The lack of proper accounts receivable management services is a common issue for dental practices. Due to the day-to-day hectic schedule, practice staff forgets to track outstanding balances for weeks and even months. In fact, the delay reaches a limit, where it becomes difficult and nearly impossible to recover revenue.
Even if practices track the pending payments and try to recover them, it’s difficult to decide where they need to prioritize their efforts.
But you can protect your revenue if you divide your outstanding balances into AR aging buckets. These help you know which claims are older or which need the best follow-up efforts on your part.
Want to know how to create these buckets and use them the right way to maximize revenue? Let’s discuss.
What are AR Aging Buckets?
Let’s first understand what the AR aging buckets are. So, simply put, these are categories to divide outstanding balances, from unpaid insurance claims or collectible patient balances. These buckets help practices prioritize claims for recovery efforts and maintain a smooth dental revenue cycle.
The most common AR aging buckets are:
0-30 Days
0-30 days are low-risk and fresh aging buckets, which are mostly easy to recover. It’s normal for insurance companies to reimburse claims after a month. In fact, under state laws, like the official Council of the District of Columbia’s Prompt Pay Laws, payers must reimburse claims within 30 days. If claims remain unpaid after 30 days, payers must pay interest beginning on the 31st day.
However, you can easily reduce these accounts receivable if you partner with a reliable dental A/R management company, like TransDental, which has an impressive turnaround time of 24-48 hours for most of its claim submissions.
31-60 Days
A 31-60-day aging bucket is mostly moderate-risk, where most practices start follow-up and recovery efforts. They consistently contact insurance companies to track the claim’s progress. If there are any payment delays due to missing documentation, billers should send the documents for the payers to review and reimburse payments soon.
If a claim is denied, the billing team corrects the errors and resends it, expecting payments to arrive sooner.
Top companies use professional strategies to reduce at least 60-70% of aging accounts receivable within 60 days.
61-90 Days
A 61-90-day aging bucket is high-risk, where recovery becomes difficult without the right approach. Delays aren’t an option here. Prompt action is required to recover payments fast.
Your staff must follow up regularly with the payer and escalate the issue to an insurance supervisor if there are no chances of recovery. If the issue persists, file a formal appeal to the payer and attach the required documents to strengthen the request.
After that, you may escalate the issue to the Provider Relations Representative if you still experience it. The payer may try to delay the payment, where you can demand payment by referencing your state’s Prompt Pay Laws, and send a legal notice mentioning contract terms for reimbursement.
91-120 Days
Your 91-120 day aging bucket is very high-risk, where recovering payments is nearly impossible in most cases. You must take urgent action with consistent follow-up to make sure you receive your payments soon; you may risk writing off the amount.
It’s a case of desperation, where you can’t take chances or afford further delays. So, you must highlight the issue on a broader scale if you don’t receive your due payments from the payer end.
The last resort is to file a complaint with your state’s Department of Insurance. Payers try to avoid legal complications, and you’re likely to receive your due payments if your claim is clean, correct, and perfectly compliant with the payer requirements.
121+ Days
Recovery is near impossible when A/R aging exceeds 120 days. It’s like the fourth month on an unpaid claim. You can barely get paid after 120 days, with only 10-20% chances of recovery.
If you’re struggling with insurance claims, submit a final appeal for reconsideration if the option is available.
In case of unpaid patient balances that extend beyond 120 days, the only option left is to transfer the case to collection agencies.
If you don’t recover payments after 121 days, your amount is written off, leading to a revenue loss.
What is the Impact of A/R Aging on Revenue and Productivity?
Outstanding balances in accounts receivable result in write-offs and huge revenue losses for dental practices if not managed properly and on time. According to a PYMNTS survey, 84% of practices lose revenue due to outdated A/R processes.
And it doesn’t just cause revenue loss but also affects staff productivity. Since A/R is a detailed process, it requires consistent follow-up, and staff must be dedicated solely to managing accounts receivable tasks and recovering overdue payments all the time.
It may not be a great option for a small and solo practice that operates with a limited staff on a restricted budget. The average annual salary of an accounts receivable specialist is $48,326, according to ZipRecruiter data. And success is still not guaranteed with it.
