Medical Accounts Receivable: Monitoring and Measuring Performance

how to calculate medical accounts receivable days in ar

One of the common issues we confront when called to perform a physician billing department assessment, or a more broad based medical practice analysis,  is the lament:  “Why aren’t we collecting more of our accounts receivable”.  And the corollary:  “Why can’t I get a straight answer to that question from the office manager/administrator/billing supervisor?”

When we ask questions about medical accounts receivable, we usually get answers like, “Oh, our AR is very low!” or, “Our AR is $XX”, with no way to tell if that’s good, bad or ugly.

One of the reasons straight answers are hard to come by is that many staff members responsible to manage accounts receivable don’t know the relevant benchmarks to use for measuring performance.  So they fall back on generalities or dollar amounts with no context.  No wonder physicians are skeptical and frustrated.

Medical Practice Revenue Cycle: a Best Practices Checklist

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In fact, it’s fairly easy to monitor the overall performance of your accounts receivable efforts, and looking at these measures each month can provide an early warning of potential collection problems – and the effect on cash flow.  It’s also part of the best practices in medical billing you need to implement, even if your cash flow seems adequate right now.

Measuring Medical Accounts Receivable:  “Days in AR”

The first measure is the “days in accounts receivable” – the average number of days it takes to collect the payments due to the practice.  To calculate days in AR,

  • Compute the average daily charges for the past several months – add up the charges posted for the last six months and divide by the total number of days in those months.
  • Divide the total accounts receivable by the average daily charges.  The result is the Days in Accounts Receivable.

total charges for last 6mo / number of days in last 6mo = average daily charges
total AR / average daily charges = days in AR

For instance, if you have charged $280,000 in the past six months, and if there were 182 days in those months, your average daily revenue is $1,538.  Then, if your total accounts receivable is $70,000, the Days in Accounts Receivable is 45.5.  It is taking an average of 45.5 days to collect your payments.

$280,000 / 182 = $1,538
$70,000 / $1,538 = 45.5

So is that good?  Well, Medicare usually pays about 14 days after receiving a claim.  Some HMOs pay claims at 45 days after receipt, the time allowed by law in some states.  We look at the following figures as benchmarks for medical billing and collections:

  • 30 days or less for a High performing Medical Billing Department.
  • 40-50 days for an Average performing Medical Billing Department.
  • 60 days or more for a Below Average Medical Billing Department.

Measuring Medical Accounts Receivable:  “Aging Buckets”

The other measure is the percent of accounts receivable in each “aging bucket”, for instance 0-30 days, 31-60 days, 61-90 days, etc. To calculate it, you will need a report showing the dollar amount of the AR in each aging bucket.  Simply convert each bucket to a percent of the total AR.   The graph below shows the contrast between Better-performing billing departments vs. Average- performing billing departments.

how to calculate medical accounts receivable aging bucketsAsking for reports each month that show the outcome of each of these measures will go a long way to helping you monitor the performance of your billing department.  Of course, these are only outcome indicators – the report card, if you will.  If they are not where you want them to be, you still have to ask questions about what can be done to move them in the right direction, but at least you know which way is up!

Take a look at my presentation on “A Better Physician Billing Department“.  There you’ll find more information on benchmarks, and questions to ask a billing department.  And if you’re hesitant to seek outside help, take a look at our Case Studies and ROI to get an idea on how investing in the services of a qualified medical billing consultant can pay off handsomely.

Need to speak with an expert about Medical Accounts Receivable?

Jim Hook, MPH

Mr. James D. Hook has over 30 years of healthcare executive management and consulting experience in medical groups, hospitals, IPA’s, MSO’s, and other healthcare organizations.

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53 thoughts on “Medical Accounts Receivable: Monitoring and Measuring Performance

  1. Hi,

    I would like to know how to handle a collection based model project. For example, if I have a physician and he pays me based on the collection. The issues that I am going to pay is from EDI, Credentialing and so on. How credentialing is being done and how to have a healthy collection.

