A lot of home care agency owners entered the business because of their skill and passion at caregiving. While on the other hand, the finance side of the business is not their strong suit. Most of the big agencies that we deal with have both a finance division and an operations division, and a lot of the smaller agencies have an accountant on staff or at least part time. Those folks are likely not even reading this article and thinking "of course I reconcile my billing." But sadly, we've come across a good number of agencies whose goal is just to cover payroll and expenses, and these agencies leave a lot of their bills, especially to Medicaid unpaid.
What Does It Mean to Reconcile Your Billing?
When you deliver a service, you're eligible for a payment. In accounting terms this is referred to as "Accounts Receivable" (AR). Some agencies track their AR in their accounting software such as Quickbooks. This is more prevalent on the "Private Duty" side of our industry. Agencies who submit claims to payers such as Medicaid or VA generally reconcile their payments inside their home care software.
To answer the question "what does it mean to reconcile," the answer is that for each outstanding bill, you need to track whether it's paid or write it off. All agencies have some write-offs, but your job is to minimize it.
Do You Reconcile Bills, or Services, or Both?
How you reconcile is related to who you bill. If you send "claims" then each "service" generally each home care visit is adjudicated and either paid or rejected.
When you are sending "invoices" rather than claims, you generally receive a payment for the bill. This is all good when items are fully paid, but when they're not, you have to figure out why, and then figure out if you can get paid (e.g., it was denied due to a clerical error that can be corrected) or whether you need to write it off.
We use the flow diagram below when we start training on this topic. For now we'll leave you with that but we'll come back to it in future articles.
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If you'd like to learn more about managing Medicaid Home Care businesses, please download our free e-Book "Best Practices for Success in Managed Care Medicaid Home Care" by clicking the link below:
provides software to improve the delivery of care outside the hospital, focusing on efficiency and care coordination. Ankota's primary focus is on Care Transitions for Readmission avoidance and on management of Private Duty non-medical home care. To learn more, please visit www.ankota.com or contact us.
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