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Account Receivable Backlogs in Medical Practice

Accounts receivable inside revenue cycle management refers to the total money owed to a healthcare provider for their rendered services – which are yet to be collected. The A/R denotes outstanding payments from patients, insurance providers, and third-party payers. Accounts receivable backlogs occur when the receivables are not collected within the agreed-upon or expected timeframe. Mounting account receivable backlogs can indicate issues in a practice’s cash flow and collection processes.
In a complex healthcare industry with multiple regulatory changes and monetary hurdles, efficiency in managing healthcare accounts receivable backlogs is vital to maintaining a healthier cash flow and financial stability.

Impact of Accounts Receivable Backlogs on Medical Practices

The accounts receivable backlogs impact a medical practice’s financial and healthcare performance. Small-sized, independent practices and private medical providers depend on the revenue generation from the services offered and claims made against them. In instances when those services are not getting reimbursed, they keep adding up as unclaimed payments or even claim denials. It eventually hurts the entire healthcare practice through its operational and financial health. Thus, medical practices must ensure a more robust revenue cycle management process that eliminates accounts receivable as much as possible.

Revenue Cycle Management and Accounts Receivable

Efficient management of A/R is an essential element of medical billing services. The AR cycle revolves around tracking and collecting owed payments –all promptly. The entire process has many steps, including:
Submitting medical bills

  • Following up on unpaid claims
  • Patient billing
  • Payment posting
  • Collections management

To assess overall financial health and identify improvement areas, a healthcare practice needs to measure days in the AR. It is one of the key performance indicator (KPI) that shows the average number of days it takes for payment collection.

Steps in Accounts Receivable Backlogs Management

Effective management and curbing the accounts receivable backlogs management typically has the following steps:

Billing and Claims Submission

Physicians and healthcare providers generate and then submit claims to insurance providers for care services/treatments. To receive appropriate reimbursements and prevent denials, they must submit accurate and complete claims with the proper medical codes and further cement claims with supporting documentation.

Unpaid Claims Follow-Up

Timely and effective follow-ups with payers help identify and resolve any issues or discrepancies if a claim gets denied, partially paid, or not paid within the expected timeframe. The particular step here may involve claims resubmission, appealing denial, or/and addressing the coding or documentation errors. It is vital to consistently monitor all accounts and have a proactive strategy in place for addressing patients who cannot make timely payments. One of the best ways to review patient aging reports is to do it every week to identify outstanding collections –that may have been overlooked. Regularly reaching out to patients can enhance the collection efforts and maximize practice revenue.

Patient Collections and Billing

When an insurance verification provider reports that a patient has a deductible, co-pay, or any other out-of-pocket expense – the practice shall bill the patient directly. Patient billing might also include sending out statements and offering payment options. Thus, the statement must include how to pay and mention to whom the checks should be made payable. The patient accounts also need continuous monitoring, with proper plans in place for following up on patients who are not making timely payments. Avoiding accounts receivable backlogs requires keeping a clear line of communication with patients regarding their financial responsibilities to ensure on-time payments.

Payment Posting and Reconciliation

After getting payments from the insurance providers or patients, billers post them to the appropriate accounts in the billing systems. Payments must be reconciled to the corresponding claims – with adjustments made for negotiated or contractual discounts. It is vital to reconcile received payments with the corresponding claims and adjust negotiated and contractual discounts to record payments correctly. Furthermore, doing so also ensures that any or all discrepancies get addressed timely. Accounts receivable backlogs are preventable by thoroughly reviewing and reconciling payments – where practices can maintain accuracy in financial records. Secondly, reconciliation ensures that medical practices receive appropriate reimbursements for the offered service.

Collections Management and Aging

In this step for staying on top of accounts receivable backlogs, the billing team will regularly review and analyze accounts receivable aging and then identify delinquent or overdue accounts. The billing staff may then use various strategies to collect outstanding payments, including phone calls, letters, or collection agencies.

Benefits of Outsourcing Accounts Receivable

Some of the most important and rewarding benefits of outsourcing accounts receivable include the following:

Ensuring Financial Stability

Outsourcing accounts receivables help medical practices quickly recover their accounts receivable backlogs. The financial stability of a medical practice massively depends on steady payments. The efforts of third-party billing providers ensure a steady flow of reimbursements that effectively cover day-to-day practice expenses.

Claim Status Updates

Third-party billing teams get claim status for every claim submission. Billing personnel utilize every possible contact channel to get claims status, including the provider portal, billing software, and phone. Each claim is marked as paid, denied, partially paid, or under process. The payments of paid claims will be updated in the billing software while the partially denied or denied claims get marked for subsequent denial management.

Swift Resolution of Denied Payments

AR management’s sole objective is to minimize the number of days needed to receive payments for denied claims. When healthcare practices receive quicker and complete payments, it contributes towards a steady revenue cycle management.

Accounts Receivable Aging Reports

Outsourcing AR ensures that your practice receives monthly or weekly AR aging reports per your specific requirements. The AR aging report, or a report that breaks down the number of debts. Furthermore it shows how long they have been outstanding – helping understand what accounts are delinquent and for how long.
Lastly, these reports can help you avoid problems with habitual late payers and allow you to meditate with collections. Furthermore you can even discontinue providing services to mitigate credit risks.

No Additional Staffing Requirements

With professional accounts receivable services, your practice will not have to hire extra staff. It includes billers, coders, or even AR callers to work on the accounts receivable backlogs or outstanding AR. Specialty-wise, experienced billers, coders, and physicians review all denied claims. Secondly, they also understand the marked codes to appeal with more or corrected information.


Lastly, with your practice not having to hire any billing or coding resources, it saves you a considerable sum on payroll and training expenditures. Also, the third-party AR specialists will only charge the amount recovered from the insurance companies.

Final Word

Precise management of accounts receivable backlogs in healthcare includes careful handling of several reports associated with insurance, collection analysis, write-offs, bad debts, reviews, and ratio analysis. The AR process includes insurance contract analysis–determining whether the healthcare practitioners are getting adequately reimbursed. Thus, relying on a medical accounts receivables management provider can make or break your healthcare practice’s financial operations.
Through outsourcing to a professional AR services provider, your practice can:

  • Minimize the costs of AR follow-ups
  • Boost cash flow
  • Have an accurate analysis of billing operations
  • Identify pain points leading to payment delays

Frequently Asked Questions

AR (Accounts Receivable in healthcare) are invoices or reimbursements due to a healthcare practice, hospital, clinic, or any other healthcare organization. These unpaid sums may have outstanding patient invoices or even insurance company reimbursements.
The medical billing benchmark for AR for practice with electronic billing is 20-35 days. Typically, the AR up to 60 days overdue, must be less than 25%.
There are many benefits of outsourcing AR, including cost savings, boosted efficiency, direct access to specialized expertise, improved cash flow, enhanced risk management, better customer services, enhanced flexibility, better accuracy, improved data security, and better compliance.