How do I reduce days in accounts receivable?

The national average for days in AR is 49 days. Top-performing practices operate at 30–35 days. The gap is almost never about collection effort—it's about clean claim rate on first submission and denial turnaround time on the back end.

Days in AR is a straightforward formula: total outstanding receivables divided by average daily charges. But the levers that move it are not straightforward. Practices that focus improvement efforts on collections calls and follow-up processes are targeting the wrong end of the revenue cycle. By the time a claim reaches follow-up, 30–45 days have already elapsed. The only way to structurally reduce days in AR is to increase the percentage of claims that pay on first submission.

Clean claim rate is the metric that drives first-pass payment. The industry benchmark is 95% clean claims on first submission for top-performing practices. At 87%, roughly 13 out of every 100 claims require at least one correction or resubmission cycle, each adding 15–30 days to the payment timeline for that claim. The compounding effect across thousands of monthly claims creates a structural floor for days in AR that collections effort alone cannot penetrate.

Denial turnaround time is the back-end equivalent. When a claim is denied, the clock continues running. A practice that takes 18 days to identify, correct, and resubmit a denied claim is adding 18 days to the effective days in AR for every denied claim. Best-performing practices have denial turnaround times of 8–10 days through structured work queues that prioritize denied claims by filing deadline proximity and dollar value, not chronological order.

Aggregate days in AR hides payer-specific AR aging. A practice with 52 aggregate days in AR might have Medicare claims paying in 14 days (consistent with Medicare's standard 14-day electronic payment timeline) while one commercial payer is averaging 78 days. The commercial payer's slowness inflates the aggregate metric, but without payer-level AR aging reports, you cannot identify which payer to escalate or renegotiate with.

Clean claim rate by charge type is also typically hidden in aggregate reporting. Practices often have very different clean claim rates for office visits versus procedures versus lab charges. A 92% clean claim rate on office visit charges and a 74% clean claim rate on procedure charges averages to 83%—but the improvement opportunity is concentrated entirely in procedures. Generic AR improvement initiatives that don't segment by charge type spread effort across the entire portfolio when the problem is specific to one area.

Run a payer-specific AR aging report segmented by 0–30, 31–60, 61–90, and 90+ day buckets. Any payer with more than 20% of their AR in the 60+ day bucket is underperforming their contractual payment obligation. Most commercial payer contracts and state prompt pay laws require payment within 30–45 days. Document the aging data and escalate to your payer relations contact. This alone can recover 15–25 days in AR for practices with one slow-paying commercial plan.

Upgrade your claims scrubber rule set on a quarterly basis. Payer editing rules change frequently, and scrubbers operating on outdated rules allow claims to pass front-end edits but fail payer-side edits—the worst outcome, because these denials are slower to identify than rejections. Most clearinghouses provide monthly rule updates; confirm your practice management vendor is applying them.

Implement eligibility verification at the point of scheduling, not just at check-in. Insurance eligibility issues are the second-largest driver of preventable claim failures. Verifying 7 days before the appointment (rather than the day of) gives staff time to resolve coverage gaps before the claim is submitted. MGMA data shows that practices performing eligibility verification at scheduling have clean claim rates 4–7 percentage points higher than those verifying only at check-in.