At RCM360, we believe in getting paid what your practice is due. Whether it’s entering billing encounters that providers haven’t finished in a timely manner, or accounts receivable follow up.
Over the years, RCM360 has worked with many clients on an AR analysis to determine how much, on average, we can collect for the current AR inventory out to insurance. MGMA has recognized that 25%-30% of collections are left on the table, and we consistently see this to be true. That means on $100,000 of outstanding AR, you can leave up to $30,000 on the table. Why is this?
It comes down to practices chasing the low hanging fruit instead of ensuring they have dedicated resources to do AR follow up. But many practices can’t or don’t allocate a dedicated resource, and we can’t figure out why. Many don’t want to hire someone to do it, however, when we do the cost breakdown, we see that practices, on average, pay 5% of $25,000 to someone to do their AR follow up. This equals $1,250 per month. Why would you not pay $1,250 to get back $23,750 per month? We don’t just see this trend with in-house billers, either. We also see it with outsourced billing. Even the outsourced billing tends to go after the low hanging fruit.
Let’s break down the average cost to do this in-house:
- Salary: $40,000
- Employment expenses (healthcare, benefits, etc.): 30% of salary, or $12,000
- Total: $52,000 annual, or between $4,000-$5,000 each month.
You won’t need a full-time employee to chase down $25,000 in outstanding AR. We typically see that AR personnel can do about 40 claims per day on average, or 800 claims each month. Then, take a look at the count of claims being denied each month or going unpaid, and you can figure out what percentage of a full-time employee you would need to collect your outstanding AR claims. If this person follows up on 200 claims each month, then 25% of their time is dedicated to collecting the money left on the table, or roughly $1,000 of their monthly salary. That $1,000 would allow you to collect $25,000. Of course, you can’t just hire a quarter of a person, and we typically see practices allocate their time to additional duties. However, even if you paid their full salary for AR, you could still net an additional $21,000 each month.
That’s for the first AR follow-up: calling the insurance, getting the actual reason why the claim was not paid, and resubmitting. If you have to follow up a second time on 20 claims – 10% of the initial 200 – you still have the AR person. You can easily calculate the return on your investment in a dedicated resource. You are spending the money to make the money, spending the money to collect on the 25%-30% left at the payer. It is entitled to you, so why not go get that money?
If you are using a billing company and seeing write-offs due to timely filing issues, ask why? Why are we seeing timely filing issues if every claim is touched every 30 days? Why aren’t you following-up?
RCM360 has implemented a set of analytics and reports so that we can monitor last touch: last payment, submission, or note on the claim. We have to touch those claims every 30 days so that we can make sure we are hitting timely filing. It starts with submission, even incomplete and unbilled encounters. If it’s not submitted, it won’t get paid. Then, it continues with regular follow-up. You have to do regular follow-up, even if you have to appeal. You really have to manage the AR process to make sure you collect the most out of the payer. It is your money. Go get it.