How Much of Your Old AR Is Actually Collectible?

Ask how much old AR can be recovered and you will find confident answers. Here is one figure from each of four sources, as published when this article was last updated.

• 20% to 40%

  Dr Billing Service says practices often see 20% to 40% recovery from aging AR.

• 50% / 25%

  Staffingly puts recovery at roughly 50% at 90 days and 25% at 120 days, a pair of figures that circulates widely among billing vendors.

• 15% to 25%

  Medtransic cites 15% to 25% of aged A/R.

• Over 90%

  MedCare MSO reports recovering over 90% of claims going back as far as one year.

The range runs from about 15% to over 90%. That does not mean some of these companies are wrong. They are not measuring the same thing:

• —Some count claims. Others count dollars. A 90% claim rate and a 20% dollar rate can describe the same backlog.
• —Some measure one aging bucket. Others measure the whole backlog.
• —None says whether claims already written off are in the denominator.
• —None publishes the data behind the figure.

Each figure may be accurate for the backlog it came from. The problem is that you cannot plan with any of them. A rate measured on someone else's claims, with an unstated denominator, says nothing about what is left in yours.

Industry benchmarks are more useful than vendor rates, because the publisher is named and the measure is defined. They answer a different question, though.

HFMA MAP Keys

AR over 90 days should stay under 10 percent of total receivables.

MGMA 2024 Cost and Revenue Survey

Median days in AR was 47, and 36 for better performers. Better performers held more than 70 percent of AR under 30 days and 8.1 percent past 120.

Revecore

Collection rates on accounts over 90 days can drop as low as 50 percent.

Benchmarks tell you how far behind you are. They do not tell you what is left to collect. A practice with a quarter of its AR past 90 days is clearly behind, but whether that quarter is mostly workable or mostly expired depends on the three factors in the next section.

Before you go further, see where your aging stands against these figures. It takes about a minute.

Every claim in an old AR report can be sorted by three questions. The answers, not the age, decide whether it is collectible.

1. The deadline

Each payer gives you a window to file, and another to appeal or reopen once a decision is made. A claim inside any open window can still be worked. A claim past all of them usually cannot. Medicare and Medicaid publish their windows in federal regulation. Commercial payers set theirs in the contract.

The most common mistake is assuming commercial payers allow Medicare's 12 months. Many allow far less. If nobody has read the timely filing clause in each payer contract, that is the first document to pull.

2. Why it is unpaid

Four situations cover almost every old claim, and each runs on a different clock.

Rejected

The payer never adjudicated the claim, usually because of a format, demographic or eligibility error. Fix it and resubmit. The filing clock is still running from the date of service, which makes old rejections some of the most urgent claims in the report.

Denied

The payer made a decision. The appeal clock is running from that decision.

No response

No payment and no denial on file. The payer may never have received the claim. Check status first, because the answer decides which clock applies.

Underpaid

The claim paid, but below the contracted rate. This is a different recovery path, measured against your fee schedule rather than a filing deadline.

Sorting by these four is often more revealing than sorting by age. A backlog that is mostly rejections behaves very differently from one that is mostly denials.

3. Proof you filed on time

Proof of timely submission is the clearinghouse acceptance report or the payer's acknowledgment showing the claim was received inside the window. It is what keeps a claim alive after the window closes. Without it, a claim past its window is usually lost, even when the original submission really was on time.

Clearinghouses do not keep these reports forever, and practices that change clearinghouse or billing company can lose access to them. If your old AR matters, pull and save those reports now, before you need them.

One AR recovery engagement. A family medicine practice in Minnesota. Individual results vary. One engagement is not a forecast.

The clearest way to see the difference between old AR that is found and old AR that is collected is one engagement where both were measured. The figures are reported separately on purpose.

Scope

245 claims were in scope. Rejections had gone unworked for about a year. 75 of the claims were in the 180+ day bucket.

Found

Roughly $40,000 to $50,000 in billed charges was sitting unworked in the rejection queue.

Recovered

About $5,500 came back, across 50 to 55 paid claims, with the bulk paid within 45 to 50 working days.

Lost to the deadline

UnitedHealthcare's 90-day timely filing window had closed on most of the affected claims, and there was no proof of timely submission on file.

The pattern

Claims worked within four to five days of rejection are recoverable. Claims found a year later usually are not.

Headline cause

70% of denials originated at the front desk.

As a general fact about any backlog, not a breakdown of this one: billed charges are a practice's list price, and they run higher than what payers allow under contract. A backlog measured in billed charges is always larger than anything a payer would pay on it.

The claims that could not be recovered here were not lost because they were old. They were lost because the window had closed and nothing on file could reopen it. That is the same three-factor test from the section above, applied to real claims.

Read the full engagement write-up.

You do not need an outside firm to get a working estimate. An in-house biller can do this in a few days. If a billing company handles your claims, ask it for the same reports; it should be able to produce them without difficulty. If you are the biller, this is the list to work from.

1. 1.

   Pull AR aging by payer and by bucket from your EHR or practice management system. Keep insurance balances separate from patient balances.

2. 2.

   Flag every claim past its payer's filing deadline. Check each payer's deadline against the date of service. For each flagged claim, look for proof of timely submission. Claims with proof stay in. Claims without it move to a write-off review list.

3. 3.

   Split what is left into rejected, denied, no response and underpaid. Note the deadline that applies to each group, because each runs on its own clock.

4. 4.

   Put a dollar figure on the workable remainder, using expected allowed amounts rather than billed charges where you have them. You can estimate what the backlog is worth from your aging totals.

5. 5.

   Decide who works it: your own team, a fixed-scope aged AR cleanup, or a documented write-off. If your team can clear the backlog without letting new claims slip, that is usually the cheapest option.

At the end you have a number you can defend, built from your own claims rather than from a published rate.

Some old AR should be written off, and doing it on purpose is better than letting it sit.

A write-off is usually right when a claim is past every filing, appeal and reopening window and there is no proof of timely submission on file. It is also right when the cost of working a balance, in staff time and payer calls, exceeds what is left to collect.

In both cases, record the reason on every write-off. A write-off with no reason is a lost claim that teaches nothing. A write-off with a reason, such as terminated coverage or a missing modifier, points to the step that failed, so it can be fixed and the same claims stop aging.

How write-offs are recorded for accounting or tax purposes is a question for your accountant.