    1. Sorry Michael, but we do not give the type of advice you are seeking in comments connected to blogs. We are able to give a general reaction to questions that people have, but we cannot advise you on how to handle the issues you have identified in this manner.

  2. Hi,
    I would like to know how to analyze the practice profit/loss statement, accounts receivable ratios and staffing patterns and how to access specialty comparison norms. Also on how to improve billing and collection performance and increase case flow. Do you have any benchmarks for each of the medical billing positions? (A/R biller, Charge biller, and Payment Poster Biller). Like how much time they have to spend on an account?
    Thank you.

    1. Our blog contains two important monitoring tools for accounts receivable, measuring the days in accounts receivable and the percent of AR in various “aging buckets”. You can also review our presentation on giving your practice a billing checkup to get ideas on best practices also has information on this topic. To get specific information, please call us about an engagement to help you identify the appropriate staffing in your setting.

      Staffing ratios are harder to define these days since so much depends on the level and type of automation available and in use in the office.

  3. Our organization gives Sliding Fee discounts for uninsured patients. Would we then subtract the Sliding Fee discount from the Total Charges to calculate the average daily charges?

    Thank you

    1. Most organizations still record all services at their usual and customary charges (billed charges), and make adjustments when posting the payments. So when calculating days in AR, you want to have the numerator (the total AR) recorded consistently, e.g., all accounts are carried at the rate of billed charges until payment comes. Then the balance in the account is reduced by the payment, the adjustment due to contractual allowances, sliding scale discounts or other factors. This numerator is divided by the average amounts billed daily over a period of time, to get the days in AR.

      If you only record the charge as the Sliding Scale amount, you can still do the calculation; just make sure the average amount billed daily over time also includes the charges at the Sliding Scale amounts, for consistency.

  4. 30 days or less for a High performing Medical Billing Department.
    40-50 days for an Average performing Medical Billing Department.
    60 days or more for a Below Average Medical Billing Department.
    You make the statement above, is this for non par practices as well? How about surgeons whose bills exceed $100K, which most always are put in the insurance companies “high dollar” unit taking more time to review and pay/deny.

    1. Of course, any individual practice may have specific circumstances that will speed up or slow down claims payments. For instance, a family practice or IM office with a preponderance of patients covered by Medicare may be considered only average if their days in accounts receivable are at 30 days since Medicare usually pays within 14 days. When your specialty involves consistent medical record reviews as part of the claims processing activity at the payor, you may have to adjust what is considered average. You should also adopt strategies to speed up claims, like calling soon after submission to see if medical records are required to review the claim, vs. waiting until you get a pending notice 30 or 45 days after the initial submission.

    1. There is no particular formula or benchmarks based strictly on the dollar amount of accounts receivable. Instead, staffing ratios are based on the volume of accounts that require charge entry, billing and collections and payment posting. And these ratios can be dramatically affected by the amount of automation in use, e.g., an electronic health record system that feeds charges and diagnoses directly into a billing system, and a system that incorporates electronic line item posting of charges.

      Benchmarks for less automated systems would include:
      1) One full-time equivalent for every 10,000 claims processed (billing and collections) annually
      2) One full-time equivalent for every 200 superbills entered manually, each day
      3) One full-time equivalent for every 400 claims posted manually, each day

      Highly automated systems may allow these benchmarks to be reduced by 50-75%.

  5. We have closed one of our offices and so we are not posting any new charges. We still have several million dollars in AR that needs to be collected. How does this open AR affect our days?

    1. This may have the effect of increasing your days in AR, at least over the short-term, depending on what, if anything is replacing the services you billed from the closed office. For instance, if you closed an office, but the services being provided there (and billed out) have been relocated to another office, the average daily billed charges you are accruing may not change. In that case, all other things being equal (like continuing to use effective collection practices), your days in AR would not change due to closing an office.

