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Fix Medical Billing Collections: A Real-World Playbook for Denials and A/R

Denials piling up? A/R aging past 90 days? This playbook gives you practical workflows to fix collections problems before they become revenue problems.

By Lemuel Areglo, CPC | Director of Revenue Cycle Management Services

Key Takeaways

  • Unresolved billing issues, delayed follow-ups, and aging patient accounts can severely impact your practice’s financial health. By the time these issues become apparent, your cash flow may already be suffering.
  • Many billing issues are preventable. Gaps in eligibility, coding mistakes, and incomplete information can be addressed before claims are submitted, provided you have effective verification and scrubbing processes in place.
  • Patients who are informed about their financial responsibilities in advance tend to pay more promptly and have fewer disputes. Unexpected bills can lead to dissatisfaction and reduced patient retention.
  • Billing challenges do not manifest overnight. They develop gradually, and by the time they are noticed, your revenue cycle may have already been compromised.
This guide addresses the most frequent reasons for billing delays and offers actionable workflows to resolve them. Navigate to the section that is currently most pressing for your practice—each section is designed to be self-contained.

Table of Contents

Understanding the Unique Challenges of Psychiatric Billing

The core issue: ownership of the billing process is often unclear.

Front desk staff may assume that billing will handle eligibility checks, while billing teams might rely on clinical documentation to be complete. This lack of clarity can lead to claims falling through the cracks, resulting in unexpected surprises when accounts receivable reports are reviewed.

Psychiatric practices face unique challenges. Psychiatry billing differs significantly from billing practices in other specialties. A general billing team handling multiple specialties may lack the specialized knowledge necessary to identify psychiatric-specific errors before claims are submitted, leading to compounding issues.

Common issues include:

  • Eligibility verification failures — If insurance is not confirmed prior to the appointment, claims may be submitted to the wrong payer or denied altogether, resulting in costly delays.
  • Insufficient documentation — If clinical notes do not adequately justify the services rendered, payers are likely to reject the claim.
  • Coding inaccuracies — Incorrect CPT or ICD-10 codes can lead to underpayment or outright denial. Psychiatric coding requires specific expertise that generalist billers may not possess.
  • Lack of follow-up processes — Claims can age without any follow-up, leading to missed timely filing deadlines and unrecoverable losses.

Building a Denial Management Workflow

Denial management should be viewed as a proactive system rather than a reactive cleanup task. It consists of three key components: prevention, identification, and resolution.

Preventing 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. Ensure that insurance eligibility is verified 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. Your billing software should identify missing modifiers, bundling issues, and frequency limit violations. If it does not, you risk sending out claims that are likely to be denied.

Identifying Denials Promptly

When a denial is received, it should be routed for review on the same day. Each hour that it remains unaddressed brings you closer to missing a timely filing deadline. Categorize denials by reason code—eligibility, authorization, coding, documentation, or duplicate—and track patterns. If one provider has a higher denial rate than others, it may indicate a documentation issue. If a particular payer denies claims more frequently, it could signal a contract issue.

Resolving Denials Within 48 Hours

Aim to resolve denials within 48 hours of receipt. If a denial cannot be resolved at the first level, escalate it immediately and avoid letting it sit. Document the steps taken to resolve each type of denial to ensure that staff do not have to reinvent the process each time.

A/R Follow-Up That Actually Works

The reality is that reviewing accounts receivable once a month is insufficient for effective follow-up; it is merely documentation. True follow-up should occur weekly, prioritizing claims based on their age and dollar amount.
The likelihood of collecting on claims decreases significantly as they age. Claims under 30 days old have a collection probability exceeding 95%, while those over 120 days may drop below 50%. Each week of inaction pushes 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 regarding any claims with no activity. Document every interaction.
  • Day 3 — Escalate claims aged 61–90 days. These are nearing critical age.
  • Day 4 — Take aggressive action on claims over 90 days. Check for timely filing proximity. Do not allow these claims to die quietly.
  • Day 5 — Follow up on patient balances and initiate discussions 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 What Slows Down Your Claims

Inefficiencies in billing often stem from role confusion or errors during the intake process.

When one individual handles registration, eligibility, charge entry, and follow-up, accountability diminishes. It is essential to separate front-end tasks (registration, eligibility, authorization) from back-end tasks (coding, billing, accounts receivable). This separation is crucial, even in smaller practices.

Another significant issue is poor data collection during intake. Incorrect insurance IDs, demographic errors, and missing authorization numbers can lead to claims failing downstream, and by that time, the visit is weeks old, making documentation retrieval challenging.

Advanced EHR systems provide AI-powered intake platforms that enhance intake accuracy and alleviate front desk bottlenecks, ultimately reducing the incidence of bad data that can delay your claims.

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 rather than in weekly batches. Daily submissions allow errors to be identified while the encounter is still fresh. This practice also helps catch clearinghouse rejections early—if a claim is rejected, it is not in the payer’s queue at all.

Collecting from Patients

With the rise of high-deductible health plans, patient financial responsibility has increased significantly. Collecting these amounts requires a different strategy compared to collecting from insurance payers.
The most effective strategy is not merely about statement design; it lies in the conversations held before the visit. Patients who are informed of their financial responsibilities beforehand are more likely to pay promptly and experience fewer complaints. In contrast, patients 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 who have options are more likely to utilize them.

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 communication attempt. A thorough paper trail is essential if an account eventually goes to collections.

Quick-Reference Checklists

Pre-visit

  • Demographics verified
  • Eligibility confirmed
  • Benefits documented
  • Authorization obtained (if required)
  • Patient informed of estimated cost

Claim submission

  • All fields completed
  • 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 documented for pattern tracking

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 Problem Most Practices Ignore

A significant portion of billing inefficiency arises from poor handoffs rather than personnel issues. When clinical documentation, practice management, and billing operate in separate systems, data must be re-entered, leading to errors and missed charges.

Psychiatry-Cloud integrates all three functions within 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, Psychiatry-Cloud Billing Services provides dedicated specialists who understand your specialty, adhere to a weekly A/R cadence, and identify denial patterns before they escalate into revenue issues.

The workflows outlined above are effective. The question is whether your current setup can support them. If it cannot, it may be worth reevaluating 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 leading medical billing, coding, credentialing, and revenue cycle operations across the healthcare industry. Lemuel’s expertise spans the full revenue cycle, including claims management, denial resolution, payment posting, accounts receivable, and practice operations. He has extensive experience supporting specialties including psychiatry, physical therapy, pain management, internal medicine, orthopedic surgery, speech therapy, and sleep medicine.

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