By Lemuel Areglo, CPC | Director of Revenue Cycle Management Services
Key Takeaways
- Unresolved claims, delayed follow-ups, and aging patient balances can severely impact your practice’s financial health. By the time issues become apparent, cash flow may already be compromised.
- Many billing issues are preventable. Gaps in eligibility verification, coding mistakes, and incomplete information can be addressed before claims are submitted, provided you have robust verification processes in place.
- Patients who are informed about their financial responsibilities upfront tend to pay more promptly and have fewer disputes. Unexpected bills can lead to dissatisfaction and reduced patient retention.
- Revenue cycle challenges do not appear overnight. They develop gradually, and by the time they are identified, your practice may have already experienced a financial setback.
This guide addresses common obstacles to effective patient collections and offers actionable workflows to enhance your practice’s financial performance. Focus on the areas that are currently most challenging for your clinic; each section is designed to provide standalone insights.
Table of Contents
Why Patient Collections Fail
The primary issue: lack of ownership over the entire process.
Front desk staff may assume billing will handle eligibility issues, while billing teams rely on complete clinical documentation. This disconnect can lead to claims falling through the cracks, resulting in unpleasant surprises when accounts receivable reports are reviewed.
Physical therapy practices face unique challenges. PhysicalTherapy billing differs significantly from other specialties like orthopedic or cardiology billing. A general billing team may lack the specialized knowledge needed to identify errors specific to physical therapy, leading to compounded issues.
Common barriers to effective collections:
- Eligibility verification failures — Not confirming insurance coverage before the appointment can lead to claims being sent to the wrong payer or outright denials, resulting in costly delays.
- Insufficient documentation — If clinical notes do not adequately justify the services rendered, payers will reject the claims. They are unlikely to provide leniency.
- Coding inaccuracies — Incorrect CPT or ICD-10 codes can lead to underpayment or denial. Specialty coding requires expertise that many generalist billers may not possess.
- Lack of follow-up procedures — Claims can age without attention, leading to missed timely filing deadlines and unrecoverable losses.
Creating a Denial Management System
Denial management should be a proactive system consisting of three key components: prevention, identification, and resolution.
Prevent denials before submission
Most denials can be avoided. The primary reasons — missing information, eligibility issues, and coding errors — can all be addressed before claims are submitted. Verify insurance eligibility prior to each appointment, not just at check-in. Confirm the payer, plan type, copay, deductible status, and any prior authorization requirements, and document this information thoroughly.
Utilize claim scrubbing tools before submission to catch issues such as missing modifiers, bundling problems, and frequency limit violations. If your system does not have these capabilities, you risk sending out claims that are likely to be denied.
Identify denials promptly
When a denial is received, it should be routed for review the same day. Every hour that a denial remains unaddressed brings you closer to missing timely filing deadlines. Categorize denials by reason code — eligibility, authorization, coding, documentation, or duplicate — and track patterns. If one provider has a higher denial rate, it may indicate a documentation issue. If a specific payer denies more frequently, it could signal a contract issue.
Resolve within 48 hours
Aim to resolve denials within 48 hours of receipt. If a denial cannot be resolved at the initial level, escalate it immediately and avoid letting it linger. Document the resolution steps for each denial type to ensure consistency and efficiency in handling future denials.
Effective A/R Follow-Up
It’s essential to recognize that reviewing accounts receivable once a month is insufficient. Real follow-up should occur weekly, prioritizing claims based on age and dollar amount.
Collection rates decline significantly as claims age. For claims under 30 days, collection rates can exceed 95%. However, for claims over 120 days, collection rates may drop below 50%. Each week of inaction moves you further down this curve.
A straightforward weekly routine:
- Day 1 — Review claims aged 0–30 days. Confirm receipt and ensure claims are being processed.
- Day 2 — Address claims aged 31–60 days. Contact payers for any claims with no activity and document every interaction.
- Day 3 — Escalate claims aged 61–90 days, as they are approaching critical age.
- Day 4 — Take aggressive action on claims over 90 days. Check for timely filing deadlines and ensure these claims do not fall through the cracks.
- Day 5 — Follow up on patient balances and initiate conversations about payment plans.
