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What if You Rely on Insurers for Payment?

Provided by Visa, Content Partner for the SME Toolkit

The Check is NOT in the Mail...

Businesses that rely on payments from insurers are prone to cash flow problems. Not only is the insurance payment often a long time coming—sometimes as late as 120 days after invoicing—but the insurer often cuts a portion of the bill, claiming that it's not covered by the policy. No wonder your dentist wants to drop all his insured clients.

In order to stay open, a business that relies on insurance income needs to manage billings and if possible, to add non-insured billings into the income mix. Many such businesses use third-party claims processors—companies that will bill and collect insurance payments on your behalf. That frees you from some administrative tasks and sometimes makes the collection process less cumbersome. But using a third-party agent doesn't relieve you from monitoring claims for timeliness and accuracy (see below for an example).

Here's the story of a nurse practitioner who outsourced her insurance billing to a third party contractor who took care of insurance billing. Unfortunately, she learned too late that the contractor had failed to bill approximately $12,000. If you outsource, you need to stay on top of it. You should know whether all of your accounts have been billed and you should check with your contractor every month for a report or statement of billings, even if it's a summary chart. You need procedures to monitor all parties, check that all of the codes are in place and track the billing diligently.

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