Key takeaways
- Split insurance AR from patient AR — they have different causes and different fixes.
- Watch the percentage of AR over 90 days, not just total AR dollars.
- Sort each bucket by payer; one slow payer often explains most of an aged bucket.
- Days in AR measures speed; net collection rate measures how much you actually collect.
- Aged AR loses value every month — prioritize by dollars and time left to act.
What does an AR aging report show?
An AR aging report lists every open balance and sorts it into time buckets. Most practice management systems can age from the date of service or from the date the claim was first billed — know which your report uses, because it changes how the buckets read.
| Bucket | What it usually means | What to do |
|---|---|---|
| 0–30 days | Normal processing time for clean claims | Monitor; confirm claims were accepted, not rejected |
| 31–60 days | Payment is slower than expected | Check claim status (276/277); look for requests for information |
| 61–90 days | Something is wrong: a denial, pend, or lost claim | Call the payer; correct and resubmit or appeal |
| 91–120 days | High risk; filing and appeal windows may be closing | Escalate; confirm proof of timely filing is on file |
| 120+ days | Lowest probability of collection | Work high-dollar accounts first; appeal or write off with a reason code |
Which numbers should you calculate from an AR aging report?
| Metric | Formula | Commonly used target |
|---|---|---|
| Days in AR | Total AR ÷ average daily charges (for example, last 90 days of gross charges ÷ 90) | Under 40 days; many practices aim for 30–35 |
| AR over 90 days | AR older than 90 days ÷ total AR | Under 15–20% of total AR |
| Net collection rate | Payments ÷ (charges − contractual adjustments) | 95% or higher |
| Aged AR by payer | Each payer’s AR over 60 or 90 days ÷ total aged AR | Identifies which payers are causing delay |
These are widely used industry targets, not guarantees. Specialty, payer mix, and patient-responsibility levels all move them — track your own trend over at least six months.
How to read an AR aging report, step by step
- Separate insurance AR from patient AR. Insurance AR problems are claim problems; patient AR problems are estimate, statement, and collection problems.
- Look at the shape, not just the total. A healthy report is front-loaded, with most dollars in 0–30 and 31–60. If the 61–90 and 90+ buckets grow month over month, claims are stalling.
- Sort each bucket by payer. When one payer owns a disproportionate share of 60+ day AR, the cause is usually payer-specific: a credentialing gap, a recurring denial, an authorization pattern, or an ERA enrollment problem.
- Open the top accounts. Read the claim history on the highest-dollar balances in the oldest buckets. Were they rejected and never resubmitted? Denied and never appealed? Paid but never posted?
- Look for credit balances. Overpayments and unapplied payments hide in aging reports and must be resolved and refunded within payer and, for Medicare, federal timelines.
- Trend it. One report is a snapshot. Days in AR and the 90+ percentage over six months tell you whether the process is actually improving.
How should you prioritize AR follow-up?
Work AR by expected value, not by age alone. A practical order: high-dollar claims still inside filing and appeal windows; denials with a fixable cause that repeats across many claims; payers with a systemic problem that one escalation can unblock; then older, low-dollar balances in batches.
Document every payer call — reference number, representative, outcome, and next step — so the next touch starts where the last one ended. LRx Healthcare’s AR follow-up service prioritizes aging buckets by recovery probability, payer behavior, and dollar value, with documented call notes and weekly recovery reporting.
This guide is general information about healthcare billing operations, not legal, tax, or compliance advice. Payer rules and regulations change — confirm current requirements with the payer or a qualified advisor.