      If, on the other hand, the average daily billed charges are declining because you are providing and billing for fewer services due to closing an office, your days in AR will increase, at least in the short term. This is because the numerator of the calculation, the total AR at the end of the month, still includes the uncollected amounts for the closed office, while the denominator, the average daily billed charges for the last few months, is decreasing due to the closed office.

      You can keep track of this by calculating your average daily billed charges each month, and tracking the change from month to month. If there is a precipitous decline due to the closed office/fewer services being billed, then you can adjust the baseline you use, shortening it to say three months instead of six, for instance. As you collect the amounts from the old office and adjust patient accounts, etc., the calculation should come back into balance and better reflect where you are at the current time.

      Of course, the accuracy of trends in your days in AR is continuously influenced by many factors, including timely posting of charges and payments, overall level of billed activity and effectiveness of collections from payors and patients. The days in AR is the report card, the daily billing and collection activities is the homework.

  6. When beginning a brand new receivable, what’s an acceptable level for percentage of accounts hitting over 90 days?

    1. Take a look at our blog “Medical Accounts Receivable: Monitoring and Measuring Performance” for some benchmarks related to aging buckets. If you work your accounts receivable with an eye to collecting everything within 60 days, the percentage hitting over 90 days will automatically be lower.

  7. Is there a check off list that an analyst can use when reviewing the current AR? A list of trends to watch out for?

    Thank you for your time


    1. You can find a Revenue Cycle checklist on our website under Medical Billing Best Practices – a Short Primer. You can also see some benchmarks on AR aging in our blog entitled “Medical accounts Receivable: Monitoring and Measuring Performance.” It is important to track AR aging over time as part of managing an organization’s AR.

  8. Jim. I am a 28 year hosp CEO now involved with healthcare startups, one of which offers a non-recourse, 24 hour payment of between 55 and 90 % of submitted Medicare/commercial claims. It uses an algorithm that has patent pending status. Wall st investors have discovered the perfected valuation of these claims ( compared with mortgages, educ loans, etc) and are the source of investment in this model

    I would like to discuss thiscwith you but first have a question: if a fictional hospital receives payment of 80% of all medicare/commercial claims within 24 hours what is the math calculation you would use to translate this into reuction in days in AR and days cash on hand? thanks!

    1. First of all, what would be the days in AR with an arrangement that factors or finances claims to Medicare and commercial payors? Accounts receivable start from the first day of service to a patient upon admission or when outpatient services are rendered, so there is a built-in # of days equivalent to the average length of stay for these patients. Claims are usually dropped a few days after the patient is discharged, and then there is the period of time between when you submit the claim to the factoring company and when payment is received. So if the ALOS is 4 days, and the claim drop period is 7 days and the payment turnaround from the factoring company is 2 days, then the new days in AR would be 13. The decrease would be the difference between the current days in AR for Medicare/Commercial and 13.

      You can estimate the one-time increase in cash by calculating the average daily collections for the past few months, and multiplying that amount by the reduction in days in AR. For instance, if collections averaged $9 million for the past 90 days, then the average daily collections are $100k. If days in AR are being reduced by 30 days, then the one-time increase in cash on hand would be $3 million. After that, assuming the factoring company efficiently collects the AR, the hospital should experience average daily collections at the same level, less the factoring company fee, assuming it is based on a percentage.

  9. Jim. Thank you so much for that information! I would like to converse with you by email should you be so inclined. Tom

    And Jim. I hope I’m not overstaying my welcome, but following your answer’s logic, if a hospital continued to receive 80% of Medicare/commercial dropped bills within 24 hours, would the days cash on hand increase exponentially. (remember Jim I was a CEO—- not CFO). Thanks again. Tom

  10. I am looking for best practice/national standards on how the billing department should work accounts receivable. I say the best way to work it is by splitting the alphabet between billing analyst, others say working by payer is better and to concentrate on the higher a/r at the time. Doesn’t that just cause other payer a/r to go up and then a continuous cycle?

    1. We don’t think there is any one best way to work AR for all healthcare providers. Many providers focus on high-dollar accounts where the insurance company is still responsible for some of all of the amount since it is usually – but not always – easier to collect from an insurance company vs. an individual patient.

