To reduce AR days, you do three things: get claims out soon after the visit, get them right the first time, and work every unpaid claim by age before it gets near the payer's deadline. Days in A/R is the number that tells you whether it's working. It is your total accounts receivable divided by your average daily charges, and it shows roughly how many days of billing are sitting uncollected.
The rest of this post shows how to calculate it, what drives it up, and a plan you can start on Monday.
How to calculate days in A/R
Days in A/R = total accounts receivable ÷ average daily charges
- Add up your charges for a recent period, for example the last three months.
- Divide by the number of days in that period. That is your average daily charges.
- Take your total A/R today: everything billed and not yet collected, from insurers and patients.
- Divide the A/R by the average daily charges.
A worked example. Say a practice billed $450,000 in the last 90 days. Its average daily charges are $450,000 ÷ 90 = $5,000. Its open A/R today is $210,000. Days in A/R = $210,000 ÷ $5,000 = 42 days.
Now say the same practice brings its A/R down to $175,000 while billing the same amount. Days in A/R falls to 35, and the $35,000 difference is cash in the bank instead of claims in a queue.
Two things keep the number honest:
- Use the same method every month. Some practices use gross charges, others charges net of contractual adjustments (MGMA's surveys use adjusted charges). Either works if you don't switch, because it's the trend you're watching.
- Watch what's in the total, not just the total. Days in A/R can fall for the wrong reason: writing off balances lowers it without collecting a dollar. Look at write-offs beside it.
What a good number looks like
There isn't one number that fits every practice. Days in A/R depends on your specialty, your payer mix and how much of your revenue is owed by patients. A practice that bills mostly Medicare will look different from one with many commercial plans and high deductibles.
MGMA publishes medians by specialty in its DataDive surveys, which are available to members and subscribers. One figure it has published openly: in its 2021 cost and revenue survey (2020 data, multispecialty groups), its better-performing practices had only 8.1% of their A/R more than 120 days old. That share of very old A/R is often more telling than the headline days figure, because it shows how much money is close to uncollectible.
The most useful benchmark is your own: days in A/R and the share over 90 and over 120 days, measured the same way each month.
Read your A/R by age
Sort open claims into aging buckets by how long they have been open. Each bucket points to a different problem.
Bucket (days open) | What to ask | What's usually wrong |
|---|---|---|
0–30 | Is the claim on file? | The payer never received it, or has it under the wrong patient or provider |
31–60 | Is the payer waiting on something? | A request for records, an itemized bill or the patient's other coverage went unanswered |
61–90 | Was it denied, or paid short? | A denial nobody worked, or an underpayment that looks settled |
Over 90 | How close is the deadline? | Filing and appeal limits are getting near |
Our A/R follow-up page has a tool, "Your A/R, by age", that walks through each bucket and what to look for.
What pushes A/R days up
- Charge lag. Days between the visit and the claim going out. Every day a claim waits to be sent is another day before it can be paid.
- Claims that bounce. Rejections from the clearinghouse or payer, for missing or invalid data, that sit in a work queue.
- Denials nobody works. A denial on a remittance that nobody reads until the appeal window has closed.
- Payer requests left unanswered. The payer pends the claim and asks for records or other coverage details, and the letter goes to a pile.
- Underpayments. A claim paid below the contracted rate looks closed unless someone compares it with the contract.
- Patient balances. Deductibles and coinsurance billed after the visit are usually the slowest part of A/R to collect.
A plan to bring it down
Every working day
- Send yesterday's claims. Measure your charge lag in days and set a target your team can hold.
- Clear the clearinghouse rejections. A rejected claim never reached the payer, so nothing happens to it until someone fixes and resends it.
- Check eligibility before each visit, so the claim goes to the right payer with the right member details. Our eligibility verification page covers what that check includes.
Every week
- Work the A/R by bucket, oldest and largest first. Check each claim's status with the payer, by portal, electronic status inquiry or phone, and record the real reason it's unpaid.
- Answer every payer request for records or information the week it arrives.
- Work new denials by reason code, and fix the step that caused them. Our post on why medical claims get denied lists the common codes and their fixes.
Every month
- Calculate days in A/R and the share over 90 and over 120 days, the same way as last month.
- Compare payments with your contracted rates for your largest payers, and follow up on underpayments.
- Review write-offs. Each should have a recorded reason, so a falling A/R number reflects money collected.
At the front desk
- Tell patients what they're likely to owe before the visit, collect copays at check-in, and send statements promptly afterward.
Why the over-90 bucket can't wait
Older claims run into hard deadlines. Medicare's limit for filing a claim is 12 months from the date of service, and its first appeal, a redetermination, must be filed within 120 days of receiving the initial determination. Commercial payers set their own filing and appeal limits in their contracts and provider manuals, and many are shorter. Keep a list of each payer's limits next to your aging report, so the oldest claims are worked while they can still be paid.
Where Beeline fits
Beeline is a US company with a dedicated billing team. Our A/R follow-up work sorts your open claims by age and value, finds out why each one is unpaid, fixes what's stopping it, and follows it until it is paid or closed with a reason you can see. To see what's sitting in your own A/R, start with a free consultation.
Frequently Asked Questions
What is a good number for days in A/R?
It depends on your specialty, payer mix and patient balances, so there's no single target. Compare yourself with MGMA's figures for your specialty if you have access, and above all with your own trend. The share of A/R over 90 and over 120 days is worth tracking beside it.
How often should we review our A/R aging report?
Work it every week, so claims are followed while they're young and none slip past a payer's deadline. Calculate days in A/R once a month, the same way each time.
What is the biggest cause of high A/R days?
It differs by practice. The usual culprits are claims sent late, claims rejected or denied and not worked, and payer requests for information left unanswered. Your aging buckets show which one it is for you.
Does writing off old balances lower A/R days?
Yes, and that's why the number alone can mislead. Write-offs reduce A/R without collecting anything. Track write-offs, with a reason for each, next to days in A/R.
How do patient balances affect A/R days?
Balances owed by patients are usually the slowest to collect. Estimating what a patient owes before the visit and collecting copays at check-in keeps less of it in A/R.