How to Reduce Days in A/R

What days in A/R measures

If you are working out how to reduce days in A/R, start with what the number actually counts. Days in accounts receivable estimates how many days of charges are sitting unpaid. It is one of the clearest signals of how quickly a practice turns its work into cash.

Days in A/R = total A/R (net of credit balances) / average daily gross charges. Average daily charges are usually gross charges for the last three months divided by the number of days in that period.

Example: a practice with $300,000 of charges over 90 days averages $3,333 a day. With $150,000 in A/R, days in A/R is about 45. Our article on A/R aging buckets shows how to break that total down by age and payer.

Because the formula uses gross charges, a fee schedule change or a jump in visit volume moves the number even if nothing in billing changed. Track the trend over several months and read it next to your aging report.

Where the days come from

Days in A/R is the sum of delays across the revenue cycle. Each stage adds days, and each has its own fix.

Stage	Typical source of delay	What to measure
Registration and eligibility	Wrong payer, inactive coverage, missing authorization	Eligibility and registration denial rate
Charge capture	Notes left unsigned, charges entered days after the visit	Days from date of service to charge entry
Claim submission	Edits and rejections held in the clearinghouse	Clean claim rate and rejection rate
Payer processing	Pended claims, requests for records	Days from submission to first remittance
Denials	Slow research and appeals	Denial rate and days to resolve a denial
Patient balances	Late statements, no payment options	Patient A/R as a share of total A/R

Fix the front end first

Claims that start with bad data come back later as denials, and each denial adds weeks. The cheapest days to remove are the ones created before the patient is seen.

• Run eligibility and benefits checks before every visit, including returning patients whose coverage may have changed.
• Capture secondary insurance and coordination of benefits details at check-in.
• Track authorizations against scheduled visits so services do not outrun the approved units or dates.
• Collect copays and known patient responsibility at the time of service.

Shorten the time from visit to claim

Every day between the visit and claim submission is a day added to A/R. Set a target for note completion and charge entry and report against it weekly.

• Close encounters the same day or the next business day.
• Review charges before submission for missing modifiers, diagnosis pointers and units.
• Work clearinghouse rejections daily. A rejected claim has not reached the payer, so the payer's processing clock has not started.
• Submit electronically and enroll for electronic remittance and payment so cash and remittance data arrive faster.

Build a disciplined claim follow-up process

A claim follow up process makes sure no claim waits silently. Most unpaid claims are not denied; they are lost, pended or waiting on information that nobody sent.

1. Set follow-up triggers by payer. If a payer normally pays electronic claims in about two to three weeks, flag anything without a response after that point.
2. Check status electronically first. Use the payer portal or a 276/277 claim status inquiry before calling.
3. Work by dollar value and age. Sort open claims by balance within each aging bucket so high-value claims are touched first.
4. Record every touch. Note the date, the person or reference number and the next action date in the account.
5. Escalate patterns. If one payer has many pended claims for the same reason, contact provider relations rather than working them one by one.
6. Watch deadlines. Flag claims approaching timely filing limits and appeal windows.

Resolve denials faster

Denials are where days pile up fastest, because each requires research, a correction or appeal, and another processing cycle. Work denials within a few days of the remittance rather than letting them age.

• Route denials by type: front-end errors to registration, coding issues to coders, medical necessity to clinical review.
• Use corrected claims for billing errors and appeals for disputes. See corrected claim vs appeal.
• Track denial reasons by payer each month and fix the top causes at the source.
• Keep appeal templates and payer policy references ready so letters go out quickly.

How to improve practice collections from patients

As deductibles rise, patient balances make up a larger part of A/R. Knowing how to improve practice collections from patients is now part of reducing days in A/R.

• Give a cost estimate before the visit when benefits are known.
• Send the first statement as soon as insurance has paid, not at the next monthly cycle.
• Offer online payment, card-on-file with consent, and written payment plans.
• Use clear statements that show what insurance paid and why the balance remains.
• Set a written policy for follow-up statements, calls and when an account goes to a collection agency.

How to improve cash flow in a medical practice beyond A/R

Lower days in A/R speeds up cash, but it is not the only lever. If you are planning how to improve cash flow in a medical practice, also review these areas.

• Underpayments. Compare payments against contracted rates. Paid claims can still be short.
• Credit balances. Resolve overpayments and unapplied payments so A/R reflects reality.
• Payer mix and contracts. Slow-paying payers with low rates may deserve a contract review.
• Write-off discipline. Require a reason and approval for each adjustment so collectible money is not written off.

Review a short weekly A/R report

Reducing days in A/R is easier when the same few numbers are reviewed every week by the people who can act on them. Keep the report short enough to discuss in fifteen minutes.

• Days in A/R and its trend over the last three to six months.
• Share of insurance A/R over 90 days, by payer.
• Open denials by reason, with the oldest denial date.
• Clearinghouse rejections still unworked.
• Patient A/R and the number of active payment plans.

Assign an owner and a next step to every item that moved the wrong way. A number without an owner tends to stay where it is.

When to bring in help

If follow-up keeps falling behind new billing, Fastora's A/R management service works open claims and legacy balances with certified billing professionals and shows progress in monthly reporting. A free billing assessment is a low-risk way to see where your days are coming from.

Checklist

Print checklist

• Calculate days in A/R the same way every month
• Verify eligibility before every visit
• Enter charges within one business day
• Work clearinghouse rejections daily
• Follow up on unpaid claims by payer-specific triggers
• Work denials within days of the remittance
• Send patient statements as soon as insurance pays

Frequently asked questions