Administrator’s Cheat Sheet to Accounts Receivable
Every company is different, but something that happens frequently is that an administrator is hired and put in charge of the building without much training on how and what to monitor. Sometimes, one needs a little direction.
Today, we’ll talk about how to monitor your accounts receivables and the basic things you need to know to stay off the AR “Focus” conference calls. (You get on a focus call with corporate when there is a problem that needs to be focused upon. They don’t focus much on what you’re doing well! Ha!)
You need to ask your Business Office Manager or AR director for a copy of the end-of-month AR Aging…every month. The aging is where all the outstanding accounts that owe you money are listed. You don’t want an interim aging. Get the most recent aging from the closing of the prior month.
On your aging, you’ll find the names and payer types along with balances from those outstanding accounts.
You usually want to focus on the following:
- Medicaid pending – A huge area of risk! If you have someone that is pending, you need to know if they are actually pending (meaning they have applied for long term care Medicaid) or they are private pay (they have not applied for Medicaid). After all, you will never get paid by Medicaid until they apply. You should check your state’s Medicaid rules to see when they have to apply. In some states, Medicaid coverage will retro back 3 months; in other states, they must apply on the first day of their nursing home stay that is not covered by Medicare. At any rate, it is best to get them to apply as early as possible so you’ll know if there are eligibility problems asap. Next, you need to know how long they’ve been pending and what the status is. Sometimes, you have to hound the Medicaid office to get things rolling. Or, you have to hound the family to take the necessary documents, bank statements, etc. to the Medicaid office to get their application processed. I suggest weekly reviews of this list to ensure the process is moving.
- The next thing you need to know is how many private pay residents who haven’t paid for the current month. This one’s pretty simple – Are you getting paid?
- You should look at any accounts with a balance over $10,000. This actually would depend on the payer type as current Medicare or managed care accounts may easily exceed $10k. You need to look anyway and determine what’s going on. If you have someone who hasn’t payed you for 4 months, there’s your problem.
- Look at insurance accounts over 90 days. Insurance is notorious for paying late, sometimes up to 6 months. So, make sure your facility is persistent on getting them everything they ask for and make follow up calls weekly until resolved.
- Medicare claims typically pay 14 days after a clean claim is submitted. Once transmitted, an interim aging is printed and worked daily until all the claims are set with a date to pay. The claim will be set to pay in full. If the claim is not set to pay in full, you need to know why – incorrect RUG rate, missing modifiers, coinsurance days not correct in software, etc. If you have unresolved Medicare balances, jump on this. There is usually a simple reason why you’re not getting paid.
- Medicaid claims should be billed as soon as your census is balanced for the month. Again, sometimes there can be problems with the Medicaid office, so pay attention here. The numbers can add up quickly month to month. Don’t let this roll month-to-month.
- Supplemental insurance – Upon receipt of the Medicare RA (Remittance Advice), a copy should be attached to the UB04 and mailed within 3 days. It’s extremely important to follow up with the insurance company to ensure they have received the claim and the claim is in their system. A rule of thumb is no later than 3 weeks after the claim is mailed, you should be able to confirm either by phone or online that they have your claim.
- Full insurance – One of the most problematic types of claims to get paid. The insurance companies use several stall tactics which delay payment – record requests, incomplete UB04, etc. It is necessary to follow up on these claims every 1-2 weeks to ensure they will continue to process.
Each week, review these accounts with your AR person to ensure progress is being made. You’ll take notes on the problem accounts you’ve identified from the list above. Document all the notes on your end-of-month aging. When the current month is over and you’re ready to close, it will be easy to see how hard your AR person is working and where help is needed.
If you’re not having major problems and you’re in maintenance mode, you may want to go over the top Medicare claims one week, the top Insurance claims another, etc. That way, it’s not so overwhelming.
Private Collections Procedures
Again, you should check with your company for their specific rerquirements, but usually, the Private pay Collection procedure is set up something like this.
Week 1: Statements should be mailed by the end of the 4th business day.
Week 2: If no payment received by the 10th of the month, AR person should initiate reminder calls. If no success with reminder calls, or no money is brought in this week, issue Collection letter #1.
Week 3: If no payment received within 7 days of collection letter, send Collection letter #2 and Administrator to contact family/RP.
Week 4: If no payment recived within 30 days of statement: 1) Issue discharge notice. 2) Social Services to contact family/RP to inform them of the date of the discharge and initiate involuntary discharge planning. 3) Notify Adult Protective Services if misuse of resident funds is suspected. 4) Request an asset search from corporate or a contract agency. 5) Consult with regional finance consultant on disposition of account.
- For your long term residents, always encourage families to set up the social security check as a direct deposit to the facility. Also, have any other checks – railroad, retirement, etc. directed to the facility. This will eliminate needless stress trying to collect the patient liability.
- Watch your balances!!
- Ensure your discharge letter has all the required elements as outlined in F-203 of your watermelon book.
- Don’t forget to check the balances of the resident trust fund. If the balances go above the SSI Resource Limit, the resident may be at risk of losing their Medicaid eligibility. Check your balances each month and ensure the notices go out as defined in F-159.
- If you have a resident who has a couple of months unpaid 6 months ago before they had Medicaid, but they are now approved for Medicaid, you need to decide what’s best for your facility. I typically exhaust all collection efforts up to the point of discharging this type of resident and then write it off if necessary. Why don’t I discharge? Well, an administrator has to look not only at an account history, but at the future as well. If a resident is approved for Medicaid and we get their liability, why in the world would I discharge this resident? That is as much of a guaranteed income as we’re going to get in long term care. Keep the resident. They may be with you for several years. You will more than earn back any money you previously lost on this resident.
- You need to be collecting 100%+ of the prior month’s AR. Usually 103-105% depending on your situation. Why? When you “scrub” the aging, most facilities have uncollected accounts. So, you need to collect not only what is owed to you on the prior month, but you need to make headway on the old accounts on the aging. If you are only collecting 80-90%, you need to investigate immediately to determine what the problem is! ie- Medicaid check didn’t come in, private pay wasn’t billed, etc.
I hope this helps. I know I could have used it when I was starting out.