      Of course, best practices include determining at or before the time of service how much of the bill the patient will be responsible for, and making sure there are arrangements in place to collect the patient program, either immediately at the time of service or on a payment plan if necessary. You should also have policies describing when and how frequently follow-up calls and letter start, for insurance and patient balances, and when small remainder amounts can be written off.

  11. Where can I find Home Healthcare benchmarks regarding AR days? We run between 30-40 days. Or would Home Healthcare have the same benchmarks you mentioned above?

    1. There are no specific benchmarks for days in AR for home healthcare services. One thing to keep in mind is the proportion of services billed to Medicare. Medicare is one of the most prompt payors out there, so if you are accumulating the information necessary to submit a clean claim promptly, achieving collections within 30 days of the date of service, is definitely possible.

  12. Hi

    Our office currently has an out of control amount of patient balance A/R. I was wondering if you had suggestions for the best way to handle it? There are only two people working it now and it seems as though little to no progress is being made.

    1. The first thing to do is to make sure the problem is not getting worse. This means providing financial counseling when appointments are made or when patients arrive for service, identifying the portion of the bill that is or will be patient responsibility, and attempting to collect it at the time of service. Make sure it is easy to collect, by accepting credit/debit cards, checks (with an automatic deposit/clearance capability to avoid bad checks) and being able to make change for people who are paying cash.

      When it is time to send patients statements for balances due, send them timely and regularly, and again make it easy to make the payment. If you are working with a clearinghouse that submits your claims electronically, consider using the clearinghouse to generate and send statements. That is often a service offered for only a few cents more than the cost of postage.

      Call patients with larger balances and offer them payment plans – and keep track of their adherence to the payment plan. If your services often result in large patient copayments right after services, like surgeries, consider affiliating with a company that offers loans to qualified patients/families. This provides for immediate payment to the practice, and the credit is extended by a third party that may charge interest, etc.

      Finally, work with a reputable collection agency, use notification messages on your statements, and then assign the unpaid balance to a collection agency after 90 or 120 days. Of course, review the assignment with the physician first to make sure there is no reason not to make the assignment, and consider if this means you also need to terminate the physician-patient relationship.

      There are also collection agencies or other services that will accept assignment of some or all of your older accounts, offering the practice a percentage of the eventual collections. The difference here is that you may assign a large number of your old AR accounts all at once, vs. trickling them out each month as account age out.

      Above all, make sure you are generating routine reports and calculating your days in AR to keep track of your progress. See for how to do that! Good luck!

  13. I currently bill at 200% of the medicare fee schedule for insurance and I have a separate fee schedule for self pay patients. I did this for expediency and never got around to updating it. Now I’m trying to evaluate my billing company based on days in A/R and I’m not sure if or how to account for the fact that I’m clearly over-billing and accepting a high write- off amount on each claim submission. My rough estimate for what percent of the billed amount I could actually be paid is 60% of the current billed amount. Will this adjusted billed amount give me a more accurate snapshot of my billing situation when I use it to calculate days in A/R? Thank you.

    1. When you are trying to calculate your Days in AR, it is important to use consistent statistics. For instance, you can use your average total billed charges per day (compute the average over a six month period), divided into your total AR, carried at the rate of billed charges (which is how receivables are usually carried in your billing system). If your billing staff makes adjustments to each account after it is billed, but before payments come in, to reduce the AR to the actual $ amount you expect to collect from each account, then divide your total adjusted AR by the average daily collections, again computed over a six month period.

      To determine how much your AR is worth, again assuming it is carried at the billed charges until adjustments are made at the time of payment, divide your AR into buckets by major payor, e.g., Medicare, self-pay, insurance, etc. Add up the total payments from each payor source over a long period of time (at least 6 months), and divide the amounts paid by the billed charges for each payor during the same time period. Assuming that you do not have wide swings in billed charges or payments collected over a short period of time, this should give you percentages of the amount you should expect to collect from each payor bucket in your AR. Couple this with the days in AR calculation, and you can forecast your cash flow 30 – 60 days out.
      I hope this helps!

