Contact Us Lawsuit Cash Advance Form Purchase Order Financing Form Transactional Funding What is medical accounts receivable funding or medical A/R funding? Medical accounts receivable funding (also known as "medical factoring") is the purchase at a discount of claims to third-party payors for services or equipment provided to patients. A portion of the purchased claim is advanced to your organization at the time of purchase, and a portion is held in reserve until the claim is actually reimbursed by the third party payor. What types of organizations can use the medical accounts receivable funding service? Any provider of services or durable medical equipment to patients that bills to a third party payor such as a health insurance company or government program such as Medicare or Medicaid can use the medical accounts receivable funding service. Some of those organizations are listed below. hospitals surgery centers physician groups diagnostic imaging centers durable medical equipment dealers rehab centers skilled nursing facilities pharmaceutical manufacturers and distributors pharmacies medical staffing companies My company provides medically related products or services, but they are not paid by third-party payors. What options do you have for my company? If your company provides medically-related products or services directly to another business or government entity (e.g. staffing services provided to a hospital, testing services to a physician group, supplies sold to a hospital, medical equipment sold to a hospital or government agency), then commercial accounts receivable funding or purchase order financing may be options for your company. To learn more about commercial accounts receivable funding, please click here. To learn more about purchase order financing, please click here. Is medical accounts receivable funding a loan ? No. As stated above the claims are being purchased at a discount. It does not add debt to your balance sheet, and it does not give up equity (ownership) in your practice or service. When should I use medical accounts receivable funding? You should use medical accounts receivable funding when you need working capital for your practice or service and you have claims on which you are waiting for payment from third-party payors. How does medical accounts receivable funding help my practice, service, or facility? It makes a significant percentage of the value of claims available to your practice, service, or facility in 24 to 48 hour after claims for provided services or equipment are presented. What do you mean by a "significant percentage"? The "significant percentage" refers to the amount of claims that is "advanced" to your practice or facility within 24 to 48 hours of presenting the claims for A/R funding. Advances typically range up to 80% of the net collectable value of the claims. The actual percentage advanced will always depend on a number of factors specific to the situation. What about the part of the claims that is not advanced to my practice, service, or facility? The part of the claims that is not advanced to your practice, service or facility is called the "reserve". A portion of the "reserve" will be used to pay the fee for the medical accounts receivable funding service. Any amount that is not used to pay the fee for the medical A/R funding service will be remitted to your organization when your third-party payor makes their reimbursement for the claims. What is the fee for the medical accounts receivable funding service? The fee for the medical accounts receivable funding services is called the "discount". The discount will vary for several reasons. Some of these reasons are listed below. the length of time from when the advance is made on the claims until reimbursement is received from the third-party payor the reimbursement rate from your third-party payors the risk perceived in the transaction (e.g. the creditworthiness of your third-party payors) the underwriter providing the medical accounts receivable funding Are there any other fees other than the discount? There may be what is sometimes called a "due diligence" or "audit" fee. This "due diligence" fee is used to check the creditworthiness of your third-party payor, to check if the claims may have been liened by your bank or another provider of medical accounts receivable funding services, and to check the background of you and your organization. The "audit" is used to evaluate the reimbursement rate from your third-party payors and the validity of patient claims submitted by your organization. Also depending on the methods used, there may also be fees for transferring the advanced funds to your organization (e.g. wire transfer fees). What monthly net collectible claims volume must my organization have to use medical accounts receivable funding? The minimum monthly net collectible claims volume is about $250,000 per month. The upper limit is about $100 million.. Would my organization be better off using a bank loan instead? Your organization may not be better off with a bank loan. if your organization is less than two years old, it may not qualify for a bank loan once your organization has a bank loan, the bank is likely to lien your receivables as collateral for the loan which will make it harder to utilize services like medical A/R funding in the future a bank credit line may actually limit the growth of your organization because the bank may not be able to grow the credit line as fast as the ability of your organization to generate new business the bank may decide to call the loan if your organization falls out of compliance with one or more covenants of the loan for any reason a bank loan will become debt on your organization's balance sheet which can affect the valuation of your organization if you are considering the sale of your organization How long does it take to setup to use the medical accounts receivable funding service? The initial step is for you to complete an application and supply the requested financial documentation. Once the application and all the financial documents are received, then a "letter of intent" will be issued. If your organization approves the letter of intent, then the "due diligence" process will start which includes an audit of previous claims to determine reimbursement rates and quality of the claims that are submitted. Typical time is 30 to 45 days to complete this one-time process. After your account is setup, advances against claims can be made within 24 to 48 hours of presentation of the claims My organization already has a bank credit line? Can my organization still use medical accounts receivable funding? Yes, but the cooperation of your bank will be required to release any lien (UCC-1) it may have on the claims on which medical accounts receivable funding is to be used. The reason for this is that if someone else has ownership of the claims (in this case, your bank), then you cannot sell them as part of an accounts receivable funding transaction. Can I use medical A/R funding if my organization has not yet provided the service or equipment? No. Medical A/R funding can only be used for equipment that have been delivered and services that have been performed, and for which a claim has been submitted to your third party payor. Does my third-party payor continue to pay my organization when using the medical accounts receivable funding service? No. When using the medical accounts receivable funding service for patient claims you will inform your third-party payor that their reimbursement of the claims should be redirected to the company providing medical accounts receivable funding to your organization. In the event that they send the reimbursement directly to your organization, then you organization should forward that payment to the company providing the medical accounts receivable funding service to your organization. My organization is in bankruptcy and is looking for financial assistance during the bankruptcy reorganization. What can you do to help with our financing needs? Once an organization is in bankruptcy we may be able to help with a form of medical accounts receivable funding called "debtor-in-possession" (or D.I.P.) financing. Working with the bankruptcy court and your bankruptcy attorney, an evaluation is done to determine if the application of medical accounts receivable funding will provide adequate and stable cash flow to allow the organization to operate profitably going forward. If it can, then the company continues to operate with the assistance of medical accounts receivable funding (also called D.I.P. financing) while terms for settlement of the debt leading to the bankruptcy filing are worked out. Can medical accounts receivable funding be used to advance on medical liens related to letters of protection from attorneys stemming from services provided to personal injury victims? No. Medical accounts receivable funding can only be used to reimburse for claims submitted to third-party payors for services or equipment provided to patients. However, it is possible to sell medical liens based on letters of protection for treatment provided to personal injury victims. The sale of the medical liens is made at a discount. Please contact us to explore this option. If you have additional questions, or if you would like to learn more about how we can provide additional working capital to your organization via medical accounts receivable funding, please click here to contact us, or Call us now at 1-800-598-1178 to get started.
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