How to Cut Accounts Receivable Days to Under 30

What Are the 12 Biggest Causes of High Accounts Receivable and How You Can Fix Them

#1 Engineering Fast Claim Submission (Charge Capture + Claim Drop)

Delays in sending out claims are the single biggest, and most overlooked, reason for high Accounts Receivable. Every day you delay sending a claim is one full day added to AR. If your clinic waits 5 days before submitting claims, you’ve lost 5 days before the payer even starts processing.

Here’s how you can achieve less than 48 hours between the patient’s visit and claim submission.

Close Charts Quickly

• Provider rule: Doctors must finish their documentation within 24 to 48 hours.
• Why: Coders can’t assign proper billing codes until the chart is complete.
• Action: Create a dashboard showing which providers have open charts older than 2 days. Any delays beyond 48 hours should be flagged to management.

Workflow Tips

• Daily reports of encounters missing provider signatures or notes.
• Alerts at 24 hours ( reminders to the provider).
• Escalation at 48 hours ( manager notified).

Code and Review Without Delay

• Coder Service-Level Agreement (SLA): Once provider notes are complete, coders must process charges the same day.
• Why: Even a one-day backlog in coding creates unnecessary AR days.
• Action: Set productivity goals for coders (e.g., 20 to 30 charts per day depending on specialty).

Workflow Tips

• Measure ‘time from provider sign-off (coding complete).’
• The goal is to keep it less than 24 hours.
•  Identify bottlenecks (complex visits, missing documentation).

Drop Claims Multiple Times Daily

• Old method: Many clinics send claims once at the end of the day or even once every few days.
• Best practice: Drop claims 3 times daily (e.g., 10am, 2pm, 6pm).
• Why: This prevents claims from “waiting until tomorrow” and accelerates payer processing.

Workflow Tips

• Set automatic claim-drop batches at fixed times.
• Review ‘pending claim’ queues each cycle.
• Track average claim submission time daily.

 Monitor ‘DOS-to-Drop’ Metric

DOS-to-Drop is the number of days between the Date of Service (when patient was seen) and Claim Drop (when claim was submitted).

• Goal: Median under 2 days.
• Tolerance: 95% of claims should be submitted within 3 days.
• Why: This metric directly impacts AR days.

Workflow Tips

• Daily report of DOS-to-Drop for every provider.
• Weekly leadership review of averages.
• Immediate action for outliers (providers or departments lagging).

Remove ‘Parking Lots’

Many billing systems have a ‘holding’ or ‘suspense’ status where claims wait for missing information. The danger: claims can sit here for weeks without anyone noticing.

• Action: Create a daily report of all claims in suspense/hold status.

Rule: Nothing stays in suspense longer than 48 hours.

#2 Denial-to-Cash: Using Codes to Automate Resolution

Every denial is a roadblock in your cash flow. But denials aren’t random, they come with specific reason codes. If you track and use these codes correctly, you can route denials to the right team and fix them quickly.  Here’s how you can do it.

Know the Denial Codes

• Claim Adjustment Reason Codes (CARC): Explain why a claim was adjusted or denied.
• Remittance Advice Remark Codes (RARC): Provide extra details.
• Example: CARC 197 = ‘authorization required,’ RARC N290 = ‘missing referral.’

Action: Load official code lists into your system so all denials are standardized.

Route Automatically

Define rules such as:

• Authorization denials: Prior Authorization Team (SLA: 48 hours).
• Eligibility denials: Front Office / Registration (SLA: same day).
• Bundling edits: Coding Team (SLA: 72 hours).

Workflow Tips

• Map top 30 denial codes to owners.
• Assign deadlines for resolution.
• Track performance by team.

 Build Appeal Kits

For each major denial type, create a ready-to-use appeal package.

 Example:

• Authorization Denial Kit: Letter template, copy of authorization approval, clinical documentation, payer guidelines.
• Medical Necessity Denial Kit: Appeal letter citing payer’s Local Coverage Determination, attached clinical notes.

This saves days when denials occur repeatedly.

Measure and Improve

Key metrics

• First-pass denial rate (goal is less than 8%).
• Denial overturn rate (how many denials are successfully appealed).
• Average time to resolve denials.

Workflow Tips

• Weekly report of denial categories.
• Monthly trend analysis: Are denials decreasing?
• Root cause fixes: Add claim edits so denials don’t repeat.

Denials are not ‘bad luck.’ They are patterns. When you standardize, route, and attack them, you recover cash faster and prevent repeat problems.

