Do you want to improve your billing system, maintain a healthy cash flow in your practice and identify potential bad credit risks? Then consider making use of aging reports in your practice. It’s a great yardstick for measuring the overall financial health of a practice. These reports provide important information to the practice, such as unpaid patient balances, and sometimes you may even find a few pending insurance claims within them. Partnering with an experienced medical billing service provider is an ideal option to deal with aging reports, as they know how to run the report and help you understand the information on the report, which is vital for the health of your practice.
Medical practices are required to review revenue reports every month, as it helps an organization to assess its revenue cycle. The main purpose of reviewing revenue reports is that it helps to understand the revenue generation pattern – by comparing the current reports to previous reports. If the practice figures out that the current report is showing poor revenue generation, then they have to change their revenue management strategy. These reports can also give a clear picture of the number of patients and insurance payers who aren’t making payments on time. With different reports available, an aging report or an accounts receivable aging report is a few of the revenue reports that play a huge role in generating revenue for a medical practice.
Aging reports are reports that show outstanding insurance claims and patient balances.. Along with the unpaid invoice, this report also shows the number of days they were paid in and the length of time the amounts have been unpaid.
The standard categories for the aging report are:
Current: Invoices that are due immediately
0 – 30 days: Invoices that are due within the next 30 days
31 – 60 days: Invoices that are a month – 31 to 60 days – past their due date.
61 – 90 days: Invoices that are two months – 61 to 90 days – overdue
Greater than 90 days: Invoices that are more than three months overdue
Why to Keep an Eye on Your Aging report?
As mentioned above, the aging report shows the total invoices due for each customer – based on the age of the invoice. So, if a customer has several bills that were acquired at different times, an aging report will show how much is due at what time. It allows practices – that are sending hundreds of claims to insurers each week, but are unsure if they are paying you or not – to keep track of their customers’ invoices, have an idea of the total amount that’s owed, and when they are due. Similarly, there are many other reasons why aging reports are important.
Notifying Scheduling Information: Aging reports provide guidance on scheduling and preventing future treatments that may add to the patients’ or the account’s unpaid balance, by flagging those who have an overdue of 30 days or more.
Identifies Hiccups or Glitches: Due to technological errors, though it is accurate most of the time, sometimes patient statements aren’t sent out. However, with aging reports you can avoid such situations, as these reports have a “last statement date” which help you identify any hiccups or glitches.
Tracks Real-Time Information: Running an aging report each week or at least once a month is helpful because the changing numbers that the aging reports provide have valuable information. It provides real-time account information which helps you track current and past due balances on each account and ensures that nothing is slipping through the cracks, and past due accounts are not going up.
Provides Better Patient Experience with Transparency: Aging reports create a transparency. You know the details of what’s owed to your practice and the accounts that are flagged between a practice and patients or accounts. This transparency would help in providing a better patient experience. All you have to do is reach out to your patients for accounts that are 30 days past due and over. Make sure your patients are getting the statements and that there are no miscommunications.
If not weekly, it is recommended that at a minimum, a practice should generate an aging report once a month so that they know the invoices that are due and notify customers of invoices that are past their due date.
However, if the accounts are being received at a slow rate, that is, 50 or more days, then the medical practice must take it as a warning sign and should bring a change in their revenue managing strategy. Whereas, if the aging report shows fewer days of unpaid accounts then we can assume that the revenue managing strategy is working great.
Certain benchmarks are used to measure the results of the A/R aging report. The benchmarks for financial health are as follows:
Good Financial Health: Accounts received in 35 or fewer days
Average Financial Health: Accounts received in 35-50 days
Poor Financial Health: Accounts received in 50 or more days
To achieve good financial health, a medical practice must perform A/R follow-up without any interruption or delay. Also, to generate high revenue and to ensure a better aging report, follow up on the pending accounts and review the denied claims.
For accurate and timely medical billing and claims submission with aging reports, healthcare or dental practices can outsource their dental billing and coding tasks to a reliable medical billing company.