Prepare For Bad Debt Reserves
By Linda Payne, President, Reimbursement Concepts, LLC
Another Problem Solved!
Situation: Bad debt reserves keep going up and Management staff is unprepared for what is coming at month end.
Problem: No one is “managing the roll.”
Cause: Collectors were working high dollar accounts, accounts that were >120 days old, credit balances, etc. but they were not running reports that looked at claims billed 45 days prior to the point when they age into a new bucket to ensure that they are being worked before they roll.
Impact: Bad debt reserves were going up in older aging buckets and management would not be expecting the additional reserves.
Solution: Run outstanding AR reports that show unpaid invoices that were recognized as revenue 30 days prior to the date that they age into a new aging bucket and reserves on the money increase. Distribute reports to individual collectors to follow up on high dollar patients that will possibly have a big impact on reserves at month end.
Prevention: Manage the Roll! Run this type of report on a weekly basis so that everyone (including finance and Sr. Management) is prepared for what will roll and need reserved at month end.