#3 Payer Scorecards: Holding Insurers Accountable

Different payers behave differently. Some pay quickly, some deny more often, some underpay. If you treat all payers the same, you waste time. A payer scorecard gives you visibility into who is slowing you down and what to do about it.

Monitor Key Metrics by Payer

For each insurance company you deal with, track:

• Median days to payment (how long they take to pay clean claims).
• Denial rate (percentage of claims denied on the first pass).
• Denial overturn rate (how many denials are successfully appealed).
• Underpayment rate (how often they pay less than the contracted amount).
• EFT/ERA adoption status (do they pay electronically or still use paper checks?).

Publish the Scorecard

Create a one-page monthly scorecard. 

Example columns:

Use Scorecards to Drive Action

• With staff: Prioritize worklists. If Blue Cross has higher denial rates, spend more time on their claims early.
• With payers: Use data to push for changes. If denial rates are above 10%, show them your data and ask for fixes.
• With leadership: Scorecards give executives a clear view of who your problem payers are.

Workflow Tips

• Build payer scorecards monthly.
• Share with billing teams and leadership.
• Use in contract negotiations.

Payer scorecards transform follow-up from ‘chasing claims randomly’ into data-driven management.

#4 Cash Application at Speed (Electronic Payments)

You get paid the fastest when you leverage Electronic Funds Transfer (EFT) and Electronic Remittance Advice (ERA) to receive and post payments automatically. Therefore:

Enroll All Payers in EFT and ERA

• EFT (Electronic Funds Transfer): Money is deposited directly into your bank.
• ERA (Electronic Remittance Advice): A digital statement showing exactly what the payer paid, denied, or adjusted.

Workflow Tips

Create a payer-by-payer tracker for EFT/ERA enrollment. Don’t accept paper checks or virtual credit cards unless absolutely unavoidable.

 Automate Payment Posting

• Configure your system to auto-post ERA payments.
• Exceptions (e.g., unusual adjustments) go into a small work queue.
• Goal: 90% of payments post automatically.

Use Same Day ACH

Since 2022, Same Day Automated Clearing House (ACH) allows transfers up to $1 million per transaction the same day. Some payers now support this. Clinics that enroll get large payments faster.

Weekly Reconciliation

• Match ERA payments with bank deposits.
• Investigate mismatches immediately.

Ensure:

• 100% payer enrollment in EFT/ERA.
• Auto-posting rate above 90%.
• Weekly reconciliation process in place.

Speeding up cash posting does two things:

• Gets money into your bank faster.
• Prevents Accounts Receivable from looking artificially high due to unposted cash.

#5 Contract Governance: Stopping Underpayments

Even when claims are paid on time, payers may pay less than contracted. If unnoticed, these ‘hidden leaks’ increase AR and reduce revenue. Thus, it is essential to:

Load Fee Schedules

• Fee schedule is the list of agreed prices for each procedure.
• Example: For CPT 99213 (office visit), Payer A pays $100, Payer B pays $115.

Action: Upload all payer fee schedules into your practice management system.

Compare Every Payment

When an ERA arrives, the system should check:

• Allowed amount (per contract).
• Paid amount (actual).
• Difference.

Flag any shortfall above $10 or 5%.

 Appeal Underpayments

• Batch-appeal similar underpayments.
• Example: If a payer consistently short-pays a modifier 25 service, gather all cases and appeal together.

Monitor Win Rates

• Track how many underpayment appeals you win.
• Report average days to recovery.

Ensure:

• Fee schedules updated quarterly.
• Weekly underpayment variance report.
• Monthly batch appeals for systemic issues.

#6 Prior Authorization in Depth

Prior authorization is one of the most frustrating sources of delays. A missing or late authorization can push balances into the 60 to 90 day bucket or lead to outright denial.

Maintain a Live Authorization List

• Keep an updated list of services and codes that require prior authorization.
• Share with scheduling and clinical staff.

Build Checklists

For each service:

• Documents required.
• Payer criteria.
• Turnaround times.

Track Authorization Turnaround

• Measure request and approval date.
• Escalate if pending beyond 5 days.

Use Government Rules to Your Advantage

Starting 2026:

• Payers must respond to prior authorization within 7 days for standard requests.
• Within 72 hours for urgent requests.
• Use these deadlines in your escalation process.

Attack Authorization Denials

• Authorization denials should route directly to the authorization team.
• Use pre-built appeal templates with documentation.

