Happy Thanksgiving! Don’t be a Turkey – Understand your A/R Days for better Pain practice performance...
Don’t be a Turkey – Understand your A/R Days for better Pain practice performance
In October 2017, we began our review of Measuring Practice Billing Performance. In our first letter, we explained that there is no “silver bullet”, or single measure, that assesses overall performance, but rather a series of key measures to understand and monitor monthly. These measures include, but are not limited to: Accounts Receivable (A/R) balance, A/R Days Outstanding, Net Collection Percentage, % of A/R greater than 120 days old. Over the coming weeks StreamlineMD will review these indicators in a series of blogs to help our clients understand their practice performance, starting with Accounts Receivable in this issue. In October 2017, we reviewed Accounts Receivable (A/R). For this month of November 2017, we will review A/R Days.
What is the formula for A/R Days?
(Accounts Receivable Balance) divided by (Average Charges per Day)
What period of time should be analyzed in the formula above?
Opinions vary on this, but we believe it is wise to pick a time frame that makes sense for your specialty and practice and then study this measure over time to understand its trend for your practice. For StreamlineMD Interventional Pain Practice clients we typically use a time frame of the last 90 days. For example:
(Current A/R Balance) divided by ((Total Billed Charges over the past 90 days) divided by (90))
How does one know if the result is good or bad?
In general, the lower the A/R Days, the better. This means that you have fewer billed charges waiting for adjudication and payment.
The A/R Days benchmark typically varies by specialty and can depend on practice specific issues such as procedure mix, payer mix and internal practice policies. Some examples:
- For a specialty practice that performs complex procedures which have high average payment amounts, such as Interventional Pain, it may take longer for insurance companies to review and pay such claims, hence extending the average time it takes to adjudicate and pay the practice’s claims, and therefore causing a higher A/R Days measure.
- Since Pain practices are prone to denials due to lack of prior authorization, medical necessity, or other challenges, these factors also cause delays in claims adjudication, leading to a higher overall A/R Days.
- If a Pain practice is not aggressive about collecting time-of-service payments from patients at the front desk, these balances can take time to collect after the fact and cause A/R Days to rise.
What other factors need to be considered in evaluating A/R Days?
Typically, the A/R balance of a practice contains both debit and credit balances, meaning that while most of the balances are debits to be paid to the practice, some are credits indicating potential overpayments which need to be refunded. Specialty practices that tend to have larger than normal credit balances need to take this into consideration when evaluating A/R Days because large credit balances in your overall A/R balance can overshadow large debit balances, and cause a misleading A/R Days measure. The point here is that it is important to consider the content and nature of the claims that make up your A/R Balances to judge whether your A/R days number is good or bad.
Where can I find the A/R Days for my practice?
Like A/R Balance, A/R Days should be reviewed at each month end. StreamlineMD shows individual practice A/R Days on several different reports and on your practice dashboard accessible in StreamlineMD PM+. Please contact your client rep if you need assistance finding yours.
Image of StreamlineMD PM+ practice performance dashboard. A/R Days indicator on far right.
Happy Thanksgiving to You, from your friends at StreamlineMD!