Understanding the AR Process in Medical Billing

You probably know that the acronym “AR” in medical billing stands for “accounts receivable.” In fact, AR is such a familiar term that it’s often taken for granted. However, AR plays a huge role in a healthcare organization’s revenue cycle. It represents money owed to the provider for services already delivered. AR is also where money gets “stuck,” causing revenue stream disruptions that ripple across the organization.

In this article, we’ll review the AR process in medical billing, some of the common challenges inherent with AR, and how better AR management can boost collections and reduce payment delays.

At its most fundamental level, AR means money owed to the provider. It comes into play after a claim is submitted to the payer, but before payment is received. Both insurance claims and patient balances can be part of the AR process. Steps in AR typically involve:

A delay at any of these junctures can result in “aging AR,” known in lay terms as “overdue balances.” An even worse outcome is a write-off…revenue that is never captured.

A strong AR follow-up program can significantly reduce payment delays and unpaid balances, supporting the financial health of your organization. By AR follow-up, we mean tracking and resolving unpaid claims and balances. These steps can encompass both insurance claims and patient collections. Done effectively and consistently, AR follow-up will shorten the AR cycle and prevent bad debt.

A growing challenge for healthcare organizations is patient collections. Specifically, collections pertain to the outstanding balance of a patient account, which is the total amount owed by the patient after insurance payments and adjustments.

Patient collections have always been challenging for healthcare organizations. However, this area of AR has become increasingly problematic, thanks to the growing popularity of high-deductible health plans. While typically offering a lower premium, these plans also saddle members with an increased financial responsibility when they require medical care.

Transparent billing, budget-friendly payment plans, and other best practices can help reduce the risks associated with patient collections. In addition, digital collection tools can make the task easier and more productive.

Indeed, for many healthcare organizations, technology plays a significant role in resolving aging accounts, whether it’s managed in-house or by an outside AR recovery services provider.

In recent years, the combination of staffing shortages and limited IT budgets has prompted more and more of rural and community hospitals to hand off this crucial function to a partner that specializes in various AR recovery services, including denial management, appeals, patient billing services, and AR clean-up projects.

Whether you choose to manage AR functions internally or outsource them to a service provider, certain best practices will help you realize a stronger return on investment. They include:

By incorporating these and other best practices into your AR management, you’ll take a big step toward optimizing your entire billing process and protecting the long-term financial health of your organization.

As you assess your current AR strategy, ask yourself this question: “Are we doing everything possible to reduce write-offs and increase cash flow, all while operating with the utmost efficiency?” If there are nagging doubts or questions about your AR management, it may be time to consider a change.  

At TruBridge we’ve been helping rural and community healthcare providers across the country achieve their AR goals. Our proven AR Recovery Services include AR Recovery Workdown, which can help you reach your collections objectives without burning out your staff.  

With this customizable service, our collections experts take over aging small-balance copays and low-dollar insurance claims, handling the time-consuming details, removing a burden from your team’s shoulders, and streamlining a typically cumbersome part of your revenue capture process. 

Another popular TruBridge AR Recovery Service is Insurance Follow-up. Also customizable for various criteria, such as defined time periods and payer types, this service frees your staff from the tedious task of following up on old claims. Our experts recover as much revenue as possible and remove excess work from your AR team.  

Both of these services come with the stipulation that TruBridge doesn’t get paid until you get paid, ensuring maximum effort with every claim.