Healthcare Accounts Receivable Management: Recover Aging Claims & Revenue

A full appointment schedule does not guarantee healthy cash flow. Claims can remain unpaid, denials can pile up, and patient balances can go uncollected while payroll, rent, and operating costs keep coming. For practice owners, delayed reimbursements can mean postponing new hires, equipment purchases, or practice expansion. Effective AR management helps turn earned revenue into collected payments while making it a critical financial lever for healthcare practices

In this guide, we explore how healthcare AR management works, why receivables become overdue, how to prioritize aging claims, resolve denials, identify underpayments, and improve collections through a structured follow-up process.

What Is Accounts Receivable Management in Healthcare?

Healthcare accounts receivable (AR) represents money owed to a healthcare provider after medical services have been delivered. These outstanding payments generally come from two sources: insurance companies and patients.

Accounts receivable management involves maintaining accurate financial records, monitoring unpaid claims, reconciling payments, investigating underpayments, resolving denials, and collecting patient responsibility.

Unlike traditional business accounts receivable, medical billing involves multiple payers, reimbursement policies, coding requirements, contractual adjustments, and regulatory obligations. A single patient encounter may generate an insurance claim, a payer adjustment, and a remaining patient balance, each requiring a different collection process.

Insurance AR vs. Patient AR

Medical practices should distinguish between insurance accounts receivable and patient accounts receivable because they require different follow-up strategies.

Insurance AR typically requires payer communication, claim corrections, appeals, and reimbursement verification. Patient AR requires accurate statements, financial communication, payment options, and appropriate collection procedures.

Separating these balances allows practice owners to identify where revenue is getting delayed and which collection workflows need improvement.

How Does the Healthcare Accounts Receivable Process Work?

The healthcare AR process begins before a claim reaches the insurance company. Registration, eligibility verification, authorization, documentation, and coding all influence whether a claim will be accepted and reimbursed correctly.

A structured AR workflow generally includes the following stages.

1. Clean Claim Submission

Accurate claim submission is the foundation of effective accounts receivable management. Before submitting a claim, billing teams should verify patient demographics, insurance coverage, provider information, diagnosis codes, procedure codes, modifiers, and supporting documentation.

Common errors include:

• Incorrect patient or insurance information.
• Missing prior authorizations.
• Invalid CPT or ICD-10-CM codes.
• Incorrect provider enrollment information.
• Missing modifiers or supporting documentation.
• Incomplete medical necessity documentation.

Eligibility verification and authorization checks help identify problems before services are billed. Accurate coding and charge capture also reduce preventable rejections and denials.

2. Insurance Claim Adjudication

After submission, the clearinghouse and insurance payer process the claim. The payer evaluates the submitted information against coverage rules, medical policies, reimbursement contracts, and applicable coding requirements.

A claim may be paid, partially paid, denied, rejected, or placed in a pending status for additional information.

Billing teams should monitor claim acknowledgments and payer status updates rather than assuming that a successfully submitted claim has been accepted for payment.

3. Payment Posting and Reconciliation

When an insurance company processes a claim, it generally provides an explanation of benefits (EOB) or electronic remittance advice (ERA).

Payment posting involves recording insurance payments, patient responsibility, contractual adjustments, and denial information in the practice management system.

The billing team should compare expected reimbursement against the actual payment.

For example, consider a claim with the following amounts:

In this example, the insurance payment and patient responsibility reconcile to the expected allowed amount.

However, if the payer only pays $130 without a valid explanation for the difference, the billing team should investigate the payment rather than automatically accepting it.

This process helps identify underpayments, incorrect adjustments, and missing reimbursements.

4. Accounts Receivable Follow-Up

AR follow-up involves monitoring outstanding claims and contacting insurance companies when payments are delayed or unresolved.

Billing teams should review payer portals, electronic claim-status transactions, clearinghouse reports, and payer correspondence to determine the reason for the delay.

A consistent follow-up process should document:

• Original claim submission date.
• Clearinghouse acceptance.
• Payer acknowledgment.
• Current claim status.
• Previous follow-up attempts.
• Outstanding documentation.
• Next required action.
• Applicable filing or appeal deadlines.

Claims should be prioritized according to aging, outstanding balances, payer response, and recovery deadlines, particularly in specialties with complex reimbursement workflows, such as OBGYN A/R aging beyond 90 days.

