#175 What Is Payment Posting and Why Your AR Is Lying to You

There’s a number in your practice that looks precise but lies to you every single month: your AR report. 

We routinely audit multi-provider practices showing $400K, $600K, even $1M in AR — and 20–40% of that “asset” is already dead. Not collectible. Just trash left behind by bad payment posting. 

In this episode — the first in a 4-part series on payment posting — Heather walks through what payment posting actually is, why getting it wrong silently inflates your AR, and the seven specific things that change in your practice when posting is done right. 

Inside the episode: 

• Why your AR report is a mirror of your team’s posting accuracy, not what you’re actually owed 
• How a $400K/month practice dropped their AR by 30% in two weeks — without collecting a dollar more 
• The 7 reasons clean payment posting transforms your revenue cycle 
• The audit moment we found 200+ accounts a week being reworked that were already paid in full 
• What’s coming in Episode 176: the most common insurance-side posting mistake we see in almost every audit 

If you’re a practice owner, billing lead, or operations director who has ever made a financial decision off an AR report — this is the foundation. 

Resources mentioned (Buzzsprout episode resources block) 

📊 Free Payment Posting Audit Checklist 

The exact framework we use when we audit a practice. Test your own team: https://eligibility.natrevmd.com/payment-posting-checklist 

📅 Book a call with Heather 

If your AR has been inflated by years of bad posting, that’s exactly what we fix at NatRevMD: https://calendly.com/heather-natrevmd/ 

🎧 More episodes 

natrevmd.com/podcast 

Buzzsprout chapter markers (paste in chapters field) 

