Best Practices for Addressing Legacy AR in Healthcare Billing

Imagine a towering stack of unpaid bills from patients and insurance companies, steadily growing taller with each passing day. This pile-up of legacy AR isn’t just a matter of inconvenience; it’s a pressing concern that impacts the financial health and operational efficiency of hospitals across the country.

As of 2021, hospitals in the United States were grappling with over $40 billion in unpaid patient bills, according to Healthcare Financial Management Association (HFMA) data. This staggering figure significantly burdens hospital resources, affecting everything from cash flow management to patient care delivery.

But the problem doesn’t stop there.

The American Hospital Association (AHA) reports that the average hospital spends approximately $1.2 million annually on uncompensated care, further exacerbating the strain caused by legacy AR.

Did you know?

Legacy AR, or Accounts Receivable, refers to outstanding balances owed to a healthcare provider by patients or insurance companies for services rendered in the past. Due to their long-standing nature, these balances have aged beyond the typical billing cycle and require special attention.

But what are the factors behind Legacy AR?

There are several factors that contribute to the accumulation of legacy AR in healthcare billing, such as:

  • Inaccurate billing: Errors in coding, documentation, or submission can delay reimbursement.
  • Denials and rejections: Insurance companies may deny or reject claims, requiring additional follow-up.
  • Patient responsibility: Unpaid copays, deductibles, or out-of-pocket expenses contribute to outstanding balances.
  • Complex reimbursement processes: Healthcare billing involves intricate rules and regulations, leading to delays in payment.

What if the legacy AR is not recovered timely?

The failure to address legacy AR in a timely manner can have significant consequences, such as:

  • Financial strain: Unresolved balances affect cash flow and revenue cycle management, hindering operational efficiency.
  • Compliance risk: Non-compliance with billing regulations can result in penalties or audits.
  • Patient dissatisfaction: Unresolved balances may lead to patient dissatisfaction and hamper the hospital’s reputation.

What’s Next?

The hospitals can adopt several strategies to ensure timely clearance of legacy AR. These include:

  • Regular Audits

According to the Healthcare Financial Management Association (HFMA), regular audits can help identify and recover up to 20% of overlooked revenue, making them a critical component of revenue cycle management.

Regular audits are essential for healthcare providers to ensure the accuracy and completeness of their billing records. By conducting routine audits, hospitals can identify errors, discrepancies, or overlooked claims that may contribute to the accumulation of legacy AR. These audits involve analyzing aging reports to prioritize older accounts for follow-up and resolution.

  • Improved Documentation

As per the research, accurate documentation not only enhances revenue recovery but also contributes to better patient care and compliance with regulatory requirements.

Accurate and detailed documentation of services provided is crucial for hospitals to facilitate timely reimbursement and reduce the risk of claim denials or rejections. Providers can minimize errors and discrepancies in their billing records by ensuring proper coding and documentation of medical necessity. Implementing electronic health record (EHR) systems can further streamline documentation processes, reducing the administrative burden and improving accuracy.

  • Streamlined Processes

According to the Medical Group Management Association (MGMA), practices with efficient medical billing and coding processes collect over 95% of their accounts receivable, highlighting the importance of streamlined processes in revenue cycle management.

Efficient billing processes are essential for hospitals to expedite the reimbursement process and reduce the chances of accounts aging into legacy AR. Providers can streamline billing operations and minimize manual errors by implementing automated claim submission and electronic remittance advice (ERA) processing. Utilizing revenue cycle management (RCM) software can further optimize billing processes, improving overall efficiency and reducing administrative costs.

  • Proactive Follow-Up

According to the American Academy of Family Physicians (AAFP), proactive follow-up can increase collection rates by up to 25%, underscoring its importance in revenue cycle management.

Proactive follow-up on unpaid claims, denials, and underpayments is critical for hospitals to minimize the impact of legacy AR on their financial health. By establishing dedicated teams for follow-up and implementing automated follow-up systems, providers can track and prioritize outstanding accounts for resolution. Proactive follow-up not only increases the possibility of timely reimbursement but also improves overall collection rates.

  • Patient Engagement

A study published in JAMA Internal Medicine found that patient engagement strategies can reduce self-pay AR days by up to 36%, highlighting their effectiveness in revenue cycle management.

Engaging patients in their financial responsibilities is essential for healthcare providers to reduce self-pay AR and improve overall revenue recovery. Hospitals can promote transparency and facilitate prompt payment by educating patients about their financial obligations, including copays, deductibles, and out-of-pocket expenses. In fact, offering payment plans, financial assistance programs, or discounts for prompt payment can further incentivize patients to settle their balances in a timely manner. Patient engagement strategies not only improve revenue recovery but also enhance patient satisfaction and loyalty.

  • Outsourcing RCM

According to Black Book Market Research, outsourcing revenue cycle management can increase collections by up to 15% and reduce AR days by up to 30%. This makes it a viable strategy for hospitals looking to optimize their revenue cycle performance.

Outsourcing revenue cycle management to 24/7 Medical Billing Services, specializing in billing and collection processes, can provide hospitals with access to specialized expertise and resources. By partnering with reputable companies, providers can offload administrative tasks, improve collection rates, and reduce AR days. Outsourcing revenue cycle management can also help providers navigate complex billing regulations and compliance requirements, reducing the risk of revenue leakage and penalties. Overall, outsourcing RCM offers a cost-effective and efficient solution for healthcare providers to streamline revenue cycle operations and enhance financial stability. Contact the team at 888-502-0537 to address your legacy AR.


Let us know what you need!

Error: Contact form not found.