  14. I thought this was a very good article. I am a coder and have been for 15 years so I am not familiar with Days in A/R and aging buckets. Although lately I have taken a very big interest in this area. Recently our entire CBO had a meeting the topic was Days in A/R which we have 5 companies. ASC, Path, ANA, and the Physicians. All companies days in A/R are great they are under 25% and the 120+ buckets were under 17%. Now what I don’t understand was the 0-30 is that not current charges that are due payment? Why does it fluctuate so? For instance I was looking at a 3 month span and July was 85%, Aug was 83% and then Sep was 90 %. I read that a good measure for the 0-30 was some where around 65% is that correct and why?

    1. You seem to be conflating the term “Days in AR” with the percentages of AR in various aging buckets. Days in AR is a calculation that uses the total Accounts Receivable and the average daily revenue to produce a number that can be described as the average number of days between when charges are booked and payment is received. These two measures do work in tandem to give you information about the state of the AR. Days in AR under 30 are usually considered very good performance. Collecting early usually results in lower percentages in the older aging buckets.

      Measuring AR performance by looking at aging bucket percentages are a little less straightforward. The percentages in aging buckets can vary due to several factors, such as an aggressive write-off policy that is enforced only periodically (which reduces the percentages in the older aging buckets), to an unusually good month in new services delivered an charged for (which increases the percentage in the 0-30 aging bucket).

      Monitoring both over time for trends is the best way to keep track of how you are doing.

    1. We would normally recommend a longish period for coming up with a value for average daily charges, for instance, billed charges for the last six months (180 days). This helps smooth out peaks and valleys that may exist in volumes of patients and the associated billed charges over time. This number is then divided into the total AR on hand at the end of a reporting period to get the days in AR.

  15. Hey Jim,
    Great information. I’ve been in Healthcare Revenue Cycle for over 20 years. It still amazes me how many Healthcare administrators fail to understand revenue cycle and benchmarking.
    Benchmarking a billing office based on AR Days, Ageing buckets etc is absolutely essential. Do you have a recommendation on how to quantify the ROI for an AR Days reduction? In other words, if AR days were to be reduced from 35 to 30, how would you calculate the value of that reduction? And for the sake of this question, we need to assume that charges, payments and adjustments remain stable, and the reduction is based solely on operational efficiencies and processes.

    1. To quantify the ROI of some reduction in AR Days, you would first need to calculate the average collections per day. If the charges, payments and adjustments are stable over a period of time, say six months, you can:
      1) Divide the total collections over six months by 180 to get the average daily collections;
      2) Multiply the average daily collections by the number of days you expect to reduce the AR. For instance, if you are reducing the AR from 35 days to 30 days, multiply the average daily collection by 5. That is the total amount you can expect to take in (on a one-time basis) by a 5 day reduction in AR.
      3) Divide the total amount of the reduction by cost of achieving that reduction (extra staff, overtime, etc.). That is your ROI. For instance if a 5 day reduction in AR brings in $100,000 additional cash, but costs only $10,000 to achieve it, the ROI is 10 to 1.
      Let us know how this turns out!

  16. I am a little confused on your aging bucket graph. It appears that for the 0-30, 31-60 and the 61-90 buckets the “Average” column is better than your “Better” column since the percentage is lower for the average than the better in these buckets. The 91+ bucket makes sense that the better would be the lower percentage but would you explain to me why it is “Better” to have higher percentages in the other buckets.

    As an Urgent Care are current buckets are:
    0-30 66%
    31-60 8%
    61-90 6%
    91+ 19% (have not taken charge offs in 3 years)

    I would appreciate your input.

    John K

    1. The answer to your question lies in the relative nature of using percentages to measure this particular indicator. In general, you want your AR to be collected as soon as possible. So you want the percentages in the earlier aging buckets to be higher. For instance, in the “Better” example, the total percentage of AR that is 90 days or less is 84%. The total percentage of AR that is 90 days or less in the “Average” example is 74%. What really matters is to keep the 91+ bucket as small as possible since it is harder to collect over time.

