Understanding Accounts Receivable (AR): Complete Reference
In healthcare, accounts receivable (AR) isn’t just a number—it’s a performance metric that reveals how effectively a provider converts services into revenue. For medical coders, billers, and AR specialists, AR determines how fast claims move from submission to payment and how well denials, delays, and patient balances are handled. Without mastering AR, even the best coding accuracy can’t translate into actual revenue recovery.
This guide cuts straight to what matters: the claim lifecycle, key AR phases, denial trends, and the software and metrics that drive collection success. Whether you’re just starting or already working in the revenue cycle, understanding AR is essential to reducing Days in AR, increasing net collection rates, and minimizing aging claims. It’s also a core pillar of the Medical Billing and Coding Certification by AMBCI, where AR isn’t a module—it’s a mission-critical competency.
What Does Accounts Receivable Mean in Healthcare?
Definitions, Phases, and Relevance in RCM
Accounts receivable (AR) in healthcare refers to the total amount of money owed to a provider for services delivered but not yet paid for. This includes insurance reimbursements, patient co-pays, and balances awaiting collection. AR begins the moment a claim is submitted and ends when payment is fully received or appropriately written off.
The AR process unfolds in distinct phases: charge capture, claim submission, payer adjudication, denial resolution, and final patient payment. Each phase is time-sensitive and regulated, especially when Medicare, Medicaid, or commercial payers are involved. Delays in any phase directly affect cash flow.
In revenue cycle management (RCM), AR is the financial pulse. It’s not enough to code correctly; you must track the dollar through each phase and aggressively manage unresolved claims. AR teams must understand not just balances, but why money is stuck—and act fast to recover it before it's lost to write-offs or timely filing limits.
Key Metrics Tracked in AR
The AR aging report is the backbone of any collection strategy. It categorizes receivables into time-based buckets (0–30, 31–60, 61–90, 91–120, and 120+ days). Aging claims over 90 days are red flags that require urgent action, especially when reimbursement windows close after 120 or 180 days depending on payer rules.
Another vital KPI is Days in AR—the average number of days it takes to collect payments. A best-practice benchmark is under 40 days. Longer cycles indicate inefficiencies in follow-up, documentation, or denial response.
Also tracked are net collection rate (payments received vs. expected payments) and first-pass resolution rate, which reflects how often claims are paid without resubmission. Low performance in any of these means lost revenue and increased administrative costs. Top RCM professionals know their numbers and act fast.
Lifecycle of a Medical Claim: From Submission to AR Collection
Claim Submission and EDI Routing
The AR process starts the moment a claim is generated. Once patient services are documented and coded, claims are submitted via electronic data interchange (EDI) to clearinghouses or directly to payers. Clean claims—those without errors—are processed faster and typically reimbursed on first pass. Any issue in demographic data, CPT/ICD-10 coding, or provider credentialing can trigger a rejection before adjudication even begins.
Clearinghouses act as pre-screening hubs. They scrub claims for formatting issues, mismatches, or missing data. This is where automation tools play a critical role. They reduce rejections, speed up routing, and provide detailed rejection reports. The faster claims exit this phase clean, the quicker revenue flows back.
Insurance Adjudication and Denial Management
Once a claim reaches the payer, it undergoes adjudication—a review process that determines if the service is covered, how much will be paid, and what portion the patient owes. Insurers may pay, deny, reduce, or pend the claim. Each outcome has direct implications for AR. Denials must be categorized and addressed immediately.
High-performing AR teams segment denials by reason codes—e.g., CO-109 (Service Not Covered) or CO-97 (Procedure Not Paid Separately)—and route them to the right personnel for appeal. Effective denial management includes verifying documentation, correcting errors, and resubmitting within filing limits. Delays at this stage extend Days in AR and reduce recovery potential.
Patient Responsibility and Final Collection
After adjudication, the remaining balance shifts to the patient. At this point, AR becomes a patient engagement challenge, not just a billing task. Statements, patient portals, and automated reminders play a major role in shortening collection time. Front-end staff must verify insurance coverage and pre-authorizations to minimize post-visit surprises.