It can be frustrating when you’re already losing money to unpaid balances and write-offs, and the expense of paying a huge A/R salary for just one staff member adds to your overhead.
What are the Best Practices to Control and Reduce A/R Aging?
Let’s discuss the best practices for accounts receivable management to reduce A/R aging and recover the maximum amount.
Verify Patient’s Coverage Plan
You need a proactive approach to effectively reduce A/R, and it starts by verifying patients’ coverage details before treatment. You can use automated insurance eligibility verification services to verify patient details in real-time, and know the patient’s coverage plan and benefits details.
When you know these details in advance, it’s easy for you to treat the patient and submit clean claims according to the coverage plan. Clean claims reduce claim denials and ensure you’re paid in full and on time. This key step can help reduce your accounts receivable to a huge extent.
Collect Patient Balances Upfront
Eligibility verification also helps you know the patient’s share of payments. Whether it’s copay, coinsurance, or deductible, you get a clear picture of the total dues on the patient’s end. You can charge the patient at the time of service. It’s easier to collect on the counter instead of pursuing a patient afterwards. It can hugely speed up your payments and reduce your A/R.
Submit Clean Claims
Clean claim submissions are the direct counter to A/R aging. When you fill all the required fields in an ADA dental claim form, attach all the required documents when required, and use the right CDT code for a procedure, you’re likely to submit a clean claim. One final check with claim scrubbing helps detect errors, which you can rectify on time and submit claims, leaving no reason for denials.
Clean claims ensure timely payments, so the amount doesn’t get stuck in outstanding, and you can control A/R aging to a huge extent.
Follow Up on the Claim
When you submit a claim to the payer, immediately start following up. Confirm if the payer has received the claim. Get the claim tracking number. Otherwise, if the payer hasn’t received the claim and you haven’t confirmed, you may feel relaxed while your A/R continues to increase.
By regularly following up on the claim, you can track its progress until you receive your payments. And if the payer denies your claim or reimburses less than the contracted fee, you can timely appeal for denials and underpayments.
Track A/R Progress
When you track your A/R progress, you can easily monitor the performance. The best way to do this is to automate the process using a robust practice management system, which manages all your revenue cycle tasks.
The all-in-one software produces a dashboard, where you can view all the key metrics, including A/R performance in real-time. It helps you review how much is stuck in outstanding, and how efficient your A/R processes are.
Generate A/R Aging Reports
A/R aging reports are the financial documents that help you provide a complete detail of accounts receivable, broken down by patient, payer, aging buckets, and outstanding balances. Your practice management system can automatically generate A/R aging reports when required, helping you review your performance in accounts receivable, create aging buckets, and identify outstanding claims or patient balances for recovery.
Final Thoughts
The purpose of A/R aging buckets is to identify unpaid claims, prioritize aging claims, and try to recover balances. However, you shouldn’t just focus on aging. Sometimes, fresh claims may have a higher value than aging claims, and pursuing them instead of low-value older claims can assist in recovering payments and help you grow your revenue smoothly.
In any case, try to control A/R by verifying patient coverage on time, collecting patient balances upfront, submitting clean claims, and following up on the claim progress for timely payment posting and appeals.
Frequently Asked Questions (FAQs)
What are AR aging buckets?
AR aging buckets are the categories to divide outstanding balances and identify older and fresher claims. AR is divided into 0-30, 31-60, 61-90, 91-120, and 121+ days aging buckets. Newer claims are low-risk, while older claims are high-risk and difficult to recover.
Why is it important to create AR aging buckets?
AR aging buckets are important to identify older unpaid claims, so you can prioritize your recovery efforts and try to collect balances from these aging claims.
What is considered a healthy AR aging distribution?
A healthy accounts receivable is one in which most payments fall in the 0-30 and 30-60 day buckets. The aim is to keep most A/R shorter than 60 days for smooth recovery and easy financial management.
How often should A/R aging reports be reviewed?
Review your A/R aging reports every week or at least once a month to check if there are any outstanding claims. It helps you to timely follow up on unpaid or denied claims.
