Good patient care is not enough for a medical practice. It also needs strong finances. After all, health costs keep rising, and insurance rules keep changing. As a result, even great practices can face cash flow problems. Often, the cause is late payments and unpaid claims. Fortunately, the fix is simple: track what people owe you. That is exactly what aging reports do. In short, they turn a practice into an active collector, not just a passive biller. Because of this, they lead to stronger revenue.
What Are Aging Reports?
An aging report may sound confusing. Nonetheless, it is easy to accomplish. In particular, the A/R aging process ranks outstanding claims based on the period that has elapsed since they were filed. This is usually done using 30-day increments:
- 0-30 Days: The payer just got the claim. So, it is still being processed.
- 31-60 Days: The statement is rather delayed. Hence, it requires a quick assessment, verification of eligibility, or correction.
- 61-90 Days: It is no longer new. Rather, it could point to a billing issue or non-payment.
- 91-120 Days: The claim is near the payer’s deadline. Therefore, it can be subject to non-payment.
- Greater Than 120 Days: The claim is quite old. Thus, it requires an extraordinary effort such as an appeal, a secondary billing effort, or a write-off.
Overall, time buckets make claims easy to sort. Because of this, practice managers and billers can spot late claims fast. In turn, they can act before a claim leaves its safe window. Meanwhile, they do not need to check each claim by hand. Instead, aging reports show them which claims need help first.
Cash Flow Impact
To begin with, every service costs money right away. For example, your practice pays for the doctor’s time, staff pay, supplies, and overhead before it gets paid back. Once a payer waits past 60 days, your chance of full payment drops fast. In addition, insurers also set strict filing deadlines. Generally, they range from 90 days to one year, depending on the contractual agreement. Should the claim remain outstanding after such a period, the insurance company will reject it. Sadly, there is no way for the medical practice to appeal the rejection. Instead, they have to write it off as bad debt.
Operational Benefits
For instance, Minnesota’s Medicare CPCs must follow set rules for Medicare reports. Even so, clinics can gain quick wins from good financial tracking. Overall, an aging report helps leaders in two ways: first, it helps them control billing, and second, it helps them get more value from every claim.
Identifying Denials
Generally, claims get harder to collect over time. Therefore, aging reports often group unpaid claims by payer or procedure code. As a result, this can point to a billing issue. Common problems include:
- Coding mistakes in ICD-10 and CPT
- Missing or wrong modifiers
- Wrong subscriber information
- Invalid patient insurance
Ultimately, these patterns help you find the root cause of errors, which leads to cleaner claims.
Prioritizing Work
Typically, most billers work in a busy setting. Moreover, their job gets harder when no one sets clear priorities. For example, staff can waste time chasing small co-pay accounts. Meanwhile, bigger accounts sit untouched. Fortunately, aging reports fix this problem. Specifically, they let billers sort unpaid claims by dollar amount, age, and insurer.
Denial Management
Above all, unhandled denials are a top cause of lost revenue. Fortunately, aging reports can flag a claim that may get rejected. So, as soon as a claim moves from the 0-30 day box to the 31-60 day box, act fast. Next, start tracing it through the clearinghouse right away. That way, finding problems early gives you plenty of time to fix them.
Key Financial Indicators
Besides this, it is important for companies to measure various A/R ratios. This will ensure that the company gets maximum benefit from its data. Below are a few common ratios:
- Days in Accounts Receivable (DAR): Amount of time needed to collect the payment. Usually, best practices keep the DAR between 35-40 days.
- Percent in A/R Over 90 Days: Percentage of A/R that is over 90 days. Best practices usually ensure this percentage remains below 15%.
- First-Time Clean Claims Rate: Proportion of claims that are paid in the first attempt. The First-Time Clean Claim Rate above 95% ensures that claims do not age.
- Net Collection Rate: Proportion of allowed payments that are actually collected. A Net Collection Rate between 95-98% is considered to be an optimum practice.
Lastly, measure these metrics using monthly aging report. This helps leaders know where the practice stands regarding billing and the performance of the team.
Best Practices
Overall, there are many ways to manage account aging. First, start with a set routine for daily and weekly tasks. This way, you turn aging data into real cash. Indeed, strict A/R steps help you catch every claim.
Here are some tips to improve your A/R:
- A/R Weekly Audit: Look at the 60-day and 90-day buckets on a weekly basis. Furthermore, each audit must have an owner from one team member.
- Custom Follow-Ups: Use a follow-up plan that fits the payer. For instance, a commercial payer needs a different plan than a government payer.
- Claim Scrubbing Tool: Good billing software flags problems before you submit a claim. In particular, it catches missing modifiers and code errors.
- Bills for Patients: Give the patient an estimated cost of their bill at the outset. Thereafter, send them an invoice instantly by either email or text. In addition, ensure that patients have convenient modes of payment too.
- Medical Billing Partner: Lastly, consider having your own medical billing team, such as MIU Medical Billing.
MIU Billing Support
At MIU Medical Billing, we build our billing services around U.S. medical practices. Specifically, our billing experts run full accounts receivable audits. Consequently, this assists in earning back money and minimizing aged claims. Moreover, we apply intelligent data analysis and have direct access to clearinghouses. For this reason, denial management is performed efficiently, hence less time spent in A/R.
Conclusion
To recap, aging reports are essential to ensure that your financials are in good shape when it comes to healthcare. This is because all the overdue amounts are visible in these reports, enabling you to identify any mistakes in billing before writing off the overdue invoices.
