How to Reduce Days in Accounts Receivable (A/R)

Payments being stuck somewhere in the revenue cycle is the reality of many healthcare practices across the nation.

You see, most healthcare practices are busy; providers are spending all day seeing patients, and even the claims are going out regularly. However, the payments are not coming in as fast as they are going out.

This is where accounts receivable, better known as A/R, becomes a problem.

Here, every single dollar your practice is waiting to collect adds to the balance, right from unpaid claims and delayed payments to unresolved denials or outstanding patient balances. But the story doesn’t end here; these balances increase, resulting in an increase in your accounts receivable days.

What appears like a billing metric on a report soon starts creating revenue issues for your practice, and you struggle with cash flow in your practice.

On the contrary, reducing A/R days isn’t simple, but simple follow-up from your teams can solve it. That is why practices are working closely with medical billing service companies to reduce days in accounts receivable.

The solution is quite simple, A/R days can be improved when you address the bottlenecks systematically. For instance, by tightening your front-end processes, submitting cleaner claims, following up on unpaid accounts, and using the right technology and workflows, the duration can be controlled.

But it can be overwhelming for a practice’s in-house billing team to handle everything on their own.

On that note, in this blog, let’s see how outsourcing medical billing reduces days in A/R and also have a look at the ways to reduce accounts receivable days in medical billing.

So, without further ado, let’s get started!

What Are Days in Accounts Receivable and How Are They Measured?

Before getting into the details, let’s start with the basics and try to understand what the number actually means.

Days in accounts receivable (A/R) measures how long, on average, your practice takes to collect the revenue it has already earned. In simple terms, it shows how quickly the money you’ve earned has been billed and paid.

The basic formula to calculate this is: A/R Days = Net A/R ÷ Average Daily Net Patient Service Revenue.

For instance, if your practice has $500,000 in net A/R and generates $10,000 in net patient service revenue per day, then your A/R days would be 50 days.

So, what does this number mean to you?

Well, a higher number generally means money is taking longer than anticipated to reach your practice. It directly indicates delayed claims, unpaid insurance claims, unresolved denials, slow payment posting, or outstanding patient balances. On the other hand, a lower number indicates that your revenue cycle is moving payments more efficiently.

HFMA’s MAP key identifies Net Days in A/R as a measure of overall A/R performance. Its published benchmark is 50 days or less. However, the appropriate target can vary based on factors such as specialty, payer mix, and practice type.

That is why one of the best practices in medical billing is to track accounts receivable days consistently, rather than viewed as a one-time-only activity.

Where Are A/R Days Being Lost?

If your accounts receivable days are increasing, take the hint and understand that your problem may not be sitting in just one place. Since your revenue cycle has several handoffs, even a small delay at one stage can push payment further out.

On that note, here are some of the places where you are looking to find where your A/R days are being lost:

• Front-End Delays: It can start before a claim is even created. For instance, incorrect insurance information, missed eligibility checks, or unclear patient responsibility can create billing issues, leading to delays in the payments you are expecting.

• Charge-to-Claim Lag: Care has been delivered, but the claim hasn’t gone out yet. Delays in charge capture, coding, documentation, or claim preparation create a gap between providing the service and starting the billing process.

• Payer Processing Lag: Sometimes, the claim is clean and submitted on time, but payment still takes longer than expected. Certain payers, claim types, or processing issues can extend the time your practice waits to get paid.

• Follow-Up Gaps: A claim shouldn’t disappear into an aging report after submission. You see, when unpaid or denied claims aren’t followed up consistently, they can sit for weeks or months, quietly pushing your A/R days higher. According to the 2024 CAQH Index, providers and staff spent an average of 25 minutes on a manual phone-based claim-status inquiry in 2023.

• Payment Posting Lag: Even after the payment reaches your practice, the revenue cycle isn’t finished. If payments and adjustments aren’t posted promptly, your billing team may not have an accurate picture of what’s still outstanding or what needs attention.

What Are the Best Ways to Reduce A/R Days in Medical Billing?

Now that you know where your days in accounts receivable can be lost, the next step is to address those delays before they become a cash-flow problem. Here are some practical ways to reduce accounts receivable days in medical billing:

• Verify Eligibility and Patient Responsibility Early: Don’t wait until a claim is denied to discover an insurance problem. Verify coverage, benefits, and patient responsibility before the date of service. Catching these issues beforehand and upfront can prevent avoidable billing delays and reduce the chances of unpaid balances later.

• Submit Clean Claims Quickly and Consistently: The faster a clean claim reaches the payer, the sooner the payment cycle can begin. That is why, make sure patient details, insurance information, codes, modifiers, and required documentation are accurate before submission. Regular claims submission also prevents completed charges from sitting in a queue.

• Maintain a Structured A/R Follow-Up Process: Not every outstanding account needs the same level of attention. Prioritize A/R based on factors such as account age, payer, balance, and claim status. A structured follow-up process ensures unpaid insurance claims don’t sit unattached until they become aged A/R.

• Track and Resolve Denials Promptly: A denied claim doesn’t mean that the revenue is lost, but it can be if nobody acts on it. That is why, when a claim is denied, look for why the claim is denied, then correct the issue, and resubmit or appeal within the payer’s applicable timeline. At the same time, look for recurring denial patterns in other claims so that you can fix them beforehand, along with fixing the process.

• Collect Patient Responsibility Earlier: Once insurance has processed a claim, don’t let the remaining patient balances sit indefinitely. Communicate what the patient owes promptly, make payment options convenient, and follow up on outstanding balances. Earlier patient collections can help keep A/R moving instead of allowing balances to age.

• Keep Monitoring Your A/R: Reducing A/R days isn’t a one-time cleanup exercise. Track your accounts receivable days regularly, review aging trends, and identify where new delays are appearing. Consistent accounts receivable management can help here, as it allows your team to catch problems early instead of waiting for A/R to build up.

How Does Outsourcing Medical Billing Reduce Days in A/R?

Knowing how to reduce A/R days is one thing, and keeping up with every account, payer response, denial, and patient balance every day is another. And this can be overwhelming for your in-house team, who already look after several aspects of your revenue cycle. This is where outsourcing medical billing can make a difference by giving A/R the consistent attention it needs.

On that note, here are some of the tried-and-tested approaches of Thinkitive that are used to reduce days in accounts receivable:

• Dedicated A/R Management: When A/R management is someone’s dedicated responsibility, aging accounts are less likely to get pushed aside by daily billing tasks. An outsourcing team can continuously review outstanding accounts, prioritize high-value and aging balances, and take action before they become harder to collect.

• Consistent Follow-Up: Following up once isn’t enough when a claim remains unpaid. This is where outsourcing can turn the tables for you by maintaining regular follow-up on outstanding insurance claims, denials, and patient balances, helping prevent accounts from sitting untouched for weeks or months.

• Faster Revenue-Cycle Handoffs: A/R can slow down when there are gaps between different stages of the revenue cycle. An experienced billing team can help keep billing, claim follow-up, payer responses, payment posting, and collections connected, reducing the time lost between one step and the next.

• Better A/R Visibility: You can’t fix what you can’t see, especially if there are numbers involved. That is why regular A/R reports can show which accounts are aging, which payers are taking longer to pay, where denials are recurring, and where follow-up is falling behind. This gives your practice a clearer picture of where revenue is getting stuck and where action is needed.

The advantage you get with outsourcing medical billing is consistency, and that is exactly what you need to reduce days in your accounts receivables. On top of that, outsourcing not only gives you dedicated resources and structured follow-up but also better visibility to keep receivables moving instead of allowing them to age.

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