What is accounts receivable in medical billing?
Accounts receivable (A/R) in medical billing refers to the money owed to a healthcare provider for services rendered but not yet collected. High A/R balances signal problems in the revenue cycle — slow claim processing, high denial rates, or poor follow-up. Managing accounts receivable in medical billing is arguably the most critical function of any billing team.
The cost of unmanaged A/R
Industry benchmarks suggest that a healthy practice should have less than 15–20% of its total A/R aged beyond 90 days. Every dollar sitting in 90+ day A/R is at risk. Many payers have timely filing limits that will bar you from collecting if claims are not followed up promptly.
Root causes of high medical billing denial rates
Reducing medical billing denials starts with understanding why claims are denied. The most common reasons are: eligibility not verified before service, incorrect or missing codes, lack of prior authorization, missing documentation, and duplicate claim submissions.
Denial management: the correct workflow
Effective denial management in medical billing follows a clear process. First, categorize each denial by reason code. Second, analyze denial trends to identify systemic issues (e.g., a specific payer consistently denying a code). Third, appeal all correctable denials within the payer’s timely appeal window. Fourth, report denial trends to clinical and operational leadership to correct upstream problems.
Working with professional denial management companies ensures appeals are filed correctly and that root cause analysis drives continuous improvement.
A/R aging reports: your financial GPS
Review A/R aging by payer at least weekly. Focus first on claims over 60 days — these are the most at risk. Prioritize by dollar value to maximize recovery. A skilled qhs billing company will provide transparent A/R aging dashboards so you always know where your money stands.
Key performance indicators to track
Monitor these KPIs: first-pass resolution rate (target: above 95%), denial rate (target: below 5%), days in A/R (target: below 35 days), and net collection rate (target: above 95%). Consistent tracking and monthly reporting are signs of a mature revenue cycle management program.
QHS manages denial and A/R workflows for practices across North Carolina. Our clients consistently maintain denial rates below 3% and days in A/R under 28 days. Let us show you what optimized revenue cycle management looks like for your practice.
