Calculating AR Days In Medical Billing

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Calculating AR Days In Medical
Billing
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Calculating AR Days In Medical Billing
Accounts receivable (AR) days refers to the
average number of days it takes a practice to
collect payments due. The lower the number, the
faster the practice is obtaining payment, on
average. For financial stability for any practice
and overall expansion opportunities, its always
preferential to have minimum number of AR days.
AR days are generally categorized as 0-30, 30-60,
60-90, 90-120 and 120 days above. This
categorization is also called as AR bucket, as
the number of days increased in AR bucket,
chances of collecting reimbursements reduces.
After submitting a claim, within few weeks
provider will generally receive the payments. So,
AR bucket 30-60 and onwards and analyzed
carefully and suitable follow up actions are
taken. AR days is an important indicator to
represent financial health of any practice so
accurately calculating AR days in medical billing
will result in taking appropriate follow up
actions. In this article, lets discuss about
correct method for calculating AR days and other
related terminologies. Calculating AR
Days Accounts receivable days is a formula that
helps you work out how long it takes to clear
your accounts receivable. In other words, its
the number of days that an invoice will remain
outstanding before its collected. To calculate
days in AR, find out the average daily charges
for the past several months. Add up the charges
posted for the last six months and divide by the
total number of days in those months. Divide the
total accounts receivable by the average daily
charges. The result is the days in Accounts
Receivable (AR). Lets take a simple example for
better understanding.
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Calculating AR Days In Medical Billing

• Receivables of 50,000, Credit Balance of 7,000,
  and Gross Charges of 600,000
• (Total Receivables Credit Balance)/Average
  Daily Gross Charge Amount (Gross charges/365
  days)
• 50,000 7,000 / (600,000/365 days)
• 43,000/1644 26.15 days in A/R
• AR days measures the amount of time it takes to
  receive payment on a claim. According to hospital
  benchmarks, AR days for facilities can range
  between 30 and 70 days. Most experts agree that
  an average AR days measurement above 50 indicates
  a problem in medical billing or collection
  processes. While calculating AR days, pay
  attention to following details
• Make sure that you have right data for
  calculating AR days. Most practices doesnt keep
  track of submitted claims, so it might be
  possible to mark a claim as unpaid even though
  you have received payment. Sometimes, claims
  denied as duplicate claim are marked in accounts
  receivable resulting in incorrect payment
  calculation. For tracking your financial
  performance, you must have accurate data.

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Calculating AR Days In Medical Billing

• Make sure you know your days in accounts
  receivable for all payers individually. It is
  essential to know both your average days in
  accounts receivable across all payers as well as
  broken down for specific payers. By identifying
  payers with a higher than average days in A/R,
  you may be able to spot some inefficiencies in
  your billing process for that payer and take
  steps to reduce the amount of time that it takes
  to get paid.
• Often times, accounts which are sent to
  collections are written off from the receivable
  records. This would create an incorrect
  impression since these monies are not being
  accounted for. Sending a large number of accounts
  to collections will make the days in A/R days
  look better. Avoid confusion by calculating and
  comparing your days in A/R with and without the
  accounts sent to collections.
• Calculating AR days is the first step of reducing
  accounts receivable for your practice, whether
  its patient or insurance. Accurately calculating
  AR days will give you clear idea about how your
  overall RCM activities are performing. You can
  form denial management team to take all the
  follow up action to reduce accounts receivable
  amount. If you need any assistance in reducing
  your old accounts receivable, Medisys Data
  Solutions can help. Our specialty wise AR experts
  help you to find root cause of claim denial and
  resolution to that. Our billing team will
  resubmit the claim with corrected or additional
  information to receive pending payments. To know
  more about our Accounts Receivable (AR) services,
  contact us at info_at_medisysdata.com/ 302-261-9187

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