What AR aging means
AR aging sorts a practice's unpaid balances by how long they have been outstanding. Every claim or patient balance falls into a time bucket, usually counted from the date of service or the date the claim was first billed. The result shows at a glance how much money is current and how much is drifting toward the point where it may never be collected.
Accounts receivable is simply money owed to the practice for services already provided. It includes balances owed by insurance payers and balances owed by patients after insurance has paid its share.
The standard AR aging buckets
Most practice management systems use 30-day buckets. The labels are simple, but each bucket calls for a different kind of attention.
| Bucket | What is usually in it | What it tells you |
|---|---|---|
| 0–30 days | Recently billed claims still in normal processing | Healthy, current receivables. Watch for rejections that were never accepted. |
| 31–60 days | Claims that should have paid by now for most electronic payers, plus new patient balances | Early warning. Unpaid insurance claims here need a status check. |
| 61–90 days | Denied, pended or lost claims, and patient balances after one or two statements | Active problems that need research and correction. |
| 91–120 days | Appealed claims, stubborn denials, slow secondary claims | Deadlines are close. Filing and appeal limits start to matter. |
| Over 120 days | Unresolved denials, missed appeals, old patient balances | High risk of loss. Needs a decision: recover, appeal, bill the patient or write off. |
Aging can be counted from the date of service or from the date the claim was submitted. Date of service is more conservative because it includes any delay in getting the claim out the door. Whichever method you choose, use it consistently so month-to-month comparisons are fair.
How to read an AR aging report
An aging report is more useful when it is filtered and sorted than when it is read as one total. Start with these views.
- Insurance versus patient balances. They need different follow-up and should be reported separately.
- By payer. A single payer with a large share of older balances usually points to a policy change, an enrollment problem or a claim format issue.
- By bucket percentage. The share of total AR in each bucket matters more than the dollar amounts, which rise and fall with visit volume.
- By claim status. Separate claims that were never received, pended, denied, under appeal or paid incorrectly.
- Credit balances. Overpayments and unapplied payments can hide in the report and distort the totals.
Compare the report month over month. A growing share of AR over 90 days is a stronger signal than any single month's total, because it shows follow-up falling behind new billing.
Days in AR and how to calculate it
Days in AR estimates how many days of charges are sitting unpaid. It turns the aging report into one number that can be tracked over time.
Days in AR = total accounts receivable ÷ average daily gross charges
To find average daily charges, divide gross charges for a recent period by the number of days in that period. Many practices use the last three months. AAFP practice management materials also suggest subtracting credit balances from total receivables first so overpayments do not understate the result.
Worked example
- Gross charges for the last 90 days: $450,000.
- Average daily charges: $450,000 ÷ 90 = $5,000.
- Total AR today, net of credit balances: $200,000.
- Days in AR: $200,000 ÷ $5,000 = 40 days.
The figures are illustrative only. Because the calculation uses gross charges, a change in your fee schedule will change the result even if collections do not change, so keep the method stable.
If the number keeps climbing, the causes are usually upstream: slow charge entry, unworked rejections and denials that sit without a next step. The guide on how to reduce days in AR covers fixes stage by stage.
Using a days in AR benchmark carefully
There is no single days in AR benchmark that fits every practice. Specialty, payer mix, the share of self-pay patients and how quickly claims are submitted all move the number. A practice with heavy workers' compensation or auto claims will usually run longer than a primary care office paid mostly by electronic commercial payers.
Published figures give a starting point. The American Academy of Family Physicians, in practice management material on five key revenue cycle metrics, suggests keeping days in AR below 50, with 30 to 40 days preferable, and keeping receivables older than 120 days between 12% and 25% of the total, with under 12% preferable. Those targets were written with family medicine in mind, so other specialties should treat them as a reference rather than a rule.
The trend in your own numbers is often more useful than an outside target. In a July 2026 MGMA Stat poll, 43% of medical group leaders said days in AR were about the same as a year earlier, 32% said they were higher and 22% said they were lower.
