Percentage of A/R over 120 days is a key metric used in healthcare revenue cycle management to measure the percentage of outstanding accounts receivable (A/R) that are more than 120 days past due. This metric is important because it provides insight into the effectiveness of the organization's billing and collections processes. A high percentage of A/R over 120 days indicates that the organization is struggling to collect payments in a timely manner, which can negatively impact cash flow and revenue. On the other hand, a low percentage of A/R over 120 days indicates that the organization is effectively managing its billing and collections processes, which can lead to improved financial performance. It is important for healthcare organizations to regularly monitor this metric and take action to address any issues that may be contributing to a high percentage of A/R over 120 days.
Percentage of A/R over 120 days is calculated by dividing the total amount of accounts receivable (A/R) that are over 120 days old by the total amount of A/R outstanding, and then multiplying the result by 100 to get a percentage.
The formula for calculating this metric is:
(Total A/R over 120 days / Total A/R outstanding) x 100
For example, if a healthcare organization has $500,000 in A/R outstanding and $100,000 of that is over 120 days old, the calculation would be:
($100,000 / $500,000) x 100 = 20%
This means that 20% of the organization's A/R is over 120 days old, which could indicate issues with collections or denials management. It is important to monitor this metric regularly and take action to address any underlying issues that may be contributing to a high percentage of A/R over 120 days.
Best practices to improve Percentage of A/R over 120 days are:
1. Timely and Accurate Billing: One of the primary reasons for an increase in A/R over 120 days is delayed or inaccurate billing. To improve this metric, it is essential to ensure that all claims are submitted accurately and in a timely manner.
2. Denial Management: Denials can significantly impact the A/R over 120 days. It is crucial to have a robust denial management process in place to identify the root cause of denials and take corrective actions to prevent them from happening in the future.
3. Follow-up on Outstanding Claims: Regular follow-up on outstanding claims is critical to reducing A/R over 120 days. It is essential to have a dedicated team to follow up on unpaid claims and take necessary actions to resolve them.
4. Patient Collections: Patient collections can also contribute to A/R over 120 days. It is essential to have a clear and transparent patient billing process in place, including providing patients with clear information about their financial responsibility and payment options.
5. Performance Monitoring: Regular monitoring of key performance indicators (KPIs) such as A/R over 120 days can help identify areas for improvement and take corrective actions. It is essential to have a dashboard that provides real-time visibility into the performance of the revenue cycle.
In conclusion, improving A/R over 120 days requires a comprehensive approach that includes timely and accurate billing, denial management, follow-up on outstanding claims, patient collections, and performance monitoring. By implementing these best practices, healthcare organizations can improve their revenue cycle performance and ensure financial stability.
The industry standard benchmark for Percentage of A/R over 120 days is typically around 10-15%. This means that healthcare organizations aim to keep their A/R over 120 days at or below this benchmark. A high Percentage of A/R over 120 days can indicate issues with the revenue cycle, such as inefficient billing processes, denied claims, or slow payment from insurance companies. It can also lead to cash flow problems and negatively impact the financial health of the organization. To improve this metric, healthcare organizations can implement strategies such as improving billing processes, reducing claim denials, and implementing timely follow-up on unpaid claims. By keeping the Percentage of A/R over 120 days at or below the industry benchmark, healthcare organizations can ensure a healthy revenue cycle and financial stability.
Revenue cycle software can significantly improve the Percentage of A/R over 120 days metric by automating and streamlining the entire revenue cycle process. With the help of advanced analytics and reporting tools, revenue cycle software can identify the root cause of delayed payments and provide actionable insights to improve the collections process.
By automating the billing and collections process, revenue cycle software can reduce the time it takes to submit claims, follow up on denials, and collect payments. This can significantly reduce the number of accounts receivable that are over 120 days old, improving the overall health of your revenue cycle.
Additionally, revenue cycle software can help you identify trends and patterns in your collections process, allowing you to make data-driven decisions to improve your collections performance. With real-time visibility into your revenue cycle metrics, you can quickly identify areas of improvement and take action to address them.
If you're looking to improve your Percentage of A/R over 120 days metric, it's time to consider implementing revenue cycle software. MD Clarity's revenue cycle software is designed to help healthcare organizations streamline their revenue cycle process, reduce denials, and improve collections performance. Book a demo today to see firsthand how MD Clarity's revenue cycle software can help you improve your collections performance and achieve better financial outcomes.