The Importance of AR Days in Medical Billing: Addressing Issues and Improving Collections – CIVXDATA

April 24, 2023 Brian Keller0
In medical billing, AR days, or Accounts Receivable days, is a crucial metric used to measure the efficiency of the revenue cycle management process
“AR days represent the number of days it takes for healthcare providers to receive payments for services rendered to patients. The lower the AR days, the more efficient the billing process, and the faster the cash flow.”
Healthcare providers rely on payments from insurance companies, Medicare, Medicaid, and private payers to maintain their operations, cover overhead costs, and provide quality care to their patients. A delay in the same or complete denial of payments can lead to financial strain, decreased staff morale, and even the closure of medical practices.
Calculation of AR days is important for every healthcare provider. A simple formula for the calculation of AR days, which is mostly being used by the healthcare provider, includes dividing their total accounts receivable by the average daily charges. The result of this calculation represents the number of days it takes for the practice to collect its outstanding payments. For example, if a practice has $10,000 in accounts receivable and its average daily charges are $1000, the AR days would be 10.
A high AR day value indicates that the billing process is inefficient, and payments are delayed. The reasons for high AR days can vary, and healthcare providers need to identify the root cause to improve their revenue cycle management process. 


Some of the common causes of high AR days include:
Inaccurate or incomplete billing information: Billing errors such as missing or incorrect patient information, incorrect billing codes, and incomplete claim forms can lead to claim denials and delayed payments.
Claims processing delays: Insurance companies and government payers can take several weeks or even months to process claims, which can increase AR days.
Slow payer reimbursement: Some insurance companies and government payers have longer reimbursement cycles, which can increase AR days.
Patient payment delays: Patients may delay payments due to financial constraints, lack of insurance coverage, or disputes over billing charges.
To reduce AR days, healthcare providers need to implement efficient revenue cycle management practices. Here are some strategies to improve AR days:
Accurate and timely billing: Healthcare providers need to ensure that they collect accurate patient information, submit clean claims, and follow up on denied claims promptly.
Claims management software: Billing software can help healthcare providers automate their revenue cycle management process, reduce errors, and improve efficiency.
Payer contract negotiations: Healthcare providers can negotiate with payers to reduce the time it takes to receive payments.
Patient collections: Healthcare providers need to implement patient collections strategies, such as offering payment plans and sending reminders to improve patient payment rates.
Outsourcing: Medical billing service providers such as CIVXDATA, can be a very cost-effective and professional way to make the billing process more efficient and reduce the AR day. 
Outsourcing medical billing can help reduce AR (accounts receivable) days in several ways:
Improved efficiency: Professional medical billing companies use specialized billing software and have experienced billing specialists who are well-versed in the latest billing practices and regulations. This can result in faster and more accurate billing, reducing the time it takes to process claims and receive payments.
Reduced errors: Outsourcing medical billing can help reduce errors that can delay payments and increase AR days. Professional billing companies have processes in place to ensure accuracy in coding and billing, and they are more likely to catch errors before they result in claim rejections or denials.
Faster claims submission: Billing companies have dedicated staff who focus solely on submitting claims and managing denials. This can result in faster claims submission and processing, leading to quicker payments and lower AR days.
Improved follow-up: Medical billing companies have the resources to manage and follow up on unpaid claims. This can include automated systems, such as reminders and alerts, as well as trained staff who can escalate issues and resolve disputes with payers. This can result in faster resolution of claims and reduced AR days.
The Wise Words!
AR days is a critical metric in medical billing that measures the efficiency of the revenue cycle management process. High AR days can lead to financial strain and decreased staff morale, while low AR days indicate an efficient billing process and faster cash flow. 
Healthcare providers need to identify the root cause of high AR days and implement efficient revenue cycle management strategies to reduce AR days and improve their bottom line. 
AR Days can be a good measurement scale for the healthcare provider if they intend to partner with a medical billing service provider. Checking the past AR records of the medical billing service provider can help healthcare providers to strengthen their decision on further partnerships.
To know more about how we can help in improving your AR days efficiency, get in touch by Clicking here.

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Copyright by CIVXDATA. All rights reserved.