Days in A/R: what the number tells you and how to bring it down

Days in accounts receivable (A/R) is the average number of days it takes your practice to collect payment after a service is billed. It is the single most useful measure of how well your revenue cycle is working, because nearly every billing problem shows up in it eventually.

How to calculate days in A/R

1. Add up your gross charges for the last three months and divide by the number of days in that period (usually 90). That is your average daily charges.
2. Take your total A/R balance today.
3. Divide total A/R by average daily charges.

For example: $900,000 in charges over 90 days is $10,000 a day. If your total A/R is $380,000, your days in A/R is 38.

Use the same method every month. The trend matters more than any single number.

What a healthy number looks like

A common industry target for physician practices is 35 days or fewer. Specialties with complex authorizations or high-dollar procedures often run higher, and practices with mostly simple office visits can run lower.

Look at a second number alongside it: the share of A/R older than 90 days. A common target is under 15%. A practice can have reasonable days in A/R while a large block of old claims quietly ages past payer filing limits.

Where aging A/R usually comes from

When days in A/R creep up, the cause is almost always in one of four places.

1. Claims that were never accepted

Clearinghouse and payer rejections don’t always appear on a denial report. If nobody works the rejection queue daily, those claims never reach adjudication. Check your rejection report before anything else.

2. Denials that weren’t worked

A denial that sits unworked for 30 days adds 30 days to that claim’s age and moves it closer to the appeal deadline. Codes like CO-16 (missing information) and CO-22 (coordination of benefits) are usually quick fixes if they are caught early.

3. Claims with no response

Some claims are simply never answered. Without a status check at 30 days, they can sit until timely filing has passed and the claim is denied as CO-29.

4. Secondary and patient balances

Secondary claims that were never sent, and patient balances that were never billed, inflate A/R without any payer activity at all.

Bringing the number down

• Work rejections daily and denials within a few business days of the remit.
• Check claim status at 30 days for every claim without a response.
• Work old A/R oldest and largest first, checking each claim against its payer’s filing and appeal limits.
• Send secondary claims automatically when the primary remit posts.
• Report by payer and age bucket every month, so you can see which payer or which step is slowing things down.

If your aging report has grown faster than your team can work it, our A/R recovery team can take on the backlog while your staff keeps current billing moving.