5 Top Ways Hospitals Lose Accounts Receivable

In a webinar titled "Closing the Five Doors Your Accounts Receivable Escape From at Point of Service," Irene Barron, nTelagent COO and product management officer, described the five biggest culprits for lost accounts receivable.

1. Inaccurate registration information. Hospitals can have inaccurate patient information for many reasons, including insurance coverage changes, complicated insurance contracts, errors in insurance data entered and a lack of knowledge of policies and procedures. Inaccurate information can lead to denials and significantly delay the hospitals' ability to capture accounts receivable. Returned mail for wrong addresses, for instance, can cost hospitals more than $20 each due to multiple returns to sender before the information is updated in the database.


2. Insurance verification and denials.
Verifying patients' insurance at the point of service eliminates denials and prevents lost accounts receivable. To aid registrars in this verification, insurance information should be provided by computer systems in an easy-to-understand format. The computer insurance verification program should provide edits when information is entered inaccurately, for instance.  

3. Medical necessity. Medical necessity is responsible for a significant portion of missed accounts receivable. According to the American Hospital Association's May 2011 RACTrac Survey, 53 percent of denials by recovery audit contractors were due to medical necessity issues. As CMS get more aggressive in its audits and fraud-fighting, hospitals need to ensure that they justify the medical necessity of each service to avoid denials. "We have to be proactive because the government has the resources and technology to be proactive in fraud and abuse," Ms. Barron says.

4. Small balances and outsourced accounts. Small balances that are never asked for account for lost revenue through small balance write-offs. In addition, spending money on outsourced vendors to collect money that the hospital can collect at no cost is a practice no longer sustainable due to rising healthcare costs. Ms. Barron says the amount hospitals write off in small balances in addition to half the cost of early-out vendors could be as much as the cost of implementing electronic medical records or other mandated systems.

5. Upfront collections. Missing upfront collections can be very costly for hospitals. Some of the reasons for this missed money can be registrars' fear of offending the community or insufficient tools to know what to collect. One opportunity for upfront collections that may be overlooked is emergency room payments. Ms. Barron explains that while hospitals are required to care for patients regardless of their ability to pay, they are not prohibited from making collections in the ER. To increase upfront collections, hospitals need to provide the registrars with the tools to gather the correct information and payment. Since registrars are not familiar with contract terms and do not have the time to read insurance contracts, it is the hospital's responsibility to ensure the registrars are equipped with an automated system or other resources to prevent lost accounts receivable.

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