KPIs to track:
Metric
Target
Days in A/R
Under 35
A/R over 90 days
Under 15% of total
Clean claim rate
95%+
Denial rate
Under 5%
Identifying Claims Delays
Inefficiencies in billing processes often stem from role confusion or errors during patient intake.
When one individual manages registration, eligibility verification, charge entry, and follow-up, accountability diminishes. It is crucial to separate front-end tasks (registration, eligibility, authorization) from back-end tasks (coding, billing, accounts receivable). This separation is important even in smaller practices.
Another significant issue is poor data collection at intake. Incorrect insurance IDs, inaccurate demographics, and missing authorization numbers can lead to claims failures later in the process, especially when the visit is weeks old and documentation is no longer fresh.
Advanced EHR systems offer AI-powered intake platforms that enhance intake accuracy and alleviate front desk bottlenecks, ultimately reducing the incidence of data errors that can delay claims processing.
Verify before the appointment:
- Patient demographics
- Active insurance coverage and effective dates
- Copay, deductible, and coinsurance status
- Prior authorization (if required)
- Estimated patient responsibility communicated to the patient
Submit claims daily instead of in weekly batches. Daily submissions allow errors to be identified while the encounter is still fresh and catch clearinghouse rejections early — a rejected claim is not in the payer’s queue at all.
Collecting Patient Payments
As patient financial responsibility increases due to the prevalence of high-deductible plans, collecting payments requires a different approach than traditional payer collections.
The key to successful collections is not merely the design of your statements but the conversations you have with patients before their visits. Patients who understand their financial obligations upfront are more likely to pay promptly and have fewer complaints. In contrast, those who receive unexpected bills are less likely to pay and may not return for future services.
Collect copays at check-in. Send statements within a week of claim adjudication. Provide multiple payment options, including online payments, phone payments, text-to-pay, and payment plans for larger balances. Patients are more likely to utilize options when they are available.
A recommended outreach schedule:
- Statement sent on day 0 (post-adjudication)
- Reminder sent on day 30 (statement + email or text)
- Phone call made on day 45
- Final notice sent on day 60 with a payment plan offer
- Consider collections on day 90
Document every attempt. A thorough paper trail is essential if an account is sent to collections.
Quick-Reference Checklists
Pre-visit
- Demographics verified
- Eligibility confirmed
- Benefits documented
- Authorization obtained (if required)
- Patient informed of estimated costs
Claim submission
- All fields complete
- Diagnosis codes support medical necessity
- Procedure codes match documentation
- Modifiers applied correctly
- Claim scrubbed
Denial management
- Denial identified within 24 hours
- Reason code categorized
- Resolution initiated within 48 hours
- Appeal filed (if applicable)
- Root cause logged for tracking patterns
Patient collections
- Copay collected at time of service
- Statement sent within 7 days of adjudication
- 30-day reminder sent
- 45-day phone outreach attempted
- Payment plan offered before day 60
The Integration Challenge Most Practices Overlook
Many billing inefficiencies arise from poor handoffs rather than individual performance issues. When clinical documentation, practice management, and billing operate in separate systems, data must be re-entered, leading to errors and missed charges.
PhysicalTherapy-Cloud integrates all three functions into a single platform. When a provider completes an encounter, billing processes begin immediately with complete clinical context — no exports, no manual entry, and no gaps. For practices seeking to enhance their operations, PhysicalTherapy-Cloud Billing Services offers dedicated specialists who understand your specialty, adhere to a weekly A/R cadence, and identify denial patterns before they escalate into revenue issues.
If your in-house billing team is struggling with increasing volumes, rising denial rates, or staff turnover affecting continuity, it may be time to consider outsourcing as a viable solution.
The workflows outlined above are effective. The key question is whether your current setup can support them. If it cannot, it may be worth reassessing your approach.
Talk to our billing team for a FREE billing analysis.
Lemuel Areglo, CPC
is the Director of Revenue Cycle Management Services at WRS Health, bringing nearly 15 years of experience in medical billing, coding, credentialing, and revenue cycle operations across the healthcare sector. Lemuel’s expertise encompasses the entire revenue cycle, including claims management, denial resolution, payment posting, accounts receivable, and practice operations. He has extensive experience supporting various specialties, including physical therapy, pain management, internal medicine, orthopedic surgery, and more.
