Healthcare organizations earn revenue when care is delivered, but they often wait weeks or months to be paid. Accounts receivable (A/R) is the money owed to you in the meantime. When A/R grows faster than revenue, cash gets tight, even in a busy month.
What your A/R is telling you
A single receivables total doesn't say much. Two views are more useful:
- Days in A/R: your A/R balance divided by your average daily charges. It estimates how long it takes, on average, to turn a service into cash.
- Aging buckets: balances grouped by how long they've been outstanding, such as 0–30, 31–60, 61–90, 91–120, and over 120 days, ideally broken out by payer.
The older a balance gets, the harder it is to collect. Payers also set deadlines for submitting and appealing claims. Medicare's filing limit is generally one year from the date of service, and Medicaid and commercial plans set their own, often shorter, limits.
Where collection delays usually start
Before the claim is sent. Coverage that wasn't verified, a missing or expired authorization, or incorrect patient information can make a claim unpayable before it's ever submitted.
While the claim is being prepared. Late charge entry, missing documentation, and coding errors slow billing down. Claims that fail clearinghouse edits are rejected and never reach the payer until they're fixed and resubmitted.
After the payer responds. Denied claims were processed and refused; they need correction or appeal. Underpaid claims were paid, but for less than expected. Payments that sit unposted make A/R look larger than it is.
What to measure each month
- Aging by payer, with the balance over 90 days called out
- Days from date of service to claim submission
- Days from submission to payment, by payer
- Rejections and denials by reason
- Payments received compared to what you expected to collect
Practical steps to shorten the cycle
- Verify eligibility and authorizations before services begin, and track authorization end dates.
- Bill promptly, on a set schedule, so charges don't pile up.
- Work clearinghouse rejections daily; they're usually quick fixes.
- Group denials by reason and fix the root cause, not just the claim.
- Compare every payment to the expected amount, not just to zero.
- Review aging weekly and require approval for write-offs.
Our revenue cycle management work focuses on exactly these handoffs, whether your billing is done in-house or by a billing company. Practices can also see our approach to physician practice financial management.