The world of healthcare is always changing, and one area where this is super clear is in revenue cycle management (RCM). For healthcare organizations, having a strong and efficient RCM process isn't just nice to have; it's absolutely essential for staying financially healthy. It’s about keeping things steady, speeding up how quickly you get paid, cutting down on denials, and making sure patients get top-notch care.
At Magical, we've seen firsthand how the latest advancements in RCM are helping healthcare teams adapt their strategies. Because let's be real, if you're not staying on top of these trends, your competitors probably are.
One of the most crucial parts of a healthy revenue cycle is effective Accounts Receivable (AR) follow-up. But for many practices, optimizing team productivity, sorting AR, and setting appropriate claim thresholds can feel like a constant uphill battle. That's where innovation comes in, especially with the rise of AI and automation.
Let's dive into how strategic AR follow-up forms the very foundation of your financial well-being and how AI automation can revolutionize these operational aspects, transforming your AR follow-up from a manual grind into a highly efficient, data-driven revenue engine.
The Foundation of Revenue: Strategic AR Follow-Up
Why is effective AR follow-up so crucial for the financial health of your practice? Simply put, accounts receivable represents the unpaid balances after a patient encounter. This can include patient balances (self-pay) or insurance/payer balances. If these balances aren’t managed effectively, your revenue cycle can grind to a halt, impacting your financial stability.
Imagine a patient visit: they're seen, coding is done, charges are entered, and then there's a balance to be managed. This balance might go to insurance, or directly to the patient if it's self-pay. True self-pay cases, ideally, are determined before the patient is even seen. For these, it’s a good practice to have clear policies on discounts, payment plans, or even financial assistance, especially for high-balance services. This requires a clear, fair policy, often working with an attorney to ensure compliance with guidelines like state poverty guidelines.
For balances after insurance has paid, you need to be meticulous. The Office of Inspector General (OIG) has very clear guidelines on courtesy adjustments. As our expert Vanessa Moldovan points out:
"The OIG has very clear guidelines on courtesy adjustments, and what is considered ethical, unethical, fraudulent, and negligent behavior regarding courtesy adjustments. The bottom line is that whatever you decide to do, you have to do across the board. If you were to be audited, and they found that you were giving courtesy adjustments only to friends of the doctors, that could get you into some trouble."
This emphasizes the critical need for consistency and clear policies that are followed strictly. Patients also receive an Explanation of Benefits (EOB) and know what they’re expected to pay, so your billing must match what the EOB states. Developing and strictly following a collections policy is vital, and these policies should be clear to patients through signs, scripts, and retained payment agreement forms.
Historically, calling patients on balances isn't cost-effective for most practices. Automated systems, patient portals, and digital reminders (text or email) are proving much more effective for patient collections. For older balances (e.g., over 90-120 days), a clear policy is needed on when to send them to collections or adjust them off, with careful tracking to maintain accurate reporting and prevent issues if a patient returns. Understanding your billing system’s limitations (account vs. claim vs. line-item balances) is also crucial for effective management.
The challenge with manual AR sorting and prioritization is immense. With constantly evolving regulations and policies, persistent staffing shortages, and the sheer volume of data, manual processes quickly become inefficient and error-prone.
Optimizing Your AR Follow-Up Team Structure
To tackle these challenges, optimizing your AR follow-up team structure is key. How you sort and work your AR can significantly impact efficiency. Here are some common strategies:
Payer Mix: Dividing AR by payer allows team members to become highly specialized in specific payer rules, clinical guidelines, billing policies, and timely filing requirements. This deep expertise can be a huge advantage. However, you might lose the personal connection with specific facility staff if you were previously organized by location.
Special Team: Some organizations divide AR by specialty (e.g., dermatology, oncology, surgical, office). This allows teams to focus on the unique billing nuances of those specific services.
Location: If you have multiple facilities, assigning AR follow-up by location allows team members to build strong relationships with on-site staff, understand their processes, and predict issues. The downside, as mentioned, is a broader knowledge base needed for all payers across all specialties.
Each approach has its pros and cons, and the "best" method often depends on your organization's specific needs and willingness to adapt. Organizational flexibility and adaptation are crucial here. When making a change, leaders need to understand there will be an adjustment period, typically 30-60 days, before the full impact can be assessed.
Measuring Success: Productivity Standards and Claim Thresholds
Once your team is structured, how do you measure success and determine staffing needs? Industry productivity standards play a critical role. Benchmarks like those from MGMA (Medical Group Management Association) or your company’s own historical productivity trends can help calculate appropriate staffing levels.
The calculation often involves looking at your total AR, total claims, and total dollar amount outstanding, then dividing it by the number of team members. For instance, if you have 5,000 claims and 5 team members, that’s 1,000 claims per person.
Next, you define "touch" rates and claim volume expectations. This refers to how often a claim is worked within a specific timeframe, typically outlined in a contract or internal policy (e.g., touching each claim every 25, 28, or 30 days). This rate can even differ by payer, such as touching workers' compensation claims every 60 days versus commercial claims every 25 days. If your policy requires a minimum of 5 claims worked per hour, this must be factored into whether your team can meet the touch rate targets.
Another important debate is whether to work every single claim or implement dollar thresholds. Some organizations commit to touching every claim, regardless of the balance, while others might guarantee follow-up only for claims over a certain threshold, like $100. If you choose a threshold, it's vital to have a clear process for handling claims below that amount after a certain period (e.g., 90-120 days). Consistency in these policies is paramount, as auditors will scrutinize your practices.
The constant need for staff training to keep employees "up to speed on the ever-changing requirements for claim submissions" adds another layer of complexity. This is where manual processes hit their limits.
