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Billing Transition Issues Concerning Old Receivables

May 2015

By: Mick Raich, President, Vachette Pathology


Every year we assist 15 to 20 clients as they transition from one billing firm to another. The reasons for these transitions are varied; usually it boils down to a lack of performance followed by a lack of communication, sometimes both.

One of the big issues often seen in these transitions is the handling of old receivables from the previous billing company. Often the original biller works these claims for three months, then rolls them off to collections. But what next?

You should ask yourself: What does your billing contract state regarding transition of old receivables to a new billing agency?

Many billing contracts have a clause indicating they will follow up on old receivables and transfer these accounts once completed. However, be mindful that the information to transition those receivables must be in an acceptable format, i.e. an electronic data file with clear indicators as to patient demographic and account detail. If that format cannot be provided, and the accounts are transferred over as hard copies, labor costs may be incurred. The labor costs (and the increased collection rate) involved may outweigh the actual payments received on the old AR.

In most cases, billing contracts stipulate that the original biller will transfer the files in a format designed by that biller. This means the previous biller could theoretically drop the accounts into a 1997 Quattro Pro file, or a similarly antiquated format, leaving the practice and their new biller to figure out the file format and how to collect on these older accounts. You would be surprised at how many billing companies become less user friendly in this way once their contract is terminated.

Being aware of these problems is just part of managing your practice correctly during these transitions. Remember, if you decide to terminate your billing contract, work with a professional who understands the complexities of these issues.

Mick Raich owns Vachette Pathology and works with pathologists, laboratories and hospitals nationwide in the area of strategic management and revenue cycle management. Mick can be reached at 866-407-0763 or 517-403-0763 or via e-mail at [email protected] or visit www.vachettepathology.com.

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