Days in AR: how to calculate and reduce AR days

Days in accounts receivable (A/R) is the number most practice owners look at first, because it answers a simple question: how long does it take us to get paid? This guide explains how to measure it, the workflow that brings it down, and how to staff A/R follow-up so it actually happens. It's part of our revenue cycle management staffing series.

We won't promise a target number of days. Results depend on your specialty, payer mix and starting point. What we can describe is the process that consistently moves the number in the right direction.

Step 1: Measure days in A/R the same way every month

A common formula:

1. Add your gross charges for the last 90 days (or 3 months).
2. Divide by 90 to get average daily charges.
3. Divide current total A/R by average daily charges.

Example: $900,000 in charges over 90 days = $10,000 per day. Total A/R of $400,000 ÷ $10,000 = 40 days in A/R. (Illustrative arithmetic only, not a benchmark.)

Track alongside it:

• A/R by aging bucket: 0-30, 31-60, 61-90, 91-120, 120+ days.
• Percentage of A/R over 90 days (or over 120).
• A/R by payer, so you can see which payers are slow.
• Insurance vs patient A/R, which need different workflows.

Credit balances, unposted payments and stale charges distort the number, so clean those up first. See our RCM KPI definitions.

Step 2: Get claims out fast and clean

You can't collect what you haven't billed.

• Charge lag: measure days from date of service to charge entry; aim to enter charges daily.
• Claim scrubbing: run edits before submission.
• Rejections: work clearinghouse and payer rejections every day. A rejected claim sitting for two weeks adds two weeks to A/R and inches toward timely filing limits. Medicare generally requires claims within one calendar year of the date of service (CMS Claims Processing Manual, Ch. 1, §70); many commercial payers allow less time.

Step 3: Work A/R by priority, not by alphabet

A/R follow-up fails when staff start at the top of an alphabetical list every Monday. Instead:

1. Sort by dollar value and age. Work high-dollar claims in the 31-60 and 61-90 buckets first. They're old enough to need attention and young enough to fix.
2. Group by payer. One call or portal session can resolve several claims.
3. Check status before calling. Use payer portals and 276/277 claim status transactions where available.
4. Act on what you find: resubmit, send records, correct coding, bill secondary, or route to denial management.
5. Set a follow-up date for every claim touched and document the action.
6. Escalate claims stuck with a payer past its own processing commitments.

Step 4: Fix the front-end causes

Much aging A/R starts at check-in. In a 2025 vendor survey, billers named coordination of benefits (45%), non-coverage (39%) and prior authorization or referral issues (31%) as top denial reasons, along with inaccurate demographics (25%) (Tebra). Each of these turns into aging A/R.

• Verify eligibility and benefits before every visit.
• Confirm authorizations and track visit limits and expiration dates.
• Capture insurance cards and demographics accurately at every visit.
• Collect copays and known patient balances at the time of service.

Our eligibility verification and prior authorization guide covers this in detail.

Step 5: Post payments accurately and promptly

Payment posting is where you discover underpayments, partial denials and secondary claims that need to go out. Post ERAs daily, reconcile to bank deposits, and flag:

• payments below contracted rates;
• zero-pay lines (these are denials);
• claims needing secondary or tertiary billing; and
• patient responsibility that should move to patient statements.

Step 6: Handle patient A/R separately

Patient balances need statements, reminders, payment plans and clear communication, not payer calls. Keep the two workflows separate so neither gets neglected.

Step 7: Clean up old A/R deliberately

For claims over 120 days:

• Check whether they can still be corrected or appealed within payer limits.
• Work the highest-value recoverable claims first.
• Write off only under your written policy, with documentation and approval.

Old A/R cleanup is often a short project that benefits from temporary extra hands.

Staffing A/R follow-up

The most common reason A/R grows is simple: nobody has protected time to work it. Front-desk staff and office managers get pulled into phones and patients. Signs you need dedicated A/R capacity:

• A/R over 90 days is rising month over month.
• Claims are aging past timely filing or appeal limits.
• Follow-up happens in bursts, then stops.
• One person holds all the payer knowledge.

Options:

• Add an in-house A/R specialist. Good control; recruiting and turnover risk.
• Outsource to a billing company. Hands-off; less visibility.
• Add a dedicated remote A/R specialist who works your queue in your systems, under your rules. This is the model our operator provides.

A good A/R specialist knows payer portals, reads remittances fluently, documents every touch and escalates sensibly. Payer phone calls during US business hours matter, so confirm schedule overlap. Before granting any access, put a business associate agreement and access controls in place (HIPAA guide).

What to report monthly

• Days in A/R (same method every month)
• A/R over 90 and over 120 days, in dollars and percent
• A/R by payer
• Claims touched per specialist per day and follow-up dates met
• Denials received and resolved
• Write-offs by reason

This site is operated by Alliance Global Solutions, which provides remote billing staff including A/R follow-up and data entry support. If you'd like a second opinion on your A/R workload, request a free staffing assessment or use the Medical Billing Health Checklist to self-audit first.

Common mistakes that keep A/R high

• Working the oldest claims first, no matter what. Very old, low-dollar claims may be past timely filing. Prioritize by dollar value and by what's still collectible.
• Touching claims without a next step. Every follow-up should end with a documented action and a date to check again.
• Letting credits and unapplied payments sit. They distort A/R reports and can create refund obligations.

Approved vendor: Alliance Global Solutions, which operates this site, provides dedicated remote staff for this work and signs a business associate agreement with each client before any PHI access. See approved vendors and how we vet vendors.