What is an Aging Report and Why is it Useful?
An aging report is a high-level overview of the outstanding money owed to a practice
It is useful because it gives you a picture of the health of a practices processes
Accounts Receivable (A/R) is the money owed to your practice by patients and insurance companies. The A/R process begins when the session with the patient is over and is closed when that session's balance comes to $0.00 from the insurance company and from the patient.
Because the success of a practice's billing operation is measured in A/R days, it is important to keep a watchful eye over your A/R reports. Both from the insurance company side and from the patient side.
The way that an A/R balance or report is reduced is by receiving payments and entering contractual adjustments into your respective EHR system. By doing so, the money "falls off" the report, so to speak.
If all the steps in the revenue cycle management process are not successfully completed, or if they are completed poorly, then you might see an increase in A/R and a decrease in revenue.
Pro-Tip: Days in A/R can be calculated for your KPIs by completing a simple fraction.
Total A/R is $200,000.00
Average Daily Charge: $4250.00
Days in A/R = $200,000/$4,250 = 47.06 days in A/R
This will help you evaluate whether you need to adjust some part of the revenue cycle management process. There are some very practice steps you can take to adjust the A/R balance for insurance or patients.
One place to start is evaluating your financial policy. Is it clear? Does it include what patients need to pay when they come in for a visit or is it ambiguous?
Also, do your clinicians or front office staff understand your financial policy and are they equipped to implement the policy? If they have any questions or confusion you may need to retrain them on the process and have them start collecting money.
The other place to start is the verification of benefits process. You can look at how many rejections and denials you have based on incorrect eligibility. Then you can evaluation whether your A/R reflects a glitch in that process.
Finally, you can look at an official collection process. Whether that means your front office staff needs to start calling patients or if you need to contract with a collections agency, you will need to collect that money somehow.
Either way, you will want to keep a watchful eye on your A/R reports so you know how your practice is running and where you can make improvements to the process!