Heading the Accounts Receivable (AR) days is one of the critical factors of Revenue Cycle Management (RCM) within Cardiology billing. Minimizing AR days ensures quick claims processing, timely reimbursements, and enhanced financial health. Outstanding Accounts Receivable in healthcare is one of the pressing issues confronting practices, and Cardiology billing is also no exception. Due to this, healthcare providers are constantly searching for best practices or strategies to reduce AR days and prevent them from happening in the first place.
In this blog, we’ll explore effective strategies for decreasing AR days in Cardiology billing, allowing for a more streamlined billing process and enhanced cash flow.
What are AR Days in Cardiology Billing?
Accounts Receivable or AR Days is a metric showcasing the time a practice takes to collect outstanding bills from the insurance providers for the services rendered. AR days refer to both patient and insurance payments and are usually calculated for 3 months, 6 months, and 9 months. The average Accounts Receivable days range from 30 days to 70 days, but anything over 50 days could be indicative of financial trouble for your practice.
In cardiology billing, extended AR days can lead to delayed payments, higher denials, increased administrative costs, and potential revenue loss. Furthermore, Cardiology billing can be challenging because it involves complex procedures. Thus, high AR days can impede Cardiology billing by reducing available working capital, further jeopardizing the ability to provide high-quality patient care.
How to Calculate AR Days?
AR days play a pivotal role in cardiology billing as they ensure timely payments and the smooth running of the practice without any financial pressure. Accounts Receivable management is important because it necessitates calculating the AR days for your cardiology practice. To calculate AR days, the below formula is followed:
AR Days= (Accounts Receivable/ Annual Revenue) * Number of days in the year
This formula is quite easy to use, but before calculating the AR days, your practice must figure out how much your practice charges each day. In doing so, your cardiology practice must add up all the charges posted by your practice for a given period and then subtract the credits that you received from the charges. The final number should now be divided by the number of days your practice was selected in your timeframe, and then that number can be applied to the formula above.
For instance, if you have receivables of $90,000, Gross charges of 600,000, and a credit balance of $10,000, then the calculation would be:
(Total Receivables-Credit Balance) / Average Daily Gross Charge Amount (Gross charges/365 days)
=($90,000-$10,000)/($600,000/365days)
=$80,000/1643
=48.69 AR days
If the AR days are below 50, then your cardiology practice’s performance is average. It needs attention or professional involvement to increase cash flow.
Reasons for Increased AR Days in Your Cardiology Billing
Days in Accounts Receivable (AR) can enhance cardiology billing for several reasons, including:
- Complex Cardiovascular Coding Requirements
Cardiology practices often encompass complex coding for procedures such as cardiac catheterization, angioplasty, electrophysiology, and others. Each service requires precise coding to prevent denials and delays in claims processing, which can ultimately prolong AR days.
- Inadequate Prior Authorization
Most Cardiology procedures are costly and require prior authorization from insurance providers. Without correct prior authorization, claims can be denied or delayed, significantly increasing Accounts Receivable days.
- Frequent Denials & Inadequate Denial Management
Cardiology billing is often prone to denials due to factors such as incomplete patient information, incorrect codes, or unmet payer-specific guidelines. If proactive denial management strategies are not in place, the time it takes to receive payments can dramatically increase.
- Inaccurate Eligibility and Benefits Verification
Inaccurate verification of benefits can lead to delayed claim submission and, ultimately, payment delays. A patient’s eligibility status, insurance plan changes, or deductible amounts can vary, leading to rejected claims if these details are inaccurately documented. Due to delayed claims, AR days can increase.
Best Practices to Reduce AR Days in Cardiology Billing
Healthcare providers can take a variety of actions to minimize their AR days and expedite payment. Let’s explore some of the best strategies for reducing AR days in the healthcare industry:
- Streamlining the Claim Submission Process
One fundamental way to reduce AR days is to submit claims as soon as services are provided. Incorporating electronic health records (EHR) with automated claim submission can expedite the process. Streamlined claim submission can prevent claim delays, allowing practices to receive payments faster.
- Leveraging Clearinghouses
Partnering with a clearinghouse can be invaluable for cardiology practices seeking to reduce AR days. Clearinghouses check claims for errors before submission by identifying and flagging potential issues that might result in rejections or denials. This process reduces the chance of AR delays by ensuring claims are clean upon initial submission.
- Regular AR Analysis
Frequently and continuously monitoring AR days and analyzing aging reports delivers insights into unpaid claims and overdue accounts in Cardiology billing. Analyzing Accounts Receivable (AR) data regularly enables the practice to evaluate slow-paying insurers, monitor performance, and take appropriate measures to improve collections.
- Effective Follow-Up Protocols
Establishing robust follow-up procedures ensures that delayed payments are pursued promptly. Setting follow-up intervals (E.g., 15, 30, or 45 days after submission) and assigning dedicated staff to handle follow-ups can help minimize AR days by addressing unpaid claims sooner rather than later.
How Can Partnering with RCM Workshop Help?
Reducing AR Days demands a systematic approach and continuous follow-up, but most providers are preoccupied with delivering excellent patient care and are unable to devote much time to improving their cardiology billing and collections.
Partnering with a specialized medical billing company like RCM Workshop is the best way to improve your Accounts Receivable days. We at RCM Workshop can offer expert support in claims management, denial resolution, payment posting, and handling billing tasks accurately and efficiently. With years of experience in this field, we provide cardiology practices with detailed reporting and analytics, enabling them to track AR trends, monitor performance, and identify bottlenecks.
Final Thoughts
Decreasing AR days in cardiology billing is pivotal for maintaining a healthy cash flow and sustaining the practice’s financial stability. Cardiology practices can optimize their billing processes and reduce AR days by incorporating a combination of proactive eligibility verification, timely claim submission, efficient denial management, and partnering with an RCM company.
