Aging of Accounts

Hi, I’m Dave Kats with Therapist Consultants and I have a tip for you.

If you take insurance and even if you are a cash practitioner, you should run an aging of accounts every month. What I mean by an aging of accounts is just a report that tells you who owes you money and how long they've owed you that money. And you have to decide based on that report what you need to do for collections. I have here a hypothetical aging of accounts that I'd like to go over with you and show you what we would do if we found these on our aging of accounts. Let's look at the aging of accounts. You can see the first person there is Bill Jones. Now he doesn't owe anything for 30 days, 60 days, 90 days, but from 90 days to 120 days he owes $100 and for over 120 days he owes $400. So he owes a total of $500. Now it appears to me that he has stopped coming in some time ago, about three months ago, and we have not collected from the times previous. Something went wrong, we sent it to the wrong insurance company, or we didn't bill it because we didn't have the right information, but something has gone wrong with this account. And we have to check it out right away because it's getting past the timely filing limit. I think most of you know that some insurance companies now have a timely filing limit of just 90 days. So really, in theory, this money that is owed could all be lost because we didn't collect it quickly enough. Let's look at Ralph Smith. He owes $200 on 30 days payable, and $100, 60 days payable. If this is an insurance practice, I'm not going to worry about this insurance practice because it just takes that long for insurance to pay, so it's probably in the pipeline. We look at his wife, Marlene Smith, she has $300, 30 days payable, $200, 60 days payable, which is fine, probably the same thing as her husband Ralph. However she has on a 120 days payable, she has over $700. Something happened where we didn't get paid on that. Now if we're waiting because of some auto accident related therapy or something like that, I understand. But if not we have to get on this right away because the insurance company is going to go past the timely filing limit with this or we're going to pass the timely filing limit with them, or we just have to see what was wrong. Maybe it was adjudicated wrong and she doesn't even know this, but we have to get it cleaned up. Now let's look at Jerry Black. Jerry Black owes $200, $300, $100, $300, $200. It appears to me that he's been coming in to see you on a regular basis and nobody's been paying anything. We're filing with the wrong insurance company, or his insurance is no longer in effect, or maybe we're behind on filing and we didn't know that right away. But we got to get on this because nothing is happening on this claim and we're treating him for nothing as it stands right now. Aaron Brown has $200, 60 days payable and 300, 90 days payable. We need to start looking at his case because it looks like he's stopped coming in because he has nothing 0 to 30 days payable. And once they stop coming in it's harder to get the collections from them. So we have to get on that collection right away too. Anyway, you see how you're supposed to do this. Every month if you have a staff person you should have them run this off. And you should have a financial meeting where you sit down with that staff person in the middle of the month and discuss what happened financially during the last month, give them about two weeks to get it prepared. And if you're not, if you don't have a staff person, you should run this off your computer all the time. Every therapist should know how to run off an aging of accounts, especially if you have an insurance practice. So there you have it. Run off an aging of accounts every month and you'll feel like you have a lot better pulse on what's happening in your practice.

This is Dave Kats. Thanks for listening.