Recipe for Billing Success:
Benchmark Your Payment Lag Against Other Practices -- and Improve Your Cash Flow
Published on Mon Apr 02, 2007
But first, learn how to calculate your days in A/R
If the thought of collections and accounts receivable (A/R) processes gives you a headache, use these expert answers to your toughest A/R questions to ensure you-re getting your money within an adequate time limit. Calculating your days in A/R is an important process for billers and the physicians they work for if you want to be sure your practice is working efficiently. Get to Know the Basics of A/R You-ve likely heard the term -days in A/R,- but do you know what it means? Days in A/R is a single number that tells you on average how long it takes you to get paid after you provide a service, says Gary Matthews with Physicians Healthcare Advisors in Atlanta.
Calculating your days in A/R is a useful process because you can benchmark the time it takes you to collect for services compared to other practices. It also enables you to communicate with your physicians and let them know how long after a procedure or service they-ll get paid. First Step: Calculate Your ADC To figure out your days in A/R, you first need to figure out your average daily charge (ADC). You get this number by dividing your gross charges by 365. Then you divide your total accounts receivable by your ADC to get the number of days in A/R you have outstanding.
Tip: If you have several claims in appeals, that will affect your A/R calculation. Depending on how you handle your appeals, they can make your A/R days higher, experts say. If you keep your appeals in your A/R, that can increase your days in A/R.
Also, the higher the proportion of nonparticipating arrangements your practice has versus participating arrangements, the higher your days in A/R may be. This is because payers often take longer to pay on
nonparticipating claims than participating ones. Also, third-party payers may not honor assignments of benefits signed by the patient instructing the payer to pay the provider directly. Therefore, the third-party payer pays the patient instead of your provider, so you then need to collect from the patient. Measure Your Success Against Other Practices Just having a number of days in A/R isn't especially helpful. You have to determine if you have a good number. That depends on many factors, including your payer mix and your type of specialty, experts say.
Example: A surgical practice can expect to have more days in A/R than a primary-care practice because the individual charges are bigger and surgeons often don't bill until the patient is discharged from the hospital, Matthews says.
Compare: The Medical Group Management Association (MGMA) has some data by practice that you should compare your number of [...]