Why old receivables lose value
An unpaid claim does not keep its value forever. Several deadlines and practical limits work against it as it ages.
- Timely filing limits. Medicare requires claims to be filed within one calendar year of the date of service. Many commercial and Medicaid plans allow far less time. A claim that was rejected and never accepted can miss the limit without anyone noticing.
- Appeal windows. Medicare allows 120 days from receipt of the initial determination to request a redetermination. Commercial appeal windows vary by plan and contract, and a missed window usually ends the claim.
- Lost information. The longer a claim waits, the harder it is to find the right records, authorization numbers and payer contacts.
- Patient balances. Addresses and phone numbers change, and patients are less likely to pay a bill for a visit they no longer remember.
This is why AR over 120 days deserves more than a monthly glance. Each claim in that bucket needs a clear status, a next action with a date and, where recovery is no longer realistic, a documented decision under your write-off policy.
Common reasons claims drift into older buckets
Before building a follow-up plan, it helps to know why balances age in the first place. A sample of 20 or 30 claims from the over-90 buckets usually reveals a handful of repeating causes.
| Cause | How it shows up | Upstream fix |
|---|---|---|
| Claim never accepted | No payer record of the claim; clearinghouse rejection left unworked | Daily rejection review and acknowledgment checks |
| Denial not posted or worked | Zero-pay remittance lines sitting without a next step | Post denials with codes the day the remittance arrives |
| Provider not enrolled or credentialed | Claims for a new provider pend or deny for enrollment reasons | Confirm effective dates with each payer before scheduling |
| Coordination of benefits hold | Payer waiting for the patient to update other coverage | Ask about other coverage at every check-in |
| Secondary claim not sent | Primary paid, but the remaining balance never billed onward | Automatic secondary billing after primary posting |
| Patient balance without a plan | Statements sent, no response, no payment plan offered | Clear financial policy and early payment plan offers |
Each cause belongs to a specific step in the workflow. Fixing that step shrinks the older buckets over the following months without extra follow-up effort.
A follow-up plan by bucket
| Bucket | Follow-up actions |
|---|---|
| 0–30 days | Work clearinghouse rejections daily. Confirm payer acknowledgment of every claim. Post payments and denials promptly. |
| 31–60 days | Check status on every unpaid insurance claim. Correct and resubmit rejected or pended claims. Send the second patient statement. |
| 61–90 days | Call or use the payer portal for claims with no response. Appeal denials with documentation. Offer patients a payment plan where appropriate. |
| 91–120 days | Prioritize by filing and appeal deadlines. Escalate to payer representatives. Resolve coordination of benefits holds with the patient. |
| Over 120 days | Decide on each claim: final appeal, patient billing where permitted, or documented write-off. Review the root cause so it does not repeat. |
Sort work queues by deadline and dollar value, not just by age. A small claim that is days away from its appeal limit deserves attention before a large claim that is still inside its window. Reviewing the pattern of aged balances by specialty also helps; for example, behavioral health practices often see older balances tied to carve-out payers and authorization limits.
How Fastora helps with receivables
Fastora's certified billing professionals work insurance follow-up by bucket, payer and deadline, including old and legacy balances, with monthly performance reporting and a review call. Learn how our accounts receivable follow-up works, or start with a free medical billing audit that reviews your current aging report.
Checklist
Frequently asked questions
Should aging be counted from the date of service or the billing date?
Either works if used consistently. Date of service is more conservative because it includes any delay in submitting the claim.
What is a good days in AR figure?
It depends on specialty and payer mix. AAFP material for family medicine suggests below 50 days, with 30 to 40 days preferable. Track your own trend over time alongside any outside reference.
When should old receivables be written off?
After every reasonable recovery step is complete, such as a final appeal or patient billing where permitted, and the reason is documented. Write-off rules should follow a written policy.
What should we do first with AR over 120 days?
Sort it by deadline and dollar value. Confirm which claims were ever accepted by the payer, which have open appeal windows and which are patient balances. Work anything near a filing or appeal limit first, then decide on the rest using your written write-off policy.