5. Denial Management and Appeals

Denied claims require investigation to determine whether the issue involves eligibility, authorization, coding, medical necessity, documentation, or payer policy.

The correct recovery action depends on the denial reason.

For example, a claim denied because of missing documentation may require medical records, while an incorrectly processed claim may require a corrected submission or formal appeal.

Repeatedly resubmitting the same claim without addressing the original denial reason creates additional administrative work and delays reimbursement.

Effective denial management also involves identifying recurring problems and correcting their underlying causes.

6. Patient Balance Collection

After insurance processing, remaining patient responsibility should be transferred accurately to the patient account.

These balances may include deductibles, copayments, coinsurance, and noncovered services for which the patient is responsible.

Practices should provide understandable statements, explain patient financial responsibility, offer appropriate payment options, and maintain documentation of communications.

Patient collections must also follow applicable federal and state requirements.

Common Accounts Receivable Challenges for Medical Practices

Increasing AR is not always caused by slow insurance payments. In many practices, several revenue-cycle problems contribute to outstanding balances simultaneously.

The Medical Group Management Association (MGMA) reported in its January 6, 2026, MGMA Stat poll that 48% of respondents identified denials and appeals as their largest revenue-cycle leakage problem. Front-end issues, including eligibility and related registration problems, followed at 23%.

These findings highlight why practices need to address both claim prevention and post-submission recovery.

Delayed Insurance Payments

Some claims remain unpaid because of payer processing delays, missing information, incorrect submission details, or unresolved claim-status issues.

When billing experts do not monitor these claims consistently, outstanding balances can move into older aging categories.

Recommended approach: Establish payer-specific follow-up schedules, monitor claim acknowledgments, and escalate unresolved balances according to contractual and filing requirements.

Coding and Documentation Errors

Incorrect CPT codes, ICD-10-CM diagnosis codes, modifiers, and incomplete medical records can lead to claim denials or reduced reimbursement.

Recommended approach: Perform coding reviews, verify documentation requirements, and analyze recurring denial codes to identify training or workflow gaps.

Authorization and Eligibility Problems

A service may be denied when coverage is inactive or required authorization was not obtained before treatment.

Recommended approach: Verify benefits and eligibility before scheduled appointments and confirm authorization requirements for applicable services.

Underpayments and Incorrect Contractual Adjustments

A claim can appear paid while the actual reimbursement is lower than the contracted amount.

Without payment reconciliation, practices may fail to identify incorrect allowed amounts, unexpected adjustments, or other payment discrepancies.

Recommended approach: Compare ERA payments against contracted fee schedules and investigate unexplained reimbursement differences.

Growing Patient Balances

High deductibles, coinsurance, and self-pay services can make patient collections more challenging.

Recommended approach: Explain expected financial responsibility before appointments, provide clear statements, and establish appropriate payment arrangements.

Inconsistent AR Follow-Up

Small practices often depend on a limited number of billing employees who handle claim submission, payment posting, denials, and patient calls simultaneously.

When workloads increase, older claims may receive less attention.

Recommended approach: Assign clear responsibility for outstanding balances, maintain claim-level follow-up records, and review aging reports regularly.

How AR Aging Buckets Affect Medical Practice Revenue

An AR aging report categorizes outstanding balances according to how long they have remained unpaid. It helps practice owners identify delayed reimbursements, prioritize collection activities, and monitor potential revenue loss.

Common aging categories include 0–30, 31–60, 61–90, 91–120, and over 120 days.

These stages are operational guidelines, not universal payer payment deadlines. Actual deadlines depend on payer contracts, government program rules, and applicable appeal requirements.

Why AR Over 90 Days Matters

Older receivables deserve particular attention because some claims may become increasingly difficult to recover as timely filing and appeal deadlines approach.

A growing 90+ day AR balance may indicate:

• Unresolved insurance denials.
• Delayed payer follow-up.
• Incorrect claim submissions.
• Missing medical documentation.
• Unidentified underpayments.
• Inadequate billing oversight.

Practice owners should monitor both the percentage and dollar value of AR over 90 days, preferably by payer.

The objective is not simply to reduce old claims. It is to recover collectible revenue before resolution options expire, using specialty-specific strategies such as cardiology AR management to reduce aging claims and delayed payments

Key Healthcare Accounts Receivable Metrics to Monitor

A practice’s financial performance should not be evaluated using total collections alone. Accounts receivable management requires several connected performance indicators.

