Practice Management Alert

Chart your A/R and other billing variables to ensure you don't leave any reimbursement on the table

If your billing office has never charted a year's worth of financial data, you don't know which factors affect your cash-flow trends.
 
To examine your billing office's activity in-depth, you should chart your accounts-receivable data. Once you understand the big picture, you can review the finer details to determine what factors affect your cash flow and how you can make positive improvements, says Pat Suhr, RN, CPC, billing manager at Maternal Fetal Medicine and practice management consultant for Professional Medical Billing in Harrisburg, Pa.

Follow these five expert recommendations to master your A/R and cash flow:

1. Chart four key billing variables monthly: payments, charges, closing A/R and adjustments. This won't require advanced software skills -- you can simply use your spreadsheet program (such as Microsoft Excel) and a simple line graph. You can obtain these four variables easily from your monthly reports, and they're useful because they serve as basic cash-flow indicators, Suhr says. She recommends charting the entire previous year using the numbers from monthly reports. Then, as you add to the chart each month, you'll be able to spot changes in the basic patterns that can indicate problems or other influencing factors, Suhr says.

2. Analyze the peaks and dips in your chart. "Some fluctuation is normal" because of a physician on vacation, a particularly busy month or stepped-up appeals efforts, says Adrienne Rabinowitz, CPC, billing manager at Western Monmouth Orthopedic Associates in Freehold, N.J. On the other hand, excessive fluctuations in charges, payments or A/R can indicate a problem.

Inconsistent charge entry can cause ups and downs in payments and closing A/R. This may not be a big deal "as long as the cash flow is still there," Suhr says. But if cash flow slows down every time charge entry drops and your practice struggles to pay the bills, then this problem merits attention, she adds. Practices often pull billers away from their duties to fill in for an absent medical assistant or other staff member. What the practice doesn't realize is how important a biller's duties are to the regular office operation, Suhr says.

Bright idea: Prove how important you are -- chart your office's billing activity and show it to your physicians. Point out the chart entry dips that correspond with occasions when you didn't have adequate time for your billing responsibilities. If your office is short-staffed, the chart can demonstrate to the physicians that you need additional staff.

3. Remain vigilant. Check your chart every month to identify new problems. If your office has staff turnover or other interruptions, use the chart to make sure your billing office stays on top of charges, appeals and collections. If you notice your A/R starting to climb, you'll know quickly that you need to focus on the billing staff's efficiency and your appeals process, Suhr says. Without a complete A/R chart, you have no way to tell quickly if your office is doing its work correctly, she adds.

4. Strive for your optimum A/R. Every practice is different, so your optimum A/R may be rightfully above or below the average. Chart out your A/R and analyze the factors affecting it, but don't stop there or you might be leaving money on the table, Suhr says. Use the insight you gleaned from your chart to make appropriate billing changes, such as more frequent charge entry and appeals work, or sending accounts to collections sooner.

5. Predict next month's cash flow. A clear understanding of your normal billing trends (demonstrated by your chart) will grant you the power of prediction. For example, if your chart indicates that money consistently decreases around the holidays or during the summer, your practice can plan accordingly. Cash flow does follow cyclical patterns based on various external factors, Rabinowitz says. It's beneficial to predict the unavoidable cash-flow downturns so you don't find yourself unprepared, she adds.

"Some doctors don't realize the dip that their money takes" at certain times of the year, Suhr says. They should figure out a way to compensate financially for periodic cash-flow loss by saving money at more lucrative times of the year. Use your chart to predict the good and bad times so you can avoid problems meeting payroll and paying bills, Suhr says.