{"id":7734,"date":"2022-03-25T17:25:55","date_gmt":"2022-03-25T11:55:55","guid":{"rendered":"https:\/\/www.medisysdata.com\/blog\/?p=7734"},"modified":"2023-07-27T18:17:34","modified_gmt":"2023-07-27T12:47:34","slug":"calculating-ar-days-in-medical-billing","status":"publish","type":"post","link":"https:\/\/www.medisysdata.com\/blog\/calculating-ar-days-in-medical-billing\/","title":{"rendered":"Calculating AR Days in Medical Billing"},"content":{"rendered":"<p>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, it\u2019s 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 &amp; 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.<\/p>\n<h2>Calculating AR Days<\/h2>\n<p>Accounts receivable days is a formula that helps you work out how long it takes to clear your accounts receivable. In other words, it\u2019s the number of days that an invoice will remain outstanding before it\u2019s 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 <a href=\"https:\/\/en.wikipedia.org\/wiki\/Accounts_receivable\" target=\"_blank\" rel=\"noopener\">Accounts Receivable<\/a> (AR). Lets take a simple example for better understanding.<\/p>\n<ul>\n<li>Receivables of $50,000, Credit Balance of $7,000, and Gross Charges of $600,000<\/li>\n<li>(Total Receivables \u2013 Credit Balance)\/Average Daily Gross Charge Amount (Gross charges\/365 days)<\/li>\n<li>[$50,000 \u2013 $7,000] \/ ($600,000\/365 days)<\/li>\n<li>$43,000\/1644 = 26.15 days in A\/R<\/li>\n<\/ul>\n<p>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:<\/p>\n<ul>\n<li>Make sure that you have right data for calculating AR days. Most practices doesn\u2019t 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.<\/li>\n<li>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.<\/li>\n<li>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.<\/li>\n<\/ul>\n<p>Calculating AR days is the first step of reducing accounts receivable for your practice, whether it\u2019s 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, <strong>Medisys Data Solutions<\/strong> can help. Our specialty wise <a href=\"https:\/\/www.medisysdata.com\/services\/account-receivables\" target=\"_blank\" rel=\"noopener\">AR experts<\/a> help you to find root cause of claim denial and resolution to that.\u00a0 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 <a href=\"mailto:info@medisysdata.com\/\">info@medisysdata.com\/<\/a> 302-261-9187<\/p>\n","protected":false},"excerpt":{"rendered":"<p>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, it\u2019s always preferential to have minimum number of AR days. AR days are [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7735,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[3],"tags":[250],"class_list":["post-7734","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-medical-billing-services","tag-medicalbilling-medicalcoding-healthcare-physician-patient-medicare"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.4 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Calculating AR Days in Medical Billing | Medisys Data Solutions<\/title>\n<meta name=\"description\" content=\"Calculating AR Days days in medical billing for financial stability and proper follow-up actions. 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