1. Days in Accounts Receivable (DAR)

Days in AR measures how long outstanding receivables take to convert into payments.

A commonly used calculation is:

Days in AR = Total Accounts Receivable ÷ Average Daily Charges For example, if a medical practice has $600,000 in AR and average daily charges of $12,000: $600,000 ÷ $12,000 = 50 days in AR. The American Academy of Family Physicians (AAFP) recommends keeping days in AR below 50 days at a minimum, with 30–40 days preferred. However, practices should evaluate their results against their specialty, payer mix, and consistent accounting methodology.

2. Percentage of AR Over 90 Days

This metric measures the proportion of outstanding receivables that have remained unpaid for more than 90 days.

AR Over 90 Days = (AR Over 90 Days ÷ Total AR) × 100 For example, if a practice has $100,000 in total AR and $20,000 is more than 90 days old, its 90+ day AR is 20%. This metric helps identify whether older claims are accumulating faster than the billing team can resolve them.

3. Net Collection Rate

Net collection rate measures how effectively a practice collects its collectible revenue after accounting for contractual adjustments and other properly excluded amounts.

A commonly used adjusted calculation is:

Net Collection Rate = Payments Collected ÷ Adjusted Collectible Charges × 100 Practices should apply a consistent definition of collectible charges and exclude appropriate contractual adjustments and approved noncollectible amounts. A declining net collection rate may indicate unresolved denials, inadequate follow-up, underpayments, or collection inefficiencies.

4. Denial Rate

Denial rate measures the proportion of submitted claims denied by payers.

Claim Denial Rate = Denied Claims ÷ Total Submitted Claims × 100 Practices should define whether they are measuring initial denials or final denials because these metrics provide different insights. Tracking denial reasons by payer, specialty, and service helps identify recurring billing problems.

5. First-Pass Resolution Rate

First-pass resolution measures how many claims are successfully processed without requiring additional correction or manual intervention, based on the practice’s defined measurement methodology.

A stronger first-pass resolution rate generally indicates better registration, eligibility verification, documentation, coding, and claim submission processes.

6. Underpayment Recovery

Underpayment recovery tracks additional reimbursement collected after identifying payment discrepancies.

This metric helps owners understand whether their billing operation is checking only for claim payment or also verifying that payers reimburse services correctly.

How to Improve Accounts Receivable Management in Healthcare

Improving AR requires coordinated attention to front-end processes, claim submission, payer follow-up, payment reconciliation, and patient collections.

The following strategies can help practices reduce preventable delays and improve collection performance.

1. Prioritize High-Value and Aging Claims

Not every outstanding claim requires the same level of attention.

Billing teams should prioritize claims according to outstanding dollar value, aging, denial status, payer behavior, and applicable submission or appeal deadlines.

For example, a high-value claim approaching its appeal deadline may require immediate attention compared with a recently submitted claim still within normal processing time.

2. Strengthen Eligibility Verification and Authorization

Verify insurance eligibility and coverage before scheduled appointments. Confirm applicable authorization requirements and document the results.

This helps prevent avoidable denials related to inactive coverage, missing authorization, and incorrect patient information.

3. Implement Consistent Denial Management

Categorize denials by reason and payer instead of treating every denial as an isolated billing issue.

Review recurring problems involving coding, medical necessity, documentation, and authorization.

Corrected claims and appeals should be submitted according to the specific payer’s requirements and applicable deadlines.

4. Reconcile Payments Against Contracted Rates

Review ERA and EOB information against expected reimbursement.

Investigate incorrect payment amounts, unexpected contractual adjustments, missing payments, and unexplained claim reductions.

Regular payment reconciliation can uncover revenue that might otherwise remain unidentified.

5. Separate Insurance and Patient Collection Workflows

Insurance follow-up and patient balance collection require different communication strategies.

Use separate aging reports, track payer-specific outstanding balances, and establish clear procedures for patient statements and payment arrangements.

This improves visibility and prevents patient responsibility from becoming mixed with unresolved insurance claims.

6. Monitor Payer-Specific Performance

Not every insurance company processes claims at the same speed or applies identical billing policies.

Compare outstanding balances, denial reasons, payment timelines, and reimbursement discrepancies by payer. Specialty-specific workflows, including endocrinology AR management and aging receivables, may require additional attention.

This helps practices identify insurers responsible for a disproportionate share of delayed or unresolved claims.