Top-performing practices reduce bad debt by offering payment plans, collecting at point-of-service, and using automated payment tools. AR ends not when a claim is submitted, but when every dollar is collected or resolved—whether from payer, secondary insurer, or patient.
| Phase | Description |
|---|---|
| Claim Submission & EDI Routing | Claim is created and sent electronically to clearinghouses or payers; errors cause rejections. |
| Clearinghouse Scrubbing | Claims are checked for formatting and data issues; clean claims move forward for faster payment. |
| Insurance Adjudication | Payer reviews claim, decides on payment, denial, or adjustment based on policy and documentation. |
| Denial Management | Denials are categorized (e.g., CO-109, CO-97) and appealed with corrections or added documentation. |
| Patient Responsibility | Any unpaid balance is billed to the patient after adjudication is complete. |
| Final Collection | Payment is collected via statements, reminders, or point-of-service tools until account is closed. |
Top Challenges in AR for Medical Billers and Coders
Delayed Payments and Aging Claims
One of the most persistent issues in AR is delayed reimbursement, often caused by payer backlog, incorrect billing, or incomplete documentation. Claims that sit unpaid for over 30 days start to strain cash flow; those over 90 days are considered critical. For medical billers, minimizing aging claims is a daily battle against shifting payer policies and internal inefficiencies.
Common causes include:
Missing or mismatched patient data
Incorrect modifiers or coding errors
Failure to verify prior authorizations or coverage
Lack of timely follow-up after submission
To overcome this, coders and billers must use real-time AR dashboards to track claim status, segment aging by payer, and prioritize high-dollar or time-sensitive cases. Aged AR should never be a static report—it must drive daily workflows that reduce risk and optimize recovery. Practices that maintain <15% of claims over 90 days are far more likely to sustain predictable cash flows.
Claim Denials, Rejections, and Appeals
Claim rejections and denials can silently eat into practice revenue if not aggressively addressed. A rejection occurs before adjudication (often due to format or demographic errors), while a denial is a post-adjudication refusal to pay. Each demands a different response—one technical, the other strategic.
Key denial types include:
Medical necessity denials (e.g., lack of supporting documentation)
Coverage denials (e.g., out-of-network or not a covered service)
Coding mismatch denials (e.g., CPT/ICD-10 inconsistencies)
For coders, accuracy in code selection isn’t enough—they must also understand documentation triggers that satisfy payers. Appeals must be airtight: properly formatted, supported by clinical notes, and submitted within each payer’s timeframe. Timely filing limits—often 90–180 days—mean delays can result in permanent revenue loss.
A high denial rate (>10%) signals system-wide issues. AR teams must not only work denials but track root causes and push for preventive training, better software validation, or improved provider documentation.
Tools and KPIs to Optimize AR Management
Key Software: Practice Management Systems & Clearinghouses
To reduce Days in AR and accelerate collections, high-performing practices invest in purpose-built RCM software. The backbone of this tech stack includes practice management systems (PMS), clearinghouses, and AR dashboards. These tools streamline claim creation, scrub for errors pre-submission, and automate follow-ups.
Top-tier PMS platforms—like Kareo, AdvancedMD, and eClinicalWorks—offer real-time visibility into claim status, denial patterns, and payment trends. Many integrate directly with clearinghouses (e.g., Change Healthcare, Office Ally), which act as the first filter, catching data mismatches before the payer ever sees the claim. This preemptive approach minimizes rejections and ensures higher first-pass resolution rates.
For AR specialists, smart software enables:
Auto-sorting of aging claims by payer and amount
Tracking of appeals and follow-up timelines
Drill-down analysis into unpaid balances by reason code
Without the right tech, even skilled staff operate in reactive mode. With it, they manage AR proactively—targeting problems before they create cash flow issues.
