Accounts Receivable & Payment Posting Explained

Accounts Receivable & Payment Posting Explained
In the field of medical billing, proper management of accounts receivables and payment posting are crucial in maintaining an effective revenue cycle.
If you’re in a practice and looking for some guidance about this matter, you’re at the right post. Here, we will discuss A/R payments and payment posting in medical billing together with the best practices in the industry.

What is accounts receivable in healthcare?

Accounts receivable (A/R) refer to the outstanding payments owed to healthcare providers for the services and treatments they rendered to patients. These are the funds that practices are yet to collect from insurance companies, government payers, or directly to the patients.
Proper management of accounts receivables ensure that healthcare practitioners aren’t leaving money on the table. At the same time, it guarantees that patients are being charged accurately.
However, for big practices, keeping up with their accounts receivables can be challenging. This is why many of them partner with medical billing companies like Med Financial Solutions to keep a steady financial position.
In addition, efficient A/R management are crucial for the following reasons:
Financial stability. Proper accounts receivable management addresses billing issues right away, reducing the risk of financial bottlenecks.
Improved cash flow. Through timely collections, healthcare providers will have the funds they need to meet financial obligations and acquire necessary resources for their practice.
Maximizing revenue. This is to ensure that healthcare providers are receiving correct reimbursements for the services they provided.

Processes involved in managing accounts receivable

While the process of accounts receivable management differ from one practice to another, it often includes similar steps. Here’s a short rundown:

Insurance verification

The first step is accurate patient registration and comprehensive insurance verification. This ensures that the billing information is correct, which is crucial for a seamless claim submission.
During this step, medical billers cross-check the patient’s eligibility and coverage. This way, practices can avoid the risk of providing services not included in their patient’s policy.

Claims submission

Once the first step is complete, medical billers will then submit claims to the insurance companies or third-party payers.
These claims contain detailed information about the services provided, including medical codes, procedural codes, and supporting documentation.
Take note that claims preparation is a very crucial step in accounts receivable management. Any error can easily lead to denials or rejections, which will slow down the revenue cycle.

Follow-up on outstanding claims

Following up on accounts receivables are necessary to ensure that everything is on track.
At this phase, managers need to keep track of denied/rejected claims as well as account receivable aging.
On average, these are the benchmarks used to measure A/R performance:
35 days or less = high performance
35-50 days = average performance
50 days or more = poor performance
From there, the A/R team should create an aging report to see which payers are lagging in terms of reimbursements. This will also help the medical collections team to assess where they need to shift their focus more.
On the other hand, healthcare providers who don’t have the luxury of time to wait for payments usually opt for medical factoring. With this financing model, they sell their A/Rs to factors who will relinquish the collections process for a small fee.

Denial management

After checking A/R performance, it’s also crucial to manage denied or rejected claims. Overall, claims can be denied for a variety of reasons, including incorrect coding, incomplete/incorrect patient information, overlapping claims, non-coverage, and more.
For this, managers need to identify the denial category and take a corrective action. After that, the claim will be resubmitted or reappealed for reimbursement.
Continuous follow-up and tracking are still necessary until all the claims have been paid. Also, the faster the errors on denied claims get corrected, the faster the payments will be as well.

Payment posting

Once the payers have reimbursed the claims, the next step is payment posting.
Healthcare providers will receive payments either via check, electronic funds transfer (EFT), or electronic remittance advice. Each of these methods are accompanied by an explanation of benefits (EOB) stating the payment details of the respective claims.

Patient collections

If the patient still has outstanding balances after insurance payments, medical billers will proceed with patient collections. This includes sending statements, following up through phone calls, and referring them to their insurance providers should they need further assistance for their claims.

Best practices in A/R management

Implementing good practices in A/R management will help avoid common pitfalls such as denied claims, repetitive rejections, and inefficient collections.
Here are some of the best practices in accounts receivable management that healthcare providers can implement in their system:
Establish Clear Financial Policies. Clearly define and communicate financial policies to both patients and staff members. This includes policies related to copays, deductibles, payment plans, collections, and dispute resolution. Consistent adherence to these policies helps maintain a smooth revenue cycle.
Embrace Automation for Efficiency. Explore automation solutions for repetitive tasks within A/R management, such as claim status inquiries, eligibility verification, or payment posting. Automation can reduce administrative burden, minimize errors, and expedite billing processes.
Consider outsourcing A/R management. Consider outsourcing certain aspects of your A/R management to reputable billing and revenue cycle management firms. Outsourcing can provide access to specialized expertise, advanced technology, and scalable resources to optimize billing processes.
Conduct Regular Audits. Perform regular internal audits to ensure compliance with billing regulations, coding standards, and documentation requirements. Identify any potential areas of non-compliance and take corrective actions to mitigate risks.
Monitor Payer Reimbursement Rates. Stay informed about payer contracts and reimbursement rates to ensure accurate billing and reimbursement. Periodically review and renegotiate contracts with payers to secure fair and competitive reimbursement rates for services rendered.
Utilize Data Analytics for Insights. Leverage data analytics tools to gain insights into A/R performance, claim denials, and reimbursement trends. Analyzing data can help identify patterns, inefficiencies, or areas for improvement in the revenue cycle, enabling proactive decision-making.

What is payment posting?

Payment posting involves cross-checking and ensuring that the filed claim matches with the amount paid. This is to check for any discrepancies that may require further action.
In general, cash posting in medical billing includes the following processes:
Receiving Payments. Medical billers receive payments in various forms, such as checks, electronic funds transfers (EFT), or electronic remittance advice (ERA) files.
Reviewing Payment Information. The biller reviews the payment information received, including the payer name, patient name, claim number, date of service, and payment amount.
Allocation of Payments. The biller allocates the payment to the appropriate patient’s account based on the claim number or patient identifier.
Cross-Verification. The allocated payment amount is cross-verified with the expected reimbursement amount mentioned in the remittance advice or explanation of benefits (EOB).
Adjustment Posting. Adjustments may be required for contractual write-offs, co-pays, deductibles, or any other payment discrepancies.
Reconciliation. The payment posting is reconciled with the corresponding claims and any outstanding balances are identified.
Claim Resubmission. If there are any underpayments or denied claims, necessary actions are taken to resubmit or appeal the claims.
Reporting. Accurate payment posting data is recorded for reporting purposes to track financial performance and identify trends or issues.

Entrust your A/R management to Med Financial Solutions

Accounts receivable management can be an overwhelming task for healthcare providers. Instead of spending time trying to handle your practice’s outstanding claims, you can let our specialists do it for you.
At Med Financial Solutions, we offer exceptional medical billing services to ensure your practice’s financial success. With over 35+ years of medical billing experience and up to 97% collection rate, your healthcare practice will be in good hands.
Contact us today to maximize your revenue and streamline your accounts receivable!
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