At month’s close, Community Health Center (CHC) executives across the country brace themselves as they review the status of their accounts receivable (AR). Dollars owed to the center for services provided, sitting there, just out of reach. Some may meet with billing staff in an effort to get those claims approved; others may just sigh and resign themselves to writing it all off. At PMG, we see that getting a handle on AR is one of the biggest challenges facing CHC execs and with the fiscal uncertainty these days simply writing off a big chunk of AR has become even less desirable.

So what to do? First, we need to establish measurements of healthy AR, so you have a goal to strive for. Let’s begin with Days in AR. DAR is measured by using this formula:

Total AR ÷ (Total Charges ÷ Number of Days in Charge Period)

At PMG, we work to keep our client’s Days in AR at 30 days or less (without self-pay). We remove self-pay from the mix as each CHC has its own policies on handling self-pay. Because of the variation from payer to payer, we suggest breaking your Days in AR down into buckets, individually measuring various payers, and self-pay separately. This will assist you in determining the root cause of again AR, allowing you to differentiate payer issues from self-pay. The payer formula would adjust AR and Charges for that payer only. For example:

Total Payer AR ÷ (Total Payer Charges ÷ Number of Days in Charge Period) 

Of course, when setting goals, you should also consider any variables specific to your CHC. For example, in some states, such as MA, where Health Safety Net takes 90+ days to pay. A high Medicare population which pays in 10 days, would decrease the days from a national average. Weigh all of those factors and set a Days in AR goal that makes sense for you.

Now we begin the cleanup! PMG’s approach is to flank the AR. That is, we attack the AR from the newest claims and the oldest claims at the same time. This team consists of front end charge processors, AR Analysts, and EDI Specialists. First, the AR Analysts sort the oldest claims to identify the contributing factors for failed validation, rejection or denial. Once the reasons are identified, the groups of claims that meet those criteria regardless of their age, are corrected and resubmitted.

Simultaneously the reasons for claim failure are communicated to both the EDI and Charge processing teams. The source of the failure is identified, and corrective action; either manual or automated edits, are put in place to avoid those failures in the future. PMG’s EDI team evaluates the practice management system configuration to identify reasons for claim failure. If changes are identified that would eliminate claim failure, the EDI team will make the necessary changes. This multi-pronged approach allows us to evaluate claims processing from three different perspectives. However, the communication of each team’s finding is the key to avoiding claims failure in the future.

Ensuring a healthy AR moving forward can be accomplished by consistently analyzing the AR and searching for the origin of claim failure and then using the information gathered in the multi-pronged approach described above including using the PM’s systems functionality to its limits to create edits that will facilitate denial avoidance. In short, ongoing analysis and continued communication will help you wrangle the beast that is AR and turn those potential write-offs into dollars in the bank.