Revenue Cycle Management Red Flags: Vital Warnings You Can’t Ignore

In healthcare revenue cycle management (RCM), identifying warning signs early can help prevent financial setbacks and enhance efficiency. Revenue cycle red flags typically signal potential issues within billing, collections, or overall financial management. As RCM experts, here are some of the primary indicators we warn you about.

1. High Accounts Receivable (AR) over 90 Days

It often indicates inefficiencies in collection practices or patient billing processes when a significant percentage of AR remains unpaid for over 90 days. We suggest that AR over 90 days should ideally be below 10% of total AR. Organizations exceeding this benchmark may experience cash flow issues, potentially driven by claim denials or poor follow-up on unpaid accounts. Promptly addressing such patterns helps prevent revenue leakage and ensures timely payments from both insurers and patients.

2. Elevated Claim Denial Rates

A high claim denial rate is a critical warning signal in revenue cycles. Common reasons include coding errors, lack of documentation and inadequate prior authorizations. Denial rates exceeding 10% suggest that there may be significant gaps in billing processes, coding accuracy, or documentation compliance. Regular audits and root cause analysis can help organizations reduce denials by addressing underlying issues in claim submission and followup workflows.

3. Rising Days in Accounts Receivable (Days in AR)

Days in AR measures the average time it takes to collect payments after services are rendered. The industry benchmark varies by specialty, but consistently high days in AR may point to workflow inefficiencies or ineffective collection strategies. Ideally, this metric should remain as low as possible to avoid revenue backlogs and maintain a steady cash flow.

4. Low Clean Claim Submission Rates

Billing teams are likely to spend excess time correcting errors if you find clean claim rates below 95%. A low clean claim submission rate often stems from coding mistakes or missing patient information. Streamlining front end processes such as patient intake, verification, and accurate coding can help improve clean claim rates and reduce administrative burden on RCM teams.

5. Increasing Patient Balances and Collection Challenges

Timely collection becomes more challenging when patient responsibility for medical bills is increasing. High patient balances and difficulty in collecting will significantly impact cash flow. Effective patient communication, clear billing policies and options for flexible payment plans are key in maintaining patient payment compliance.

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These red flags serve as essential indicators for healthcare organizations aiming to optimize their revenue cycle performance. HealthRecon Connect can reduce financial risks and enhance overall operational efficiency by closely monitoring and proactively addressing these issues on behalf of your organization. Start optimizing your revenue cycle with a complementary revenue audit and embark on our proven 90-day action plan to transform your RCM workflow with HealthRecon Connect!

Talk to us today for a complementary, no-obligation benchmark assessment and demo!

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References:

1.?????? RevCycleIntelligence on AR and claims management: Visit at https://www.equalizercm.com/2020/05/11/red-flags-in-revenue-cycle-performance/ .

2.?????? Solutions4MDs on AR over 90 days benchmarks and clean claim importance: Visit at https://solutions4mds.com/what-are-the-red-flags-in-revenue-cycle-performance/

3.?????? Coker Group on key RCM red flags and management tips: Visit at https://www.cokergroup.com/insights/revenue-cycle-management-look-out-for-the-red-flags

4.?????? Days in Account Receivable : Visit at https://www.svmic.com/resources/newsletters/314/key-performance-indicators-spotlight-on-revenue-cycle-management

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