7. Review AR Reports Regularly

Practice owners should review AR reports at least monthly, with more frequent monitoring for practices experiencing significant backlogs.

A useful AR dashboard should include:

• Total outstanding receivables.
• Insurance AR and patient AR.
• Aging by 30-day intervals.
• Percentage of AR over 90 days.
• Days in AR.
• Denial and appeal trends.
• Net collection rate.
• Unresolved high-value claims.
• Underpayment recovery.
• Write-offs and adjustment activity.

Reports should show actual collection progress and claim-level resolution, not just the number of calls or follow-up attempts completed.

2026–2027 CMS Medicare Physician Fee Schedule Updates and Their Impact on AR

Changes to Medicare reimbursement can affect expected payments, fee schedule maintenance, and payment reconciliation.

Medical practices should review annual Centers for Medicare & Medicaid Services (CMS) updates to ensure their billing systems and reimbursement expectations remain current.

2026 Medicare Physician Fee Schedule

CMS finalized two Medicare Physician Fee Schedule conversion factors for 2026:

These figures reflect the applicable statutory updates, including the temporary 2.5% increase for 2026.

A conversion factor is used alongside relative value units (RVUs) and geographic practice cost indices (GPCIs) to calculate Medicare payment rates. It does not represent the payment amount for every individual service.

What practices should do:

• Update Medicare fee schedule information in billing systems.
• Review expected reimbursement for frequently billed CPT and HCPCS codes.
• Compare actual ERA payments against applicable Medicare rates.
• Investigate unexplained payment differences.
• Review changes that affect specialty-specific services.

2027 Proposed Medicare Physician Fee Schedule

On July 14, 2026, CMS released its CY 2027 proposed Physician Fee Schedule.

The proposed conversion factors are:

The proposed figures reflect decreases of approximately 1.19% and 1.68%, respectively, compared with the corresponding 2026 conversion factors.

One significant factor is the expiration of the temporary 2.5% statutory payment increase applicable to 2026.

How this affects medical practices: Practices with substantial Medicare patient volume should review proposed reimbursement changes, identify potentially affected services, and assess how payment adjustments could influence expected collections. Billing teams should also review updated fee schedules and compare actual payments against the final applicable Medicare rates once finalized. As of November 3, 2026, CMS’s published Physician Fee Schedule regulation index lists the CY 2027 rule as a proposed rule. Therefore, these figures should not be treated as finalized reimbursement rates. Sources:

• CMS – CY 2027 Physician Fee Schedule Proposed Rule
• CMS – Physician Fee Schedule Federal Regulation Notices

How the No Surprises Act Affects Patient Collections

The No Surprises Act, effective January 1, 2022, established federal protections against certain unexpected medical bills and introduced Good Faith Estimate requirements for uninsured and self-pay patients.

These requirements are important for practices managing patient responsibility and self-pay accounts.

Under applicable federal rules, providers generally must give uninsured or self-pay patients a Good Faith Estimate when the patient requests one or schedules services at least three business days in advance.

The estimate should explain the expected charges for the scheduled services.

Patient-Provider Dispute Resolution

An uninsured or self-pay patient may qualify for the federal patient-provider dispute resolution process when the billed amount from a provider is at least $400 higher than that provider’s Good Faith Estimate.

Eligible patients generally must initiate the dispute within 120 calendar days of receiving the initial bill.

While the dispute process is underway, providers:

• Cannot move the disputed bill into collections or threaten to do so.
• Must pause collection activity if the bill is already in collections.
• Cannot collect late fees on the unpaid disputed amount.
• Must avoid retaliatory action against the patient.

These protections apply to qualifying disputes, not every outstanding patient balance.

AR management considerations: Practices should maintain Good Faith Estimate records, reconcile estimates against final charges, identify qualifying disputes, and ensure collection workflows follow applicable federal requirements.

How Health Quest Billing Helps Medical Practices Improve AR Performance

Unresolved claims, rising AR balances, and inconsistent payer follow-ups can strain medical practices. Health Quest Billing provides medical billing, coding, denial management, payment posting, and AR follow-up services.

We identify outstanding claims, resolve reimbursement issues, and monitor aging balances to improve revenue cycle visibility and help providers focus on patient care.

Losing collectible revenue? Schedule an appointment with Health Quest Billing for a free billing assessment.

For general informational purposes. Payer requirements, contractual terms, and applicable rules should be verified for the situation involved.