How to Avoid Top 4 Hospital Accounts Receivable Problems?

The value of Hospital Accounts Receivable is a high-risk field. It is extremely sophisticated, and because it is based on assumptions and estimation, it is prone to errors and fraud. But that's only the beginning. Hospital Accounts Receivable is compounded further by frequent regulatory changes, ever-changing payment methods, increased usage of high-deductible health plans (HDHPs), and the addition of vast pools of formerly uninsured persons driven into health plans by the Affordable Care Act (ACA).

To make matters more difficult, collection varies by patient and plan, and collection timeframes might range from days to years. As a result, many present Hospital Accounts Receivable valuation methodologies are not adjusting effectively, and businesses must figure out how to evaluate and calculate impacts, as well as make modifications to account for them. Many established Hospital Accounts Receivable rules and procedures aren't changing properly, and organizations have to deal with issues they didn't anticipate.

What should a Hospital Accounts Receivable analysis look for? 

Based on our examination of healthcare Hospital Accounts Receivable from enterprises, we identified four major risk areas: 

• Incorrect contractual allowances and/or ineffective reserving procedures 

• Insufficient processes 

• Failure to adapt to shifting reimbursement and regulatory contexts 

• Insufficient resources 

Each potential issue is described below; along with a few questions you may ask to assist in establishing your Hospital Accounts Receivable risk exposure.

Concern 1: Incorrect contractual allowances and/or ineffective reserving procedures 

Inaccurate contractual allowances and/or insufficient reserves are two major issues that we frequently identify through Hospital Accounts Receivable data analysis. Organizations learn that their methodologies aren't as strong as they thought and, in some cases, are simply inaccurate. The systems and procedures in place suggest that their contractual allowances and reserves are adequate, but the data shows that this is not the case. 

Concern 2: Inadequate processes 

Inadequate processes are the second major risk we notice coming from our Hospital Accounts Receivable risk evaluations. Often, a leadership team believes something is being done one way, but an examination of day-to-day operations reveals that it is being done another way and essential items are falling through the cracks. Because processes and internal controls are inextricably intertwined, a problem with a process usually indicates that another internal control must be implemented to ensure that it does not occur again in the future. 

Concern 3: Related to reimbursement and the regulatory environment

A lack of organizational awareness of reimbursement and regulatory changes is another important risk to Hospital Accounts Receivable. Regulatory changes resulting from the ACA are now beginning to be reflected in the data, and in many cases, adjustments are not being made promptly. Some organizations assume they are accurately calculating AR, but they are unaware that larger changes are required. 

Concern 4: Resources 

Organizations are identifying faults in their Hospital Accounts Receivable approaches, as well as the fact that they may not have the necessary resources in place. They may, for example, have employees whose skill sets have not kept up with the rising complexity of the Hospital Accounts Receivable environment. Furthermore, Hospital Accounts Receivable evaluations frequently discover that technology is not being used appropriately. If individuals aren't properly trained, or if the data entering the system is improper, the data coming out will be poor as well.  

Key takeaways

The potential for Hospital Accounts Receivable valuation errors is great in this period of fast industry and regulatory change. Staff, management, and governance must be hyper vigilant to review and double-check the integrity of Hospital Accounts Receivable calculations, the data that goes into them, and the analysis and reports that come out of the reporting system. If the numbers on the books indicate one thing but the cash in the bank indicates another, it's time to revisit your AR valuation methodology.