are some of the common AR follow-up challenges:
- There is no standardization across insurance payers for claim submission and appeal processes.
- Payers often use unclear or generic denial codes, complicating the appeal process. For example, CO-16 indicates that the claim is missing critical information or has submission/billing errors.
- It is time-consuming to identify payments lower than the negotiated rate.
- A high claim denial rate due to errors in patient demographic details, etc.
- Incomplete or missing documentation that fails to support the billed services.
- Working on low-value claims, which negatively impacts the revenue cycle (inefficient prioritization stage 2 of the AR follow-up process).
- The need for continuous training to keep the AR staff up-to-date on ever-evolving guidelines.
- Missing filing deadlines that lead to unnecessary write-offs.
- Inappropriate use of modifiers.
Let NeuraBill Handle the AR Follow-Up Intricacies!
Are you overwhelmed by the AR follow-up process and the potential hurdles you may encounter along the way? We understand your worry!
Your healthcare organization’s finances depend on the effectiveness of the follow-up process. Thus, risking it is like jeopardizing your entire practice.
Luckily, you can outsource AR recovery services to professionals like NeuraBill. We are a leading medical billing company helping practices nationwide ensure a steady cash flow.