AI’s Role in Revolutionizing AR Follow-Up Productivity
This brings us to the exciting part: how Artificial Intelligence (AI) and automation are transforming AR follow-up. Healthcare organizations are increasingly investing in IT and software, with about 80% of executives increasing spending due to the rise of AI technologies. These powerful tools improve efficiency, optimize workflows, and minimize errors, especially in RCM areas like patient registration, eligibility verification, claims processing, denials management, and payment posting.
AI is making traditional Robotic Process Automation (RPA) tools, which were often difficult to set up and maintain, far more accessible and effective. Tools like Magical are making it possible to set up RPA workflows in minutes instead of months.
Magical’s Agentic AI employees are specifically designed to address the complexities of revenue cycle management. Unlike traditional rule-based automation that breaks if it encounters something unexpected, Agentic AI operates more like a human worker, understanding context, adapting to changing situations, and making judgments based on available data.
Here’s how Agentic AI revolutionizes AR follow-up productivity:
Intelligent Claim Prioritization: AI-driven algorithms can intelligently prioritize high-value or high-risk claims, ensuring that your team focuses its efforts where they will have the most impact. This means less time spent on low-value tasks and more on complex problem-solving.
Automated Workflow Management: Agentic AI can dynamically assign and distribute workloads. It handles data movement between systems, navigates forms, and submits information without human inputs. This frees up staff from mundane, repetitive tasks.
Automated Routine Checks: Many routine checks, such as verifying insurance information, checking claim status, or identifying claims stuck in the system, can be fully automated. As Vanessa Moldovan notes regarding claims with no payer response:
"Regarding claims that have had no response from the payer in the 20 years that I have been doing this nine times out of 10, it has something to do with the insurance information itself. What has happened especially in the last 10 years is that payers are streamlining their finances as well and they are not sending as many responses as they used to."
This highlights a common and time-consuming manual check that AI can perform instantly and accurately. Agentic AI can analyze data, make decisions, and perform actions with minimal human intervention, continuously improving its performance by learning from experience.
Magical's Agentic AI offers features like:
Smart Data Transformation: Automatically moves and transforms data between apps, handling date conversions, text extraction, and formatting without manual cleanup.
Intelligent PDF Processing: Extracts data from any PDF (like medical records or insurance forms) and populates it into online forms instantly.
AI-Powered Resilience: Our AI agents adapt to changes and handle edge cases automatically, ensuring your automations keep running reliably. They can even self-heal workflows and adapt on the fly if a button changes in an application.
Seamless Integration: Agentic AI agents can interact with multiple systems involved in the revenue cycle, such as electronic health records (EHRs), billing systems, and payment gateways, enabling seamless data flow and process automation across departments.
This significantly reduces manual effort, minimizes errors, and accelerates the revenue cycle. The healthcare industry is constantly battling cyberattacks and data breaches. Magical is designed with security in mind, not storing keystrokes or patient data, which helps mitigate the risk of data breaches.
Ready to see how Agentic AI can transform your AR follow-up? Book a demo with Magical today to explore how our fully autonomous AI employees can streamline your workflows and boost your revenue.
Building a Future-Ready AR Team with AI Automation
Embracing AI automation isn't just about efficiency; it's about building a future-ready AR team.
Boosting Operational Efficiency and Staff Engagement: By offloading repetitive, soul-crushing tasks to AI, your human team members are freed up to focus on more complex problem-solving, strategic thinking, and tasks that truly require human judgment and empathy. This not only boosts operational efficiency but also significantly increases staff engagement and job satisfaction.
Ensuring Consistent Policy Adherence and Audit Preparedness: Automated systems, especially those powered by AI, can consistently apply your established policies and guidelines without human error. This consistency is vital for avoiding costly penalties and maintaining financial health, especially in a heavily regulated industry like healthcare. Detailed automation logs and daily automated testing also contribute to audit preparedness by providing clear records of every action taken.
Maximizing Revenue Recovery and Minimizing Lost Dollars: By intelligently prioritizing claims, speeding up processing, and reducing denials, AI automation directly contributes to maximizing revenue recovery. This proactive approach to AR follow-up means fewer lost dollars and a healthier financial outlook for your organization. Healthcare providers using advanced RCM systems have reported a 10-15% increase in revenue.
The healthcare industry is experiencing a noticeable shift from traditional fee-for-service models to value-based care, which puts patient outcomes at the forefront. RCM must align with these principles, moving from a quantity-driven to a quality-driven model. AI and automation support this shift by streamlining administrative tasks, allowing providers to focus more on quality metrics and patient outcomes.
Magical is trusted by thousands of companies to automate workflows without the need for complex integrations. It uses AI to simplify automation setup for anyone and can even help identify new repetitive workflows that are ideal for automation. This means your team can slash through repetitive tasks in seconds by teleporting data between your tabs, making tasks disappear like magic.
By embracing these revenue cycle management trends and investing in innovative solutions like Agentic AI, revenue cycle leaders can steer their organizations through challenging times. This supports the financial well-being of the facility and helps patients understand their financial responsibility, ultimately enhancing the patient's financial experience.
In the intricate and constantly changing landscape of healthcare, effectively managing your revenue cycle isn't optional—it's a necessity. By joining forces with innovative solutions, your organization gains a valuable ally, empowering you to navigate the complexities of medical billing. The result? More financial stability and more resources to dedicate to your patients.
Don't let manual AR follow-up hold your practice back. See the magic for yourself! Book a free demo to learn how Magical’s Agentic AI can streamline your revenue cycle workflows today.
