If you listened to my last podcast about unbilled encounters, you know that I believe in getting paid what is due. Whether that be for billing encounters that providers haven’t finished and getting those entered in a timely manner, or, which is what I would like to talk about today, doing that AR Follow-up the cost is to do that follow-up.
I have worked with a few clients over the last several months where I have done their AR analysis to see how much we can collect on average for the current AR inventory out to insurance. I am consistently seeing this 25-30% the MGMA has recognized as being left on the table not being collected by the practice. Say for instance on $100,000, you are leaving $25,000-$30,000 on the table. Why is this? Why are people leaving this on the table?
It comes down to them chasing the low hanging fruit and they haven’t dedicated the resources to do that AR follow-up. I can’t figure out why. Some people don’t want to hire people to do the AR follow-up. Say on average you are paying 5% of $25,000 to someone to do your AR follow-up. That is $1,250 per month. Why would you not pay $1,250 to get back $23,750 per month. Why would you not do that?
I am not just seeing this with in-house billers either. I see this with outsourced billing as well. Even the outsourced billing is going after the low hanging fruit. To me that’s just, laziness … or poor management.
Let’s look at the average cost to do this in house. Say you are paying a biller $40,000 plus 30% for healthcare, expenses, etc. This comes out to about $53,000 per year for this AR person. This is about $4,000-$5,000 a month. You aren’t going to need a full time person for $25,000 in AR. If an AR person is doing 40 claims per day (what we see on average), that’s 800 claims per month. If you look at the count of claims that are being denied per month or claims not paid on average, you can figure out what percentage of that person you need. If you only need to follow-up on 200 claims per month, you only need 25% of this person. 25% of $4,000 is $1,000 per month. If you are spending $1,000 to collect $25,000, you are still netting $24,000 per month. I know that you will have to have this person anyway (you can’t just hire a quarter of a person). You can use this person for other duties. Even if you use this person fully loaded for AR only, you are still netting $21,000 per 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 another time on 20 claims (10% of the initial 200), you still have the AR person. You can see the cost of doing that follow-up. You can see the return on the investment. You are spending the money to make the money. You are spending the money to collect on the 25%-30% left at the payer. It is entitled to you. Why not go get that money?
If you are using a billing company and you are 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. 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.