0:00 Hook — the number that’s lying to you 

0:45 Why 20–40% of your AR may already be dead 

1:45 What payment posting actually is 

3:30 The $400K case study 

5:30 7 reasons posting matters 

12:30 Recap and what’s next 

Transcript

SPEAKER_00 0:05

There's a number in your practice that you think looks precise, but actually can lie to you, and that is your AR number. So we all talk about AR, it's an important metric, but we routinely audit practices showing$600,000 revenue, a million dollars in AR. And on paper, it looks like a cash windfall, waiting to be collected. But in reality, 20 to 40% of that is already dead. And it's just the trash left behind, a bad payment posting process. And so over the next four episodes, we're breaking down the most ignored lever in your revenue cycle, and that's payment posting. Welcome to NatrevMD, a podcast where we share tips on optimizing medical billing and improving practice efficiency so you can have the business of your dreams. I'm your host, Dr. Heather Signorelli, founder of Nat RevMD. Let's get started. It is super important that we have a foundation with what payment posting actually is, why you know teams can get it wrong, and how it can inflate your AR and push you to make bad financial decisions or have expectations when a new team takes over that you think it's going to be money in the bank. So here's the key thing, right? So we all know that your AR AR report is not a list of people, what people owe you. It's a mirror of how you accurately post payments and adjustments, right? So as soon as you drop a charge, that charge then goes into this AR bucket. And as payments come in, right, the there are adjustments, and then that AR should correct itself or go to zero dollars for that specific claim. However, if you're wrong and you're posting it incorrectly, then those metrics that you trust, AR collection percentage, even clean claims, can have issues. So before we get into the reason why this matters, I do want to make sure that we're all on the same page around payment posting actually is because most physicians, right? Most of us who maybe even run practices may not ever have walked through the details around payment posting and what it is. So obviously, payment posting is a process of recording every payment of your practice receives. And that can be from insurance companies, that can be from patients into your practice management system. And so on the insurance side, when a payer sends an ERA or an electronic remittance advice or a paper EOB, if you're not, if it's not set up to be integrated, then it's going to tell you exactly what you charged, what they paid, what they wrote off as a contractual adjustment, and then what they've either denied or pushed to the patient. So your billing team then is responsible for taking that information and posting it accurately line by line into the system. Now on the patient side, every copay at the front desk, every deductible payment, every balance payment, or phone or online payment has to be applied to the correct charge in the system. And this is where it can get tricky because you want to make sure that when you're collecting those payments, that they are applied to the correct date of service. And that can get tricky if, for example, your patient already had a prior balance from a prior date of service and that wasn't collected at the time of the new date of service. And so that payment may then accidentally be applied to a prior date of service. And while that's technically wrong, right? Technically you want to apply it to the correct date of service. Some systems are set up to where it auto-posts and does that incorrectly. Or if you have a refund that's due that's not addressed, that can also cause issues when it comes to payment posting correctly. Now, so if they do post incorrectly, your AR could be incorrect, right? Um, and if your AR is incorrect, then your view of your practice and the financial health is going to be also incorrect. All right, let me give you a real example. We recently audited a multi-provider practice. They were doing uh close to half a million dollars a month in net receipts, and their AR looked massive. The owners were convinced that the payers and the patients were just ignoring the bills and that there was a lot to collect on. So obviously for us, payment posting is one of the first places we look in a billing audit because we want to make sure that that's done correctly. Obviously, just having the AR number is a good number for okay, where do we go and check and look at things? But then you want to do a deep dive. And so for this practice, uh, we found critical posting issues. So after we cleaned up their posting rules, their AR dropped and we were able to clearly identify what truly belongs still in the insurance bucket versus the patient bucket, and then really had a deep dive into understanding of that insurance bucket, how much of that was actually truly collectible. So it does get tricky, especially if you are making a change to a new team, that you set expectations. AR is one of the most time-consuming things to deep dive into to figure out these issues and understand what could be going on. So if you're not sure whether or not your AR reports are hiding the same issues, we have uh created a uh payment posting checklist and it's uh a really strong framework, um, something that's similar that we use within our own audits, and you can download that in the show notes below. Obviously, why does payment posting matter? We've even taken on practices and we got in there and there was a whole bunch of AR sitting there that hadn't been written off, that contractual adjustments weren't correct, or what was flipped to patient wasn't correct. And so it's really, really important that when you look at that ERA, you know where everything goes. So, you know, one of the other main reasons for wanting to make sure that you understand payment posting, that your team understands payment posting is because obviously it's going to be the true picture of your financial health, right? So when contractual adjustments are posted correctly, your AR deflates to show you only what is actually collectible by the patient, right? Because as soon as you do that contractual adjustment, what's left over should be for the patient balance. So then that makes forecasting and cash planning better and more accurate. Granted, you want to make sure that you have a solid patient collection process. Otherwise, that money's gonna be forgotten as well. Also, it's important that to know that with appropriate payment posting, you want to make sure that you're catching underpayments easier. So posting that line by line against a loaded fee schedule in your system can be really, really critical so that you understand. I do recommend that practices set this up the moment that they set up their EMR system, that they put those uh payer rates in. Oftentimes that's part of the office's responsibility when they set up the system. Also, you want to make sure that with appropriate payment posting, that it's going to help prevent uh double work or issues at month end close. So when you zero balance claims and they are closed properly, then those dollars are posted to the right line item. Then your billing team is gonna not have to rework those accounts. Those that are gonna be resolved show the contractual adjustments. They show the right patient balance. That patient balance is collected at the front desk. And then your accounting team can reconcile deposits and that bank reconciliation process is in sync. And so you have a clean, fast month end. Obviously, we wanna make sure that you don't have any unauthorized write-offs. So you want to have uh really solid payment posting rules that are set up in your system so that if there are adjustment codes outside of contractual adjustments, those are approved by the practice or manager so that you don't have uh somebody writing off something that they shouldn't. And that is really, really important to protect revenue. So obviously, if you're realizing your A reports may be full of these issues, check out the uh payment posting audit checklist down below in the show notes and let us know if you have any questions. The last thing I'll mention is if you have this done correctly, denial management is gonna be so much easier. So when those denials come in, it's attached to a the claim. Then the right person immediately is uh able to manage that, call the payer, address the issue, and it can help address um, you know, eligibility denials then can go to the front desk, a coding deni can go to the physician, medical necessity denial goes to the clinical team for them to adjust again. Managing those denials when the payments are posted appropriately makes it so much easier. Now, the next thing I'll mention that's really important is we've all been in a situation where if a payment isn't posted correctly, patients are calling, they're acting, they're asking questions. So accurate posting keeps uh payer responsibility with the payer, patient responsibility with the patient. And then you can reduce phone calls and patient bills that are inaccurate if that is done correctly. Now, there are some systems that do this better than others. Personally, I think you guys have heard me talk about Tibra from my standpoint. I think it has a very uh more complicated process when it comes to this. Um, at least that's the feedback that I get from our team. Uh, so certainly your software does impact the accuracy of your payment posting. So highly recommend that you're um maybe picking a uh a system that um is uh very accurate when it comes to rules that you can build uh for payment posting and rules and workflows that help manage uh accounts receivable. Um, it's just not one of my favorites. So hopefully all of this has helped. As you know, a simple payment posting audit shows whether or not that AR report can be trusted. And that is one of the most important things that your practice can do. So, to recap, payment posting really is that foundation for you to understand how accurate your AR reports are, then to allow uh the correct patient payment process to be kicked off, making sure that denials are routed and resolved fast and that you have a clean month and close process that your office manages. And then that's time to your bank reconciliation. So, like I said, we're gonna be doing a deep dive on all the different types of payment posting. So we'll talk about insurance, we're gonna talk about patient and be able to help kind of frame this up for practices who are looking for some more information. And again, if this episode or any of our episodes were helpful, we'd love for you to share it with a colleague. So thank you so much for listening this week. We'll talk to you soon.