      It is also better to keep the AR “cleaned up” timely by referring aging accounts to outside collection agency, if appropriate, and having a minor balance write off policy. This will keep your percentages more meaningful and consistent overtime.

  17. Jim, Our total due AR balance is approx. $466,000. Of that, $7100 is over 90 days and $14,000 is 90 days old. Combined, we have a .046 percentage past due. Collecting these amounts is priority one in our department. Can you tell me if this past due % is a healthy amount or not?

    Thank you

    1. If I understand what you are saying, $71,100, or 4.6%, of your AR is in a category of 90 days old. This percentage of your AR in the 90+ days category would be considered very low.

  18. Our office collection % is down from last year. Last year we ran about 72-75%, & this year it has dropped to about 65-69%. Our A/R is in good shape. What kind of a report do I run to see what is going on?
    Thank you

    1. You would want to look at 2 or 3 reports:
      1) Although you are saying the collection % is down from last year, you should still verify that you are recording a similar amount of charges to last year, broken down by major payor source, You could be experiencing a shift from payor sources that pay promptly, to those that do not pay as promptly.
      2) You mention the AR is in good shape. It is important to look at the dollar amounts and percentages in each aging bucket (e.g., 0-30 days, 31-60 days, etc.) compared to where you last year at this time.
      3) Finally, you should be tracking your days in AR each month to see if they are going up, staying the same, or going down. The formula for computing days in AR is on this page.

      Looking beyond the total amount of the accounts receivable is very important, especially when collections are lagging without any good explanation.

  19. Jim – Thank you for this great information. I am a Medical Billing Office Manager and one of my clients has me stumped. Their days in A/R are right at 20 so looking good there and their aging buckets all look good as well. However, comparing last year to this year they have seen 570 more patients in the first half of the year yet their Net Medical Revenue is down $154,364 compared to the prior year. They did lose three providers but they have accounted for that loss by removing the revenue generated by those providers last year from the comparison. Any thoughts on what could be causing this? Thanks again! Kat

    1. Kat, one more thing to analyze is the net revenue (collections) per visit, comparing all providers still on board this year, to the net revenue per visit for all providers on board last year. It may be that the departed providers were billing at higher CPT codes, or performing proportionately more procedures, compared to the providers still with the practice this year. Also, were the days in AR even lower last year? An increase in the days in AR could result in lower overall collections during this year compared to last, even with more visits. Good luck getting to the bottom of this issue!

  20. For a office based procedure practice that has minimal rejected first pass claims what would be the expected return on a monthly billing of $376k -$410K? Currently we are ony collecting 22% across the buckets.

    1. The percentage of billing that you collect, on average, is a function of several things, including:
      1) How much above your average payment rates from payors are your usual billed charges. For instance, if you are charging $200 for a procedure which payors reimburse an average of $100, your collection rate will average 50%, all other things being equal. If you are charging $300 for that procedure, your collection rate will average 33%.
      2) How timely you are sending claims for services and doing follow-up. While payors like Medicare and most insurance companies pay timely after receiving claims, collections from patients can fall off dramatically if you don’t send them a bill timely and do timely follow-up. And while you can submit a claim to Medicare up to a year after the date of service, many insurance companies and HMOs require claims to be submitted within 60 days after the date of service.

      If you think your claims submission and follow-up have been relatively consistent, you can calculate the percentage of your AR that is collectible by looking at total collections as a percentage of total charges over a long term period, say the last six months. Keeping up a rolling six month or even 12 month average of collections as a percentage of charges during that period is a good way to monitor if your collections are at the point they should be. Of course, there are things that can influence that factor, such as a marked increase (or decrease) in the total charges billed at a point in time during the six or 2 month rolling baseline period.

