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Improving ASC KPIs: Days in AR and AR greater than 90

When ASCs effectively monitor and analyze key performance indicators (KPIs), they can positively influence revenue cycle performance by quickly identifying problems that harm staff productivity, revenue, and profits. Once spotted, ASCs can apply data-driven solutions to right the ship.

This third article in an ongoing series about improving ASC KPIs focuses on two related metrics: days in accounts receivable (AR) and AR greater than 90. Note: Access the previous article on specialty and payer volume trending.

Why you should monitor these KPIs
Tracking days in AR is an effective means of identifying revenue cycle issues. While this KPI is sometimes confused with "days to pay," the two figures are distinct and serve specific purposes in achieving and maintaining a healthy revenue cycle.

Consider an ASC that only performs Medicare procedures. While days to pay and days in AR both monitor how quickly Medicare will pay for these procedures, days to pay is the indicator of how quickly the center receives the initial insurance payment. On the other hand, days in AR indicates how long it takes for the ASC to completely resolve the case from its AR. This includes patient billing and any secondary/tertiary billing.

Tracking AR greater than 90 days is also a powerful means of helping with early identification of problems. A value trending higher than usual may indicate payment delays and/or potential payer issues. A sudden increase with a specific financial class may also indicate a recoupment issue; higher volume of medical record requests, medical reviews, and denials; and other problems.

Benchmarks
The industry standard for days in AR is 35 days. However, this figure will be specific to each center as it is dependent upon multiple factors. They can include payer mix, percentage of out-of-network claims, outstanding litigation cases, and billing/collections staff performance. It is advisable to track days in AR by financial class as this will support efforts to be proactive in flagging issues.

The total AR percentage over 90 days should be below 15%-20% of the total AR. Break this benchmark down by financial class at a minimum or consider going even deeper and segmenting it by specific payer. Omit personal injury and litigation cases from this percentage as such cases can take many months, if not years to resolve and would impact the figure in such a significant way that benchmarking would prove very difficult.

Red flags to watch for
An increase in days in AR, barring any major changes to the factors influencing the benchmark, points to developing issues. If an ASC is continuing to receive insurance payments but days in AR is rising, there is likely an internal problem keeping cases open.

When AR percentage over 90 days hits and exceeds 15%, this indicates the presence of revenue cycle problems, especially when the percentage greatly exceeds a center’s norm. Immediately review the offending financial class for issues.

Contributing problems
There are several reasons why days in AR can go awry. Factors can include a high percentage of litigation cases, workers' compensation cases, and/or out-of-network cases; secondary insurance and/or patient balances not resolved in a timely manner; and AR not worked effectively or in a timely manner.

For days in AR and AR greater than 90, a mutual problem is appeals or denials not addressed in a timely manner. Additional problems associated with poor AR greater than 90 includes initial follow-up not occurring in a timely manner, required invoices not submitted in a timely manner, claim submission errors, patient balances not worked diligently, and balances that are not resolved or dropped to the secondary insurance or patient following payment posting.

Solutions to pursue
When days in AR begins to move in an undesirable direction, monitor this KPI by financial class to better determine offenders. Review cases under the offending financial class to better understand the reason(s) for the increase. Reviewing days in AR by financial class can help isolate the offenders without specific types of cases skewing the numbers.

Set reasonable benchmarks for each payer type. If even a slight increase occurs, there are likely recurring issues.

Finally, complete an audit of the AR to further determine the reasons why a specific financial class has higher days in AR, focusing on the common problems.

For problems with AR greater than 90, work all claims within 21 days of submission to ensure they are received and in process. Confirm that the payer requires no additional information to process a claim. Perform a quality assurance review of all charges prior to claim submission to avoid errors that may delay payment and age the account.

If a case includes a covered implant(s) but the invoice is not available upon claim submission, track and submit the invoice when it becomes available.

Identify all denials in a timely manner, submitting appeals within 48 hours of receiving a low or incorrect payment.

Treat patient balance AR as seriously as insurance AR. Work patient balances consistently. Implement a process to refer patients to collections when patients are unresponsive to ongoing outreach efforts and statements.

Finally, once the primary payer makes a payment, immediately drop the balance to the secondary insurance or patient.

Next in the KPI series…
Stay tuned for our next article is this KPI analysis series, which will focus on clean claim percentage, denial rate, and denial reason trending.

Angela Mattioda (amattioda@surgicalnotes.com) is vice president of revenue cycle management services for Surgical Notes. Surgical Notes is a nationwide provider of revenue cycle solutions, including, transcription, coding, revenue cycle management (RCM), and document management applications for the ASC and surgical hospital markets. Mattioda oversees the SNBilling RCM service, the fastest-growing component of Surgical Notes' complete end-to-end revenue cycle solution offering.

 

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