AR-Related KPIs: Days in AR, Net Collection Rate, etc.
Performance in AR isn’t guesswork—it’s data-driven, KPI-monitored execution. The most critical AR metrics include:
Days in AR – The average time it takes to collect payment. Industry benchmark: under 40 days. Longer cycles point to claim or follow-up inefficiencies.
Net Collection Rate – Shows what percentage of collectible revenue you actually receive. A rate above 95% signals strong AR operations.
First Pass Resolution Rate (FPRR) – Reflects the percent of claims paid on first submission. Higher FPRR means fewer resources spent on resubmissions.
Bad Debt Rate – Percentage of billed services written off. Lower is better and signals effective patient engagement and front-end verification.
Aging AR Percentages – Tracks how much AR is over 90 or 120 days. This reveals where collection efforts need to intensify.
These KPIs aren’t just metrics—they’re early warning systems. Monitoring them weekly allows RCM teams to shift resources, escalate claims, and tighten workflows long before revenue is compromised.
AR Specialist Role vs. Medical Biller: What’s the Difference?
Skill Sets, Job Functions, and Workflow Ownership
While medical billers and AR specialists both operate within the revenue cycle, their day-to-day responsibilities, performance goals, and mindset differ sharply. Medical billers focus on claim creation, submission, and initial processing. Their job is to ensure that every claim is clean, accurate, and aligned with payer requirements from the start.
AR specialists, on the other hand, step in post-submission. They manage outstanding claims, denial follow-ups, payment delays, and patient collections. Their expertise lies in dissecting aging reports, analyzing denial codes, and initiating escalations or appeals. Where a biller ensures claims get out clean, an AR specialist ensures every dollar owed comes back in.
Core AR specialist skills include:
Interpreting payer EOBs (Explanation of Benefits)
Managing appeal letters and documentation submission
Prioritizing follow-ups by dollar amount and days in AR
Using denial reason codes to guide recovery strategy
The difference isn’t just operational—it’s strategic. One builds the pipeline; the other protects the revenue.
Team Coordination Across RCM Stages
Successful revenue cycle teams don’t work in silos. AR specialists and billers must coordinate tightly to identify patterns, fix recurring issues, and ensure smoother claim flow. For instance, if AR notes repeated CO-50 (non-covered service) denials, billers must revisit code mappings or authorization workflows. Likewise, if billers see high rejection rates, AR must prepare for increased denial volume.
Top-performing teams share dashboards, communicate payer updates in real time, and hold weekly standups to align priorities. This collaboration ensures fewer claim resubmissions, faster turnaround, and higher collection rates. AR isn’t the end of the pipeline—it’s the part that makes the rest count.
| Category | Medical Biller | AR Specialist |
|---|---|---|
| Primary Focus | Claim creation, coding accuracy, and payer compliance | Post-submission claim resolution, collections, and denial management |
| Key Responsibilities |
- Code selection and charge entry - Claim formatting and submission |
- Appeal handling - Denial resolution - Aging AR follow-up |
| Performance Indicators | Clean claim rate, rejection rate | Days in AR, denial overturn rate, net collection rate |
| Tools Used | PMS for coding and submission workflows | AR dashboards, EOB analyzers, denial code reports |
| Strategic Role in RCM | Ensures correct claims go out | Ensures maximum payment comes in |
| Collaboration Example | Informs AR about frequent rejections | Alerts billers to common denial causes to prevent future issues |
Master AR Management Inside the Medical Billing and Coding Certification by AMBCI
How AR Is Covered in the AMBCI Certification Program
The CPC + CPB Medical Billing and Coding Certification by AMBCI doesn’t treat accounts receivable (AR) as a minor topic—it treats it as a core business competency. The course includes in-depth, scenario-based modules on AR workflows, denial analysis, and payer-specific nuances. You’ll learn to track AR from first claim touch to final resolution, using real-world datasets and KPIs.
