Compared to almost any other industry, the healthcare payment system is strange. Your local coffee shop wouldn’t provide you with a latte then send you (or a third-party payer) a bill later, hoping to collect most or all of what you owe. Even industries that do provide services up front without full payment (like a mortgage or a car loan) have something they can use as collateral until payments are made in full.
In healthcare, clinicians provide services today and then wait an average of four to eight weeks to get paid with no collateral. The billing process is a complex web of medical coding, insurance pre-authorizations, claims denials, and self-pay patients. The longer it takes from the time you provided the care to the time you collect payment, the less likely you will be to collect what you are owed. Whether that’s because you miss deadlines to file claims with payers, or you have trouble getting patients to pay the portion that they owe, the end result is the same: lower revenue and “bad debt” that you have to write off.
Operational Challenges with the Current Model
One of the biggest challenges this model presents for clinical practices is on the operational side. You cannot effectively evaluate the financial health of your practice if:
- Your cash flow is uncertain because you don’t know how much of your billed charges you will actually be able to collect
- Your revenue cycle is delayed by several weeks or even months
Small practices can be especially susceptible to cash flow and revenue cycle management concerns; any fluctuations in reimbursement could quickly become a significant financial issue. If you can’t pay your employees or you miss a vendor payment because your claims are delayed two weeks, that makes it hard to retain good employees and maintain vendor relationships.
The Alternative: Instant Claims Payments
There are some things you can do to improve revenue cycle management, such as making sure you collect things like copays, coinsurance, and patient balances at the time of service. But since the vast majority of collections still go through insurance payers, these strategies only get you so far.
One way you can improve it is with instant claims payments. AdvancedMD partner Aquina Health offers an instant claims payment service that provides several benefits to small clinics:
- Get paid immediately when you submit a claim
- You don’t need to significantly alter your workflows
- Choose which claims you want to advance—all of them, or just the ones from the payers that take the longest
- Reduce your total days in AR to zero (an average medical billing office usually takes 40-50 days)
- Pay only a minimal servicing fee on the claims you choose to advance
The right medical billing and coding software and financial tools allow you to have more control over your clinic’s cash flow, which helps you manage your clinic today, and plan for growth in the future.