Accounts Receivable Management: Turning Aged Balances into Cash

Accounts receivable is the clearest window into the health of a practice's revenue cycle. Days in AR, the percentage of AR over 90 days, and the ratio of net collections to net charges tell a comprehensive story about billing performance — one that is often more revealing than any individual denial rate or coding accuracy metric.

Most practices have AR that is older than it needs to be — not because collections are impossible but because the follow-up process is inconsistent, under-resourced, or not systematically prioritized. A structured AR management approach recovers revenue that would otherwise be written off or abandoned.

Aging Analysis and Segmentation

Effective AR management begins with accurate segmentation. Not all aged balances are created equal: a 90-day balance from a commercial payer that has not yet responded to a follow-up is very different from a 90-day patient balance after an appeal has been exhausted. Treating them identically leads to misallocated follow-up effort.

Segment AR by payer type, balance age, and balance size. High-dollar payer balances deserve priority regardless of age — the return on follow-up effort is highest here. Small-balance, old payer claims may be better candidates for appeal batch submission or write-off depending on the cost to collect.

Systematic Follow-Up Workflows

A follow-up workflow specifies what action is taken, by whom, and at what interval for each segment of the AR. Without a defined workflow, follow-up depends on staff initiative and prioritizes whatever is most visible rather than what is most valuable.

For payer AR, a standard workflow might specify: initial claim submission at day 0, first follow-up call or portal check at day 30, appeal submission at day 45 if no response, escalation to payer relations at day 60. The specific intervals vary by payer and claim type, but the principle is consistent: every outstanding claim has a next action and a next action date.

Patient Balance Collection

Patient balances represent a growing share of total AR as high-deductible health plans have shifted more cost-sharing to patients. Collecting patient balances requires different approaches than payer AR — patient-facing communication, payment plan options, and point-of-service collection strategies.

Point-of-service collection — collecting estimated patient responsibility at the time of service — is the most effective patient AR strategy because it eliminates the mailing and aging cycle entirely for a significant portion of balances. Practices that consistently collect co-pays, co-insurance estimates, and known deductible balances at the time of service maintain significantly lower patient AR days and collection costs.