A solid AR (accounts receivable) process plays a critical role in every organization’s success in all industries, including healthcare. When we talk about billing operations, companies face many unique challenges. If an organization wants to succeed, it must manage accounts receivable properly. Here, we will see what account receivable in medical billing is. We will also take a quick look at the challenges of AR in medical billing.
What is Account Receivable in Medical Billing?
Accounts receivable or AR is payments of a company that they have to collect for the services and/or goods they render. In medical billing, patients don’t have to pay immediately after they receive the treatment. The AR of a healthcare provider is significant to avoid cash flow problems. It ensures that the financial standing of the service provider stays healthy.
Challenges of AR in Medical Billing
The diverse needs of AR or the account receivable in medical billing result in a few important challenges. All these challenges can have a critical impact on the cash flow. These challenges are as follows:
1. Claim Denial
In the healthcare industry, insurance companies purposely and frequently make it hard to get payments. They do it through claim denials for different reasons. Some common claim denial explanations are late filing, missing information, duplicate submissions, coding errors, and lost claims.
2. Bad Debts
There has been a constant change in the landscape of healthcare. Because of the increasing costs for patients and greater deductible plans, patients are paying more consistently. The amplified financial load is an elevated responsibility which results in higher bad debt numbers.
3. Unwarranted Writ-offs
These are the customers’ debt forgiveness without payment. However, these write-offs have a great impact on the company’s bottom line. Therefore, you must try to avoid them.
4. A Messy Collection Process
Just like all other businesses, medical practices must also receive reimbursements to continue working. While it is a subtle process, care expenses must be discussed clearly and shared with patients when providing the service.
Apart from the above-discussed challenges, there can also be a few AR challenges, such as restrictive payment modes.
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