We didn’t receive your claim

•  It’s being sent back for reprocessing
•  Call back in 30 days
•  Claim was denied for missing a procedure code

  Do these statements sound familiar? These are some

  of the most common answers given when trying to collect

  commercial insurance claims. Did you know the average

  Days Sales Outstanding (DSOs) in the 2nd quarter for

  commercial insurance is 80 days? DSOs are an important

  financial metric for home health agencies to review every

  quarter. By looking into your Days Sales Outstanding and

  comparing them to industry benchmarks, your agency

  has the ability to better understand the performance of

  your intake and/or billing and collection departments. In

  reviewing your DSO, you will be able to understand the

  length of time (in days) it takes for one dollar from a sale to

  actually be recognized as cash. An agency should have a

  goal of keeping their DSOs below the national averages.

  If your Days Sales Outstanding are significantly higher

  you may want to reevaluate your intake and/or billing and

  collection processes.

  You should keep track of your DSOs by revenue source

  to best understand your agency’s efficiencies. DSOs should

  be at a minimum broken down by Medicare, Medicare

  Advantage, Medicaid, commercial insurance and self pay.

  Using a DSO by payer analysis, an agency is able to evaluate

  where their cash flow management may be weak. When

  looking at DSOs it is also important to compare yourself to

  state and local benchmarks. You may find that your DSOs

  are higher than the national averages but are closer to the

  state averages. There can be specific state issues that affect

  your DSOs and cause differences from national averages,

  especially with Medicaid.

  It is very important that your billing and collection

  department establish goals relating to DSOs for each

  significant payer source. The objective should be to keep

  DSOs in line or better than the national and/or state average

  benchmarks. You should consistently express these goals,

  even possibly offering incentives to your billing and collection

  department so they understand the importance of their role

  within your agency.

  It is important to have strong internal controls within your

  billing and collection department when it comes to cash

  management. This includes proper documentation and sign

  off on write offs, cash postings and deposits, and payer

  changes. It is important that when the billing and collection

  department determines that an account should be written off

  they properly document their reasoning. This documentation

  should be presented to management to verify. Management

  should then reconcile write offs in the general ledger to the

  approved documentation.

  In maintaining strong internal controls it is important

  to fully utilize your software’s automation functions. Using

  the up to date automation functions allows your agency

  to bill more timely and to be sure that all documentation

  is reviewed prior to billing. Also, automated cash postings

  will enable agencies to maintain up-to-date accounts

  receivable aging.