Medical billing process - AR analysis

Role of Account receivable person AR - part 1


There may be some claims which would have been sent to the carrier but would not have reached them or would have kept pended with them for want of certain information or would have reached them but not registered in the system due to certain problems. These issues can be identified through follow up calls made to the carriers.

Each Insurance Company would have representatives to handle queries from providers on the claims sent by them. These representatives can be reached during office hours (generally 8am – 4pm EST-Eastern Standard Time) at the phone numbers listed. We have a call center working in the night (EST day) to make calls to insurance carriers and to patients based on work-orders given by the analysts. The duty of the analyst is to analyze and identify accounts that need to be called.

Analysis is the most essential part of billing. An analyst is a person who monitors the receivables such that it is well within control. He should also keep in mind that the main objective of a billing company is to maximize collections. He/ She should work towards it and set his work methods such that his goal is attained. For this purpose, the analyst should set a target every month of what his collections would be for that month taking into account various factors such as the average turnaround time and unresolved issues. Thus there are two major functions of an analyst – Maximizing collections and Bringing down receivables. Let us discuss each in detail.

Maximizing collections

Setting of Targets

In order to set the target the following should be identified first:
* The normal turnaround time of payment for each carrier (major carriers)
* Set an average turnaround time for the project as a whole
Then work out the following:
* Take the total insurance AR (Accounts Receivable) for the project as a whole
* Eliminate claims filed/ re-filed during the period starting from the date this target is prepared to going back to the completion of the average turnaround time date i.e. the claims which are within the average turnaround time
* Eliminate claims that are beyond this period but which has certain issues which have still remained unresolved.
* On the balance arrived at, apply the average collection rate for the project as a whole. This would be the target for the project for that month.

The analyst should work towards this target.

Duties of an analyst

The basic duties of an analyst are apart from the above:

· Should constantly keep track of electronic claims.

· Should constantly keep track of paper claims.

· Should keep eyes open for any major rejections – clearing house/ carrier.

· Should constantly keep watch on EOBs received from major carriers for payments, pay-to address, provider #s etc.

· Should constantly get himself/herself updated on the latest in billing.

· Should compulsorily go through each regular mail (Info from the insurance) since they are the source of a lot of information.

· Should be thoroughly aware of all the billing rules for the specialty, which he takes care of.

· Should advise his co-staff of any changes in data entry rules.

· Should ensure that AR days meet industry standards.

· Should co-ordinate with the call center crew/ Client coordinator and solve problems.

· Should ensure that claims for every carrier goes electronically and work towards achieving it wherever possible.

AR analysis responsibility Insurance not paid claim -Calling follow up

Bringing down receivables

We can categorize the outstanding claims into 5 broad reasons:







• Billed amount:

It is the Amount charged for each service performed by the provider. In other words it is the total charge value of the claim. The billed amount for a specific procedure code is based on the provider. It may vary from place to place. It is not common across all the states.

• Allowed amount:

The maximum reimbursement the member's health policy allows for a specific service. It is the maximum dollar amount assigned for a procedure based on various pricing mechanisms. Allowed amounts are generally based on the rate specified by the insurance. This amount may be:

-a fee negotiated with participating providers.
-an allowance established by law.
-an amount set on a Fee Schedule of Allowance.

For Example:-

If the billed amount is $100.00 and the insurance allows $80.00 then the allowed amount is $80.00 and the balance $20.00 is the write-off amount.

Formula: -
Allowed amount = Amount paid + co-pay / co-insurance + Deductible

• Paid amount:
It is the amount which the insurance originally pays to the claim. It is the balance of allowed amount – Co-pay / Co-insurance – deductible. The paid amount may be either full or partial. i.e. Full allowed amount being paid or a certain percentage of the allowed amount being paid.

For Example:-
If the billed amount is $100.00 and the insurance allows $80.00 but the payment amount is $60.00. Here $60.00 is the actual amount paid for the claim.
Formula: -
Paid amount = Allowed amount – (Co-pay / Co-insurance + Deductible)

• Co-pay:

The fixed dollar amount that patient requires to pay as patient’s share each time out of his pocket when a service is rendered. This is paid during the time of the visit. Co-pay ranges from $5.00 to $25.00. Co-pay’s are usually associated with the HMO plan. The Co-pay amount is usually specified in the insurance card copy.

• Co-insurance:

Co-insurance is the portion or percentage of the cost of covered services to be paid either by insurance or patient. After the primary insurance making payment the balance of the cost covered (Co-insurance) will be sent to secondary insurance if the patient has one or to the patient.

For Example:-

If the billed amount is $100.00 and the insurance allows @80%. The payment amount is $60.00 then the remaining $20.00 is the co-insurance amount.

Formula: -

Co-insurance = Allowed amount – Paid amount – Write-off amount.

• Deductible:

Deductible is the amount the patient has to pay for his health care services, whereas only after the patient meets the deductible the health insurance plan starts its coverage. The patient has to meet the Deductibles every year. It is mostly patient responsibility and very rarely another payor pays this amount.

• Posting Reference Number:

This is the number which is given by the operator to the claims posted in order to keep track of the payment posted details. This is generally given in a specified format as per the client requirement.

For Example:-

01.3651.123103 here the 01 refers to the serial number, 3651 refers to the batch number and 123103 refer to the date and the year on which the file was received by us.

• Offset:
This is a kind of an adjustment which is made by the insurance when excess payments and wrong payments are made. If insurance pays to a claim more than the specified amount or pays incorrectly it asks for a refund or adjusts / offsets the payment against the payment of another claim. This is called as Offset.

For example:-

Let the total billed amount of two claims is $100.00 each and the specified payment for this is $80.00. The insurance pays $90.00 for the first claim. Here $10.00 is paid in excess. Now while making payment for the second claim the insurance pays $70.00 and sets $10.00 as offset. Now the insurance payment becomes normal as the excess payment had been adjusted off.

• Refund:

This is the process of returning back the excess money paid by the insurance / patient on request. If payment is received in excess than the specified amount, insurance / patient request for a refund. The process of Refund is usually done as per the client specifications.

For example:-

Let the total billed amount of a claim be $100.00 and the specified payment for this is $80.00. The insurance pays $90.00 for the claim. Here $10.00 is paid in excess. Now the insurance requests for a refund of $10.00 which will be done as per the client specifications.

• Adjustment:

An adjustment is an amount which had been adjusted for some reason and may be recoverable. It can be an additional payment or correction of records on a previously processed claim. Adjustments are done based on the client instructions. One specific type of adjustment is the write-off.

For Example:-

Let the billed amount of a claim be $100.00 and the paid amount is given as $70 and $ 30 is given as participating providers adjustment. So this $ 30 has to be adjusted.
Write-Off:- It is an amount which cannot be recovered at all. This write-off is usually done when the insurance payments are made. It is the balance of what the insurance have allowed on a particular charge i.e. Total Billed amount – Allowed amount. The main difference between an adjustment and write-off is that Adjustment may be recovered whereas write-off cannot be recovered at all.

For Example:-

If the billed amount is $100.00 and the insurance allowed amount is $80.00. The payment amount is $80.00 then the remaining $20.00 is the write-off amount.

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