How do I manage accounts receivable for a medical practice?
Medical practice AR is more complex than typical business receivables because you’re collecting from two sources: insurance companies and patients. Each requires different processes and different timelines, and dropping the ball on either one leaves money on the table.
Insurance verification happens before the patient is seen. Confirming coverage, understanding what the plan pays, and knowing the patient’s deductible status prevents claim problems later. Front desk mistakes during registration create AR headaches that take months to untangle.
Clean claims get paid faster. A clean claim has accurate patient demographics, correct CPT and ICD-10 codes, proper modifiers, and all required documentation. Claims with errors get rejected or denied, adding weeks to your payment cycle. Most practice management systems flag common errors before submission, but someone needs to review flagged claims before they go out.
Follow up on unpaid insurance claims systematically. Commercial payers typically have 30 to 45 day payment windows. If a claim hasn’t been paid or denied within that timeframe, call or check the payer portal. Track denial reasons because patterns reveal fixable problems. If a specific payer keeps denying claims for the same reason, that’s a coding issue or a missing authorization process, not bad luck.
Patient balances need their own workflow. After insurance pays, bill the patient for co-pays, deductibles, and uncovered services. Send statements promptly and follow up on unpaid balances. Many practices focus all their energy on insurance and let patient AR age for months. By the time they get serious about collections, patients have forgotten the visit happened.
Run aging reports weekly and review them. Your aging report shows what’s outstanding and for how long. The older a receivable gets, the less likely you’ll collect it. Medical practices should aim for less than 50 days in AR on average. If you’re at 70 or 80 days, something in your process is broken.
Your practice management system needs to reconcile with your accounting software. AR in the billing system and AR on your books should match. When they don’t, someone is posting payments incorrectly or making adjustments without documentation. This creates problems at tax time and makes it impossible to know what you’re actually owed.
Many practices in Los Angeles County work with a bookkeeper familiar with medical practice operations because the complexity justifies outside help. When you consider how much revenue sits in unpaid claims at any given time, having someone manage the accounts receivable process properly pays for itself.
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