A Simple System to Cut Your Practice’s Accounts Receivables and Collect What You Earn
- Soendeep Kaur
- Oct 6
- 4 min read
Every Friday, Dr. Elena Rodriguez reviewed her practice’s bank balance. The number was always lower than it should be. The appointment schedule was full. Her staff was busy. The services were rendered. Yet, the cash flow felt tight. She knew the revenue was there—it was simply trapped.
The average private medical practice should collect its money in under 45 days. When that number—your Days in Accounts Receivable (DAR)—climbs past 50 days, the practice isn’t just slow. It’s bleeding. The money you earned is stuck in a queue of unpaid bills and ignored denials.
The Problem: Cash Flow Stuck in a Queue
Accounts Receivable (AR) is the total money owed to your practice by insurance payers and patients. A huge AR is not a back-end problem; it is a symptom of systemic failure at the front of your practice.
Imagine a bucket with a few tiny, unseen holes. You fill it with water (your services), but by the time you go to pour it out (get paid), much of the water is gone. Each hole is a simple process mistake: a mistyped Payer ID, a skipped verification, an unfiled appeal.
The critical benchmark is DAR. A Days in AR figure over 50 days signals financial trouble. High-performing practices keep this number below 30 days. If you are constantly chasing checks from three months ago, you are operating your practice like a lender, not a provider.
You cannot fix your Accounts Receivable problem in the billing department; you must fix it in the front office.
The Wrong Move: Chasing the Symptom, Ignoring the Cause
Most practices react to high AR by asking their biller to work harder. They focus on claims over 90 days old. This is the wrong approach. It’s like trying to bail out the leaky bucket instead of plugging the holes.
The truth is, high AR is caused by three fundamental mistakes made weeks or months earlier:
Skipping the Pre-Service Check: Claims die fastest at the front desk when staff skips eligibility checks or copies patient data incorrectly.
Delaying the Repair: Allowing denials to sit unaddressed until the timely filing deadline approaches.
Treating Claims as Tasks, Not Data: Submitting the claim without checking for the necessary modifier (CO-4) or a valid authorization number (CO-15), guaranteeing a denial.
The solution requires a shift from passive collection to active revenue cycle management—a few small, repeatable actions that deliver exponential results.
Three Habits to Shrink Your Accounts Receivable
Here are the practical steps that turn a slow, bleeding practice into a cash-flow machine:
1. Close the Financial Front Door
What: Implement a mandatory, two-step verification process for every patient, every time. Why: Eligibility errors and missing demographic data are the top causes of front-end rejections. Fixing a claim after the service is rendered costs 4-5 times more than getting it right the first time. How:
Scan Both Sides: The back of the insurance card often contains the crucial Payer ID or claim submission address. Without it, the claim will sit or be rejected.
Verify Benefits and Authorization: Check eligibility before the patient arrives. Flag required Prior Authorizations immediately. Denials like CO-27 (Expired Coverage) and CO-15 (Missing Authorization) become preventable.
Impact: A higher First-Pass Resolution Rate (FPRR). Your initial claims get paid, meaning less work for the back office.
2. Treat Claims Submission as a Precision System
What: Submit claims daily, not weekly, and treat every detail as mission-critical. Why: The second most common reason for uncollectible AR is exceeding the payer’s timely filing deadline (Denial Code CO-29). Some deadlines are as short as 90 days, and the clock starts on the date of service. How:
Daily Batching: Claims must be generated and sent electronically every day.
Coder-to-Provider Feedback Loop: If a denial comes in for a diagnosis code error (CO-11) or a missing modifier (CO-4), the coder must immediately flag the provider to review documentation. Systematically tracking these errors prevents duplicate submissions (CO-18).
Impact: You beat the clock on timely filing, and you turn denials into lessons, not losses.
3. Master the Art of the Aging Report
What: Use the Accounts Receivable Aging Report as your weekly task list, prioritizing follow-up based on dollar amount and deadline. Why: Not all unpaid claims are created equal. You must prioritize the claims that offer the highest financial return and those closest to the point of becoming uncollectible. How:
Prioritize the High-Dollar and the Timely: Focus on the highest balances first, then address any claims approaching a timely filing deadline.
Follow the Denial Workflow: When a denial hits, use a seven-step workflow: Identify the code (CO-16 for missing info, for example), Review the claim, Fix the error, Resubmit or Appeal, and Track the outcome.
Engage Patient Balances: Move money to patient responsibility fast. Offer flexible payment plans and use digital tools (text, email) to simplify collection.
Impact: You actively manage your revenue instead of passively waiting for it, converting older AR into cash.
Expected Outcomes: What a Healthy AR Looks Like
When you implement these systems, the numbers change quickly.
Days in AR Drops: Your benchmark goal should be under 45 days. High-performing practices aim for 30 days or less.
Aging Buckets Shift: You will see a significant drop in the percentage of AR over 90 days. The industry standard recommends keeping less than 10% of your total AR in the 90+ day buckets.
FPRR Rises: As front-end errors decrease, your First-Pass Resolution Rate—the percentage of claims paid correctly on the first submission—climbs toward the 95%+ range, meaning fewer hours wasted on follow-up.
Your Quick AR Checklist
Before you leave the office today, ask these three questions:
Do we scan both the front and the back of every insurance card?
Is any claim older than 48 hours still waiting to be submitted?
What percentage of our AR is over 90 days old?
Conclusion: The Power of the Process
High Accounts Receivable is not a permanent state. It is the natural consequence of poor systems.
Just as an athlete builds muscle through small, consistent effort, your practice builds financial health through small, consistent, and correct RCM actions. Prioritize the front door. Treat claims with precision. Work your aging report weekly.
The money is yours. It’s time to build the system that brings it home.
