Direct Answer
Accounts receivable aging is the distribution of unpaid claims by how long they've been outstanding — organized in time buckets (0–30, 31–60, 61–90, 91–120, 120+ days). An AR aging report that shows growing balances in the 60-day-and-beyond buckets indicates collection performance problems that require immediate action. Industry standard target: fewer than 25% of total AR should be over 90 days old.
Table of Contents
Reading AR Aging Reports
A standard AR aging report organizes unpaid claims into time buckets based on days since the date of service: 0–30 days (current), 31–60 days, 61–90 days, 91–120 days, and 120+ days. The report should be breakable by payer, by provider, by service type, and by denial reason to enable root cause analysis.
The most important numbers to look at: the percentage of total AR balance in each bucket; the trend in bucket percentages month-over-month; and the specific payers and denial reasons driving the highest-aging balances. A healthy AR profile shows most balances in the 0–30 day bucket, with declining percentages in successive buckets. An unhealthy profile shows growing concentrations in the 60+ and 90+ day buckets — indicating collection failures that compound over time.
AR Aging Benchmarks
Industry standards for AR aging vary somewhat by specialty and payer mix, but general benchmarks from MGMA and HFMA: 0–30 days should represent 60–70% of total AR; 31–60 days should represent 15–20%; 61–90 days should represent 5–10%; and over 90 days should represent less than 15–25% of total AR. Days in AR — the average age of unpaid claims — should be 30–35 days for most practices; above 45 days indicates significant collection management problems.
Root Cause Analysis by Bucket
Each aging bucket tends to reveal different types of problems:
- 0–30 days: Mostly recent claims in normal processing. Elevated balances here may indicate clearinghouse or submission delays.
- 31–60 days: Claims that should have been adjudicated but haven't been. Common causes: claims rejected or lost; payer system delays; eligibility denials that were appealed. These need active follow-up immediately.
- 61–90 days: Claims not resolved in the normal adjudication cycle. Common causes: denials that haven't been worked; claims not submitted due to coding holds; missing information. Every claim here is at risk.
- 91–120 days: Serious collection problems. Many payers have timely filing limits in the 90–180 day range — claims approaching these limits need immediate action before they become uncollectable.
- 120+ days: These claims are frequently at or beyond timely filing limits. Some are collectable through appeal or secondary billing; many are close to write-off territory. Analyze this bucket carefully to identify any systemic causes that are still generating new additions to it.
Systematic Follow-Up Strategies
AR follow-up that isn't systematic — working claims randomly or only when staff have time — doesn't work. Effective follow-up programs prioritize by: dollar value (work the highest-value claims first); payer payment window (claims approaching timely filing deadlines override value-based priority); and denial reason (systematic denials that can be resolved in bulk are more efficient than individual claim resolution).
Assign specific AR buckets or payer groups to specific staff members, with clear expectations for follow-up frequency and documentation requirements. Track each action taken on each claim. Claims without documented follow-up activity within the expected window should escalate automatically to supervisory review.
Managing Aging Balances and Write-Offs
Not all aged AR is recoverable. Balances that have exceeded timely filing limits without successful appeal, balances for which the payer coverage was never active, and small balance amounts where collection cost exceeds collection probability should be written off in a structured, documented process — not aged indefinitely. Write-off policies should require supervisory approval above specific dollar thresholds and document the reason for write-off in each case.
Tracking write-off categories over time reveals whether write-offs represent systemic process failures (timely filing missed repeatedly suggests a workflow problem) or unavoidable bad debt. This analysis drives process improvement decisions that reduce future write-offs.
FAQ
How often should AR aging be reviewed?
Billing staff should work AR queues daily. Management-level AR aging reports should be reviewed weekly for trend monitoring and prioritization decisions. Monthly AR aging snapshots — compared against prior months and industry benchmarks — should be standard reporting for practice leadership. For practices with known collection performance problems, more frequent (daily or twice-weekly) management review is appropriate until the problems are resolved.
What is the difference between gross AR and net AR?
Gross AR is the total amount billed to payers and patients before any adjustments. Net AR is gross AR minus expected contractual adjustments — the amount the practice actually expects to collect based on its payer contracts. Days in AR and AR aging benchmarks should be measured against net AR, not gross AR, to accurately reflect collection performance. Practices that measure days in AR against gross AR typically appear to have worse performance than they actually have, because the metric includes amounts that will always be adjusted off as contractual discounts.
AR That Actually Gets Collected — Not Just Aged
Valiant Lifecare manages AR with systematic follow-up protocols, denial root cause analysis, and timely filing discipline — converting more of your billed revenue into collected cash, faster.
Improve Your AR Collection Rate