Medicare Compliance & Reimbursement

Tip: Explain the A/R timeline to providers, too.

Even if you’ve stayed on top of the annual coding changes, educated providers on new coverage decisions for the various payers, and updated your billing systems periodically, you still may not be collecting all the money you deserve. Without a way to keep your accounts receivable (A/R) process on track, you could be bleeding cash.

Furthermore, collections can be hard enough to manage without mastering all the jargon as well. But when people talk about “days in A/R,” they’re referring to a tool that your practice should be using.

A/R defined: Accounts receivable, or A/R for short, is the money that is owed to the practice. If you aren’t aware of what your A/R looks like at any given time, you are leaving out an important piece of the collections puzzle.

Check out these Frequently Asked Questions (FAQs) to better understand exactly what you need to know about A/R to boost your bottom line.

What is “days in A/R?”

This is a single number that tells you on average how long it takes you to get paid after you provide a service.

Why should you bother to calculate your days in A/R?

Because you can benchmark that length of time against other practices and against yourself during any given period. When you talk to clinicians about the hundreds of thousands of dollars people owe your practice, it’s difficult for them to relate to that large, abstract number. But if you tell the provider, “If you do a surgery today, it’s going to take you 60 days before you get paid based on our average,” that gives them a more tangible understanding.

How do you calculate days in A/R?

First you need to figure out your Average Daily Charge (ADC). You get this number by dividing your gross charges by 365. Then you divide your total accounts receivable by your ADC to get the number of days A/R you have outstanding.

What’s a good number of days in A/R?

It depends on many factors, including your payer mix and your type of specialty, say experts. A surgical practice can expect to have more days in A/R than a primary care practice because the individual charges are bigger and surgeons often don’t bill until the patient is discharged.