Not-so-graceful aging: Half of practices saw days in A/R increase in 2021

The Medical Group Management Association’s most recent MGMA Stat poll asked medical practice leaders, “How have your days in A/R changed in 2021?” The majority (49%) said days in A/R increased, compared to 15% who reported a decrease and another 37% who said they stayed the same.

The poll was conducted Nov. 9, 2021, and had 587 applicable responses.

The longer a medical bill goes unpaid, the harder it is to collect — and there’s a growing amount of medical debt across the United States: A study from Debt.com found that half of Americans carry some medical debt (up from 45% in 2020), and that 57% of those who have medical debt owe at least $1,000. (Read more in Forbes.)

Several respondents shared their biggest challenges and successes this year with this aspect of their revenue cycle. Among practices that improved their A/R aging:

• Implementing new billing rules that improved the number of clean claims sent out helped one practice decrease their A/R aging.
• One practice leader pointed to renewed enrollment in ACA marketplace plans reduced the number of uninsured patients, making it easier to collect balances.
• Several practices pointed to either outsourcing elements of their revenue cycle management or embracing new artificial intelligence/machine learning tools to minimize repetitive tasks.

As for practices that struggled and saw their A/R aging increase:

• Many pointed to lack of office staff to work outstanding balances, and that the new workers they have been able to bring in face major learning curves.
• Many of the practice leaders pointed the finger at payers for questionable denials and delays in reviewing appeals. (An Aug. 24 MGMA Stat poll found similar complaints after 54% of medical practices reported that credentialing-related denials increased in 2021.)
• Prior authorizations continue to be a burden to several medical practices. This echoes the findings of a May 18 MGMA Stat poll that found 81% of medical practices experienced an increase in payer prior authorization requirements in 2021.

Managing days in A/R

Having a solid revenue cycle process will help improve your practice’s days in A/R. Days in A/R is calculated by dividing the total A/R amount by the practice’s average daily charges and is usually classified by age, which is the time since the patient or insurance company was billed. A/R is placed in “aging buckets” of 0 to 30 days, 31 to 60 days, 61 to 90 days, 91 to 120 days and 121+ days. According to the 2021 MGMA DataDive Cost and Revenue, the median for total A/R over 120 days in multispecialty practices is 13.54%.

It’s important to establish billing guidelines and a process to collect balances due, as well as past-due accounts, especially if you are working with an outside agency as your clearinghouse. Communication with patients is vital, as they may need help understanding the portion of the bill they are responsible for, and some may have high deductibles.

You may want to provide payment options to help reduce bad debt and possibly prevent their debt from being sent to collections — an MGMA Stat poll from February 2021 found that 27% of practice leaders changed patient payment plan policies in the past year, with many practices working to collect more at the time of service and requiring down payments for surgical procedures.

Appropriate coding is vital for documenting every billable aspect of your practice. Staff should be experts at coding, and they should educate providers as needed. Best practice is for providers to close their encounters the same day but no longer than 72 hours after a visit, which can help prevent denials.

It is important that you run regular A/R reports and work denials immediately. If claims are repeatedly denied for the same reason, the denials must be looked at closer and you may need to review your payer contracts. Thankfully, medical groups showed renewed proficiency in their claim submissions during the first year of the pandemic, according to 2021 and 2020 MGMA DataDive Practice Operations benchmarks:

• The percent of claims denied on first submission for primary care specialties dropped from 8% in 2019 to 4% in 2020.
• The same benchmark for nonsurgical specialties fell from 7% in 2019 to 3% in 2020.
• Surgical specialties cut claim denials on first submission nearly in half, from 8% in 2019 to 4.16% in 2020.

Key items for effective A/R and improved cash flow:

• Establish financial policies for patient payment options and billing.
• Create tools to help staff collect unpaid balances efficiently and timely.
• Develop financial policies for billing staff on how to handle denials and write-offs.
• Complete insurance verification prior to any scheduled procedure or appointment.
• Ensure proper coding of patient visits, tests and procedures along with diagnosis and treatments.
• Use a “claim scrubbing” tool to catch clerical and simple coding errors.
• Run your A/R reports monthly at minimum, separating out insurance and patient balances due using service date instead of billing date to identify billing schedule issues.
• Work all denials immediately and determine if there are reasons for denial and correct processes.
• Communicate frequently with patients who have outstanding balances.
• Benchmark A/R aging with industry best practice standards.

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Additional resources

• MGMA DataDive — An online platform with thousands of metrics, allowing you to see the best in your organization and your areas for improvement.
• Revenue Cycle Management: Don’t Get Lost in the Financial Maze — This book offers proven strategies to optimize your revenue cycle.
• Certificate Program: Revenue Cycle Management – on demand — Demonstrate your proficiency with medical practice revenue cycle management via this six-hour ACMPE Certificate program.
• Chart Auditing and Coding Education Services — Leverage MGMA subject-matter expert knowledge on coding to ensure coding on all levels is accurate and compliant.