4 Common Errors That Cause Excessive Hospital Accounts Receivable (AR)

Physicians must now, keep a close eye on the impact health insurance plans have on their revenue cycle management. The harsh reality is that a high Hospital Accounts Receivable indicates that immediate RCM performance improvements are required in your practice.

So, what are the red flags to look for in order to reduce your practice's Hospital AR?

Let's take a closer look at four common mistakes that lead to high accounts receivables and how to improve them.

  1. Refusal to Respond to Claim Denials

According to the American Academy of Family Physicians (AAFP), health insurance claims are denied on average 5% to 10% of the time. To maintain a positive cash flow, practices should aim for denial rates of less than 5%.

Consider a practice that submits $150,000 in insurance claims over four months. Claim denials could cost the practice anywhere from $7,500 to $15,000 per quarter on an average.

Denial rates can rise due to:

  1. Coding errors
  2. Charge entry errors
  3. Payer errors
  4. Missed payer deadlines
  5. Medical necessity denials

Among other factors. Set up clear internal processes to help employees identify errors before submitting claims to reduce denial rates.

  1. Problems with Staffing

Your best line of defense against high Hospital AR is always a well-trained staff. Taking steps to hire qualified employees and providing ongoing training program as needed are two key ways to address staffing issues.

Employees who are unfamiliar with revenue cycle management are more likely to make the following errors:

  1. Errors in internal billing and coding.
  2. Failure to put patient collections first.
  3. Patients are not properly informed about payment policies.
  4. Not verifying each patient's insurance.

The number of accounting issues your firm could face as a result of under-qualified or unmotivated employees is limitless. Determine which of your practice's most common issues are causing high Hospital AR, and train or hire staff as needed. Consider outsourcing your revenue cycle management if finding qualified staff is a problem.

  1. Patient Collections

To track patient collections, performance measures should also be in place. If employee performance falls short of expectations, your staff must be held accountable for mistakes.

Consider implementing the following to reduce collection errors:

  1. Ensure that the patient pay at the time of service
  2. Set up a credit card on the file system
  3. Regularly update patient billing information
  4. Patients should be informed about their insurance benefits and financial responsibilities
  5. Before the patient visit, implement an audit process to track delinquent accounts
  6. Examine financial reports at the end of each month to look for issues
  7. Establish a financial policy

With the rise of high-deductible health plans (HDHPs), patient education and clear payment expectations are crutial. It is critical to train your staff on how to effectively communicate the financial policy to collect money from patients.

  1. Write-offs are not reviewed

One of the most common payments posting mistakes is applying incorrect adjustments to charges. This often leads to Cause Excessive Hospital Accounts Receivable (AR). Check for errors and ways to improve revenue cycle performance by going over write-offs. To keep track of contractual write-offs, the AAFP suggests that you have access to each payer's fee schedule and reimbursement schedule.

Non-contractual write-offs, on the other hand, are frequently avoidable and within your control. Writing off debts to transfer to a collections agency is an example of an unnecessary reason for approving write-offs. It's critical to review contractual and non-contractual write-off reports every month to improve your revenue cycle and collect the money you're owed.

Hence to conclude, keep in mind that the state of your Hospital AR has an impact on your company's:

  1. Credit
  2. Stability
  3. Reputation

These are the most common Hospital account receivables (AR) mistakes. By avoiding them, you will be able to keep your business finances in good shape.


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  1. author
    27 Aug 2019
    Tomas Mandy

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    1. author
      27 Aug 2019
      Britney Millner

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  2. author
    27 Aug 2019
    Simon Downey

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