Ensure:

• Updated prior authorization list.
• Daily report of pending requests.
• Escalation rules tied to payer deadlines.
• Appeal kits ready for common denials.

Prior authorization is painful, but with discipline, it can be controlled. Clinics that manage this well cut AR days by 5 to 7 compared to those that don’t.

#7 A Six-Week Sprint to Under 30 Days in Accounts Receivable

Bringing Days in Accounts Receivable below 30 does not have to take a year. Clinics that focus intensely can make huge improvements in just six weeks. Here’s a proven sprint plan.

Week 1: Set Standards and Measure

• Adopt the Healthcare Financial Management Association (HFMA) definition of Days in Accounts Receivable.
• Build dashboards that show:
  • Days in Accounts Receivable.
  • Percentage of Accounts Receivable over 90 days.
  • Charge lag (time from visit to claim submission).
  • First-pass denial rate.
  • Percentage of payments through Electronic Funds Transfer (EFT).

Ensure:

• One agreed definition for Days in Accounts Receivable.
• Dashboard showing charge lag, denials, AR aging.
• Daily huddles using the same data.

Week 2: Eliminate Charge Lag

• Require providers to close charts within 48 hours.
• Coders must process charts the same day.
• Submit claims 3 times daily.

Ensure:

• Chart closure dashboard.
• Automatic alerts at 24 and 48 hours.
• Claim-drop schedule at 10am, 2pm, 6pm.

Week 3: Enroll All Payers in EFT and ERA

• Refuse paper checks and virtual credit cards.
• Enroll every payer in EFT and Electronic Remittance Advice (ERA).
• Set up auto-posting for payments.

Ensure:

• Payer-by-payer EFT/ERA tracker.
• 90% auto-posting rate.
• Weekly reconciliation of deposits and ERA.

Week 4: Denial Management System

• Map top 30 denial reason codes (Claim Adjustment Reason Codes and Remittance Advice Remark Codes).
• Assign each denial type to a team member with a Service Level Agreement (SLA).
• Build appeal kits for the top denial categories.

Build:

• Denial routing matrix.
• SLA timers for each denial type.
• Ready-to-use appeal templates.

Week 5: Payer Scorecards and Timed Follow-Up

• Publish payer scorecards showing average payment days, denial rates, and underpayments.
• Create a payer timing ‘cheat sheet’ with follow-up schedules.
• Example: Medicare ( check at day 21, escalate at day 30).

Build:

• Monthly payer scorecard.
• Cheat sheet of payer timelines.
• Automated reminders for claim follow-up.

Week 6: Attack the Aging Tail

• Focus on Accounts Receivable over 90 days.
• Run weekly ‘AR >90 Strike’ meetings.
• Automate secondary claim submission the day after primary payment.
• Run weekly credit balance sweeps.

Ensure:

• Daily report of AR greater than 90 days.
• Assigned ownership for top-dollar old claims.
• Weekly credits and refunds cleared.

By the end of Week 6, most clinics can shave 10 to 15 days off their Accounts Receivable. The key is relentless daily measurement and discipline.

#8 Key Metrics That Predict Success

It’s said that you can’t improve what you don’t measure. The clinics that keep AR under 30 track the following metrics consistently.

Days in Accounts Receivable

• Definition: Total Accounts Receivable ÷ Average Daily Net Patient Revenue.
• Target: <30.
• Why it matters: It is the single best measure of revenue cycle health.

Accounts Receivable Over 90 Days

• Definition: Percentage of total AR older than 90 days.
• Target: <10%.
• Why it matters: Old balances rarely get collected. If this number rises, cash flow is at risk.

Charge Lag (Date of Service and Claim Submission)

• Target: Median <2 days, 95% within 3 days.
• Why it matters: Every day of delay adds directly to AR days.

First-Pass Denial Rate

• Definition: Percentage of claims denied the first time.
• Target: <8%.
• Why it matters: Denials slow cash by weeks.

Clean Claim Rate

• Definition: Percentage of claims accepted without needing correction.
• Target: >95%.
• Why it matters: Clean claims are paid fastest.

EFT/ERA Adoption Rate

• Definition: Percentage of payments received electronically.
• Target: Near 100%.
• Why it matters: Electronic payments post faster than paper checks.

Days to Payment by Payer

• Definition: Median number of days from claim submission to payment.
• Why it matters: Helps identify slow payers and push them.

Tracking these33 metrics gives you a dashboard for financial health. If these numbers stay in line, Days in AR will stay under 30.