  21. Hey James,
    Do you know of a way to score individual account receivable? Perhaps based off of tthe ICD code/CPT and which HMO is used? I’m hoping to predict the likelyhood of receiving payment as well as how long it may take

    Or, maybe you know of a consultation company which can provide insight?

    1. Nicholas, you can measure the time it takes to collect from a particular payor (like an HMO) by using the same technique you would use to measure the time it takes to collect from all payors. You do need a billing application that will allow you to get a report on the total charges to that specific payor for a period of time, say six months. Divide the total charges during that time by the number of days in the period you choose. That gives you the average daily charges. Divide the total Accounts Receivable by the average daily charges, and you have the average number of days it takes to receive payment.

      To figure out if you are going to be paid, you can look first to your payment history and/or denials from the HMO. If they are denying payment for a specific combination of CPT code and diagnosis, then you can look to their medical management policies to determine if they consider the condition you are billing for to be a covered benefit. If you are not billing for a particular service/diagnosis at the current time, you can again look at their medical management policies or call the provider relations department to find out if they cover the condition you are asking about. You can also call the provider relations department if you think they are inappropriately denying your claims.

      Of course, The Fox Group is a consulting company that provides this type of advice in many of our engagements, so you can always engage us! Good luck!

  22. I run a two physician family practice and use an outside biller which tells me they are collecting about 33% of charges every month. Is this good or bad? I think it’s terrible.

    1. Well Micheal, it may or may not be good, bad or just right. Many physician practices peg their billed charges to a multiple of Medicare rates. So for example, if all of the practice’s patients were covered by Medicare, and the billed charges were set at 200% of Medicare rates, the percentage of charges collected would be 50%. You can get an idea of what a good percentage is by asking for reports that can help you stratify your patient charges by payor category, e.g., Medicare, Medicaid, commercial, self-pay, etc., and then calculate an average for the percentage of charges, weighted by the proportion of charges each of the payor categories represents. For instance, collecting 50% of Medicare charges might be an acceptable amount if you are charging 200% of Medicare rates, but maybe the percentage of collections on commercial payors (assuming they pay more) should be 75%.

      There is a lot more to AR management and performance, however. Here are a few links with methods to evaluate your billing and accounts receivable process.

  23. We have 5000 claims old AR worth of $100000, we need to touch these using 3 agents in next 10 days. How would you determine how many claims falls in which AR days and bad AR.

    1. Most billing systems can sort claims by aging buckets with aging dated from the date of service, e.g., 0-30 days, 31-60, etc. Reports showing which claims are in which bucket can usually be pulled from the claims/billing software. Claims more than 180 days old have very low collection potential, so starting with the most recent claims is usually most productive. The other thing to consider is the dollar amount of each claim. If your numbers on claims and the AR totals are correct, the average amount for each claim is about $20. To the extent that there is a mix of high dollar and low dollar claims, it would also be advisable to start with the newest, high dollar claims.

      Good Luck!

    1. Shirdar, I am assuming you are referring to the Average Days Gross FFS Charges which is a component of measuring Days in AR. We recommend calculating the average daily gross charges over a 3 or six month period to smooth out peaks and valleys that can happen seasonally or for other reasons, e.g., a clinician goes on vacation and the activity in a one-clinician office falls off dramatically. To get the Average Days Gross FFS Charges, add up the monthly gross charges for 3 months (or 6 months if you are using a longer base line) and divide by the number of days in that 3 (or 6) month period. Then divide that amount into your Accounts receivable (assuming the amounts have not been adjusted materially from the amounts recorded as gross charges at the time of service). The result is your days in accounts receivable.

      Some practices adjust accounts of Medicare patients to the amounts Medicare is expected to pay, right after the charges are recorded. If a practice is doing that, they need to exclude their Medicare accounts from the calculations above, and do a separate calculation just for Medicare. For instance, you could calculate the average amounts received in payments from Medicare over a 3 or six month period, and divide the amount paid daily into the net amount of Medicare accounts receivable. That is not quite as sensitive, but would still be an indicator of where things stand.

      Good luck!