Days in AR (Accounts Receivable Days)

How Days in AR is Calculated

Days in AR (also called Accounts Receivable Days or AR Days) measures how long, on average, outstanding receivables represent in terms of average daily charges. The standard formula is:

Days in AR = Total Accounts Receivable ÷ (Total Gross Charges ÷ Number of Days in Period)

Example: If a practice has $2.5M in outstanding AR and generated $18M in gross charges over the past 90 days ($200,000/day), the Days in AR = $2.5M ÷ $200,000 = 12.5 days. More realistically, a practice generating $5M in annual charges ($13,699/day) with $650,000 in AR has Days in AR of 47.4 days — slightly above the commercial benchmark of 35–45 days.

Benchmark Standards by Payer

• Overall commercial target: 35–45 days
• Medicare: <30 days (Medicare processes clean claims within 14 days under the Prompt Payment Act)
• Medicaid: 45–60 days (longer due to eligibility verification delays and state-specific processing timelines)
• High-performing practices: <35 days overall
• Warning threshold: > 55 days signals revenue cycle dysfunction requiring investigation

AR Aging Buckets

AR is typically analysed in aging buckets: 0–30 days, 31–60 days, 61–90 days, 91–120 days, and > 120 days. Industry benchmark is that > 60% of AR should be in the 0–30 day bucket. AR > 120 days becomes increasingly difficult to collect — the industry standard is to write off most commercial insurance AR outstanding beyond 180 days and assess Medicaid AR beyond 12 months.

Denial Impact on Days in AR

Denials are the most significant driver of elevated Days in AR. Each denial requires rework (appeal or resubmission), adding 30–90 days to the collection cycle. A practice with a 10% denial rate versus a practice with a 5% denial rate will typically have 15–25 additional Days in AR, representing significant working capital tied up in outstanding receivables.