Accounts receivable — almost always shortened to AR — is the money a practice has billed and not yet collected. It is one of the most quoted numbers in medical billing and one of the least understood, largely because the total on its own says very little.
What matters is what the number is made of.
What AR actually contains
The AR balance is not one thing. It is a mixture of:
- Claims recently submitted and working through adjudication normally
- Claims that were rejected and never resubmitted
- Claims that were denied and never worked
- Claims sitting with a payer for reasons nobody has established
- Patient balances after insurance
- Balances that will never be collected but have not been closed
Those categories behave completely differently, and lumping them together is why a single AR figure is a poor management tool. The first is healthy. The last is an accounting fiction. The middle three are the actual problem.
Aging buckets
AR is conventionally split by how long the balance has been outstanding, usually in 30-day bands: 0–30 days, 31–60, 61–90, 91–120, and over 120. The bands are counted from a defined point — commonly the date of service or the date of billing — and it is worth knowing which your system uses, because the two produce meaningfully different reports.
The first bucket is normal business. Everything after it is a question. And the further right a balance sits, the less likely it is to be collected — partly because payers apply filing and appeal deadlines, and partly because a claim that has aged has usually done so for a reason nobody has yet addressed.
The total AR figure tells you how much. The aging tells you how worried to be.
AR over 90 days
The share of AR sitting beyond 90 days is the single most useful summary number in the report. It is where the claims that need attention concentrate, and it moves slowly enough to be a genuine trend rather than noise.
A rising percentage in that bucket while total AR is flat is a specific and important signal: new claims are being collected normally and old ones are not being worked. That is a resourcing or ownership problem rather than a payer problem.
Days in AR
Days in AR estimates how long, on average, it takes a practice to collect. The usual calculation divides the current AR balance by average daily charges over a recent period.
Two cautions. First, it is sensitive to charge volume — a practice whose volume drops will see days in AR rise even if collection performance is unchanged. Second, benchmark figures vary substantially by specialty and payer mix, so comparing yourself to a general industry number is of limited value. Your own trend, measured consistently, is worth more than any external benchmark.
Insurance AR and patient AR
These should be looked at separately. They behave differently, they are worked differently, and mixing them hides both.
Insurance AR is a payer follow-up problem. Patient AR is a communication and collection problem, and it has grown as a share of practice revenue with the spread of high-deductible plans. A practice with a large patient AR balance and a small insurance one has a completely different job to do from a practice with the reverse.
What the shape tells you
A few common patterns and their usual meaning:
- Balance concentrated in 0–30 days. Healthy. This is what working AR looks like.
- Growing 91–120 and 120+ buckets. Claims are not being worked, or are being worked without resolution. Usually a capacity or ownership problem.
- One payer dominating the older buckets. Either a payer-specific process problem — enrollment, a policy change, a systematic denial — or a payer that genuinely pays slowly. Both are actionable once identified.
- A large, stable, very old balance. Almost always uncollectable balances that have never been closed. It flatters nobody and distorts every other number.
Cleaning up versus following up
These are different jobs and confusing them is why backlogs persist. Follow-up is the ongoing cadence applied to current receivables. Cleanup is a scoped project on an aged backlog, run separately so it does not compete with current-month work for the same people.
A practice that tries to do both with the same capacity does neither, because current claims always take priority — correctly, since they are the most collectable.
How to read your own report this week
Pull the aging report and answer four questions:
- What proportion of the total sits beyond 90 days?
- Is that proportion higher or lower than three months ago?
- Which payer accounts for the largest share of the old buckets?
- How much of the oldest bucket is genuinely still collectable?
If the fourth question cannot be answered, that is the finding. An AR figure nobody can decompose is not a measurement — it is an estimate that has been carried forward.
Want this looked at for your practice?
We review your AR aging and denial patterns and send you a written summary — whether or not you go on to work with us.
Get a Free Billing & AR AssessmentFrequently asked questions
What is a good days in AR figure?
It varies by specialty and payer mix, so a single benchmark is not meaningful across practices. What is meaningful is your own trend and how much of the balance sits beyond 90 days.
Does a high AR always mean a problem?
Not necessarily. A practice that has grown quickly will carry more AR simply because it is billing more. The question is whether AR has grown faster than charges, and whether the older buckets are growing as a share of the total.
Related services
This article is general information about medical billing and revenue cycle management for US practices. It is not legal, coding or compliance advice, and payer rules vary by payer, plan and state. Check the position that applies to your own practice before acting on anything here.