Days in A/R equals total accounts receivable divided by average daily charges — gross charges for the trailing 90 days, divided by 90. Practices bring it down by tightening front-end eligibility checks, shortening charge lag, raising the clean-claim rate, and working denials by root cause instead of by due date. This case study walks through that sequence step by step.
A note before we start: this is a composite illustration drawn from the patterns we see repeatedly in internal medicine engagements — not a named client, and not a promise of specific results. Every practice’s numbers are different. What stays remarkably consistent is where the problems hide and the order in which you fix them.
The starting point: a familiar picture
Picture a typical multi-provider internal medicine practice. Visit volume is healthy, providers are busy, and yet cash feels tight every month. The practice manager knows collections are lagging but can’t say exactly why — the billing queue always looks “busy.” That gap between activity and insight is almost always where an engagement begins.
The first thing we establish is the baseline metric, calculated the same way every time:
Days in A/R = Total accounts receivable ÷ Average daily charges
where average daily charges are gross charges for the trailing 90 days divided by 90. This is the convention reflected in HFMA’s MAP Keys revenue cycle KPI definitions and used in MGMA practice benchmarking, and consistency matters more than the specific window you pick. If you change the lookback period, include or exclude credit balances inconsistently, or take a big write-off mid-measurement, the trend line stops meaning anything.
Step 1: Read the A/R aging buckets
The aging report — 0–30, 31–60, 61–90, 91–120, and 120+ days — is the diagnostic X-ray. Two patterns tell very different stories:
- A/R stacked in the 0–60 buckets usually means the problem is upstream: charges are going out late, or claims are pending payer processing. The fix lives in charge capture and submission speed.
- A/R stacked in the 90+ buckets means claims went out, something went wrong, and nobody circled back. That aged inventory is where denials, underpayments, and unbilled secondary claims go to die — and the older a claim gets, the closer it drifts toward timely-filing deadlines that turn a fixable denial into a permanent write-off.
We also split the aging by payer and by financial class. A bucket that looks acceptable in aggregate often hides one payer — or the patient-responsibility class — carrying most of the aged balance.
Step 2: Measure the clean-claim rate
A clean claim is one that gets accepted and adjudicated on the first pass, with no rejection, no denial, and no request for more information. Every claim that fails first-pass adjudication restarts the payment clock and adds staff touches. So the second diagnostic is simple: of the claims submitted in a recent period, how many needed to be touched again? Common first-pass killers in internal medicine include eligibility and registration errors, missing or invalid diagnosis linkage, and coordination-of-benefits problems on Medicare patients with secondary coverage.
Step 3: Categorize denials by CARC code
This is the step most practices skip. Denials come back with standardized Claim Adjustment Reason Codes (CARCs) maintained by the X12 standards body, and grouping them is how “we get a lot of denials” becomes an action plan. Two examples we see constantly:
- CO-97 — the benefit for the service is included in the payment or allowance for another service already adjudicated. This is the classic bundling denial: an E/M visit or ancillary service the payer considers part of another billed procedure. The fix is usually coding-level — reviewing edit pairs and modifier usage before submission — not appealing after the fact.
- CO-50 — the service is not deemed a medical necessity by the payer. These trace back to diagnosis coding that doesn’t support the service under the payer’s coverage policy, and the fix lives in documentation and coverage-policy checks before the claim goes out.
Once denials are grouped by reason code and payer, a handful of categories almost always account for the bulk of the denied dollars. That’s the work list.
The interventions, in order
With diagnostics done, the fixes follow a consistent sequence:
- Verify eligibility before the visit, not after the denial. Real-time eligibility checks at scheduling and again at check-in eliminate a whole class of registration denials.
- Shorten charge lag. Encounters should become claims in days, not weeks. Nothing else matters if charges sit unbilled.
- Scrub before submission. Claim edits tuned to the practice’s actual denial history — including the bundling pairs behind those CO-97s — move rework from post-denial to pre-submission.
- Work denials by root cause, in dollar order. Instead of touching whatever is oldest, staff work the categories that represent the most recoverable money, and each resolved category gets a prevention edit so it stops recurring.
- Tighten the patient-responsibility process. Clear estimates up front, cards on file where appropriate, and statements that go out promptly — patient balances age faster than payer balances when nobody owns them.
Where the improvement actually comes from
When Days in A/R falls in an engagement like this, it isn’t magic and it isn’t one lever. It comes from claims leaving the building sooner, more of them paying on the first pass, and aged inventory being resolved — collected, corrected, or consciously written off — instead of quietly compounding. The metric improves because the process improved; the number is the symptom, not the target. And the discipline that matters most is measuring it the same way every month, so you know the improvement is real.
A word on honesty in measurement
One caution from experience: a big write-off of old A/R will drop Days in A/R overnight without collecting a dollar. That’s why we track the metric alongside net collection rate and denial trends. Any single revenue cycle number, viewed alone, can be made to look good.
If your aging report has been telling the same uncomfortable story for a few quarters, an outside diagnostic is often the fastest way to see which of these patterns is yours. AMS Solutions has been doing exactly this work for practices since 1992 — our medical billing services team starts every engagement with the same aging, clean-claim, and CARC analysis described above, so the plan is built on your data rather than assumptions.