AR units are not buried in theory—they are mapped to day-to-day responsibilities you’ll carry in provider offices, specialty clinics, or billing firms. From building AR aging dashboards to resolving CO and PR code denials, you gain both the technical workflow and the strategic lens to drive recovery.
CPC + CPB Medical Billing and Coding Certification
If you’re serious about reducing Days in AR, improving collection rates, and building job-ready expertise, the CPC + CPB Medical Billing and Coding Certification by AMBCI delivers comprehensive AR training with immediate real-world application. This is where AR becomes more than a metric—it becomes your tool for career leverage and revenue performance.
Frequently Asked Questions
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The most essential KPIs in accounts receivable (AR) management include Days in AR, Net Collection Rate, and First Pass Resolution Rate (FPRR). Days in AR tells you how long it takes to collect payment—the lower, the better. Net Collection Rate reveals how much of the collectible revenue is actually collected, with a benchmark of 95% or higher. FPRR shows the percentage of claims paid without resubmission. Monitoring these KPIs weekly helps medical billers and AR specialists identify process gaps, escalate denials, and prevent revenue leakage. Without strong KPI tracking, it’s nearly impossible to reduce aging claims or improve financial outcomes in healthcare RCM.
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AR specialists focus on revenue recovery, which means they go beyond claim creation and concentrate on resolving what’s already gone unpaid. Denied claims are dissected by denial codes, analyzed for root causes, and often appealed with corrected documentation or provider notes. While billers work proactively to prevent denials during submission, AR specialists operate reactively and strategically—tracking each claim, filing appeals before timely filing deadlines, and following up persistently. The goal is not just to refile, but to ensure payers can’t reject the claim again for the same reason. This division of labor keeps both front-end and back-end revenue flowing.
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Claims age when there are delays in submission, errors in the claim, or lack of follow-up after denials. If claims aren’t properly routed through clearinghouses or if key data (like insurance info or CPT/ICD-10 codes) is incorrect, they either get stuck or bounce back. Rejections that aren’t fixed quickly, or denials that aren’t appealed within timely filing limits, push claims into the 90+ day category. Many aged claims also result from poor coordination between billing and AR teams. To prevent this, AR teams must run aging reports daily, escalate problem claims fast, and set payer-specific follow-up schedules.
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A clean claim is a claim submitted with all the correct patient, provider, diagnosis, and procedure information, without formatting or documentation errors. Clean claims get accepted and reimbursed on the first pass—without rework, resubmission, or appeals. In AR, this is critical because clean claims shorten the Days in AR, improve cash flow, and reduce admin workload. Clearinghouses and PMS tools are often used to scrub claims before submission. A high clean claim rate means the billing process is solid and AR staff can focus on exception management, not chasing preventable errors.
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To reduce aging AR percentages, practices must use automated AR dashboards to track claims by payer, balance, and days unpaid. Follow-ups should be scheduled based on payer policy—Medicare, Medicaid, and commercial insurers all have different timely filing rules. Teams must also address the root causes of aging: unclear documentation, missing pre-authorizations, or incorrect codes. Holding weekly AR meetings, assigning accountability, and prioritizing high-dollar or aging claims first can drastically reduce unresolved balances. Combining automation with manual prioritization is key to keeping over-90-day AR below industry targets like 15% or lower.
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Yes. In the CPC + CPB Medical Billing and Coding Certification by AMBCI, AR is not just included—it’s central. The program teaches how to read AR reports, resolve denials, analyze payer trends, and interpret EOBs (Explanation of Benefits). Real-world workflows like appeal writing, claim escalation, and secondary billing are all covered. Students also practice using actual KPIs like Days in AR and Net Collection Rate. The course prepares you to enter any AR-heavy role in a hospital, private practice, or third-party billing firm with immediate operational impact.
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Front-end errors—like inaccurate patient data, incorrect insurance information, or missed authorizations—can sabotage AR performance from day one. When these issues aren’t caught before submission, they lead to rejections, denials, or payment delays. The result? Increased Days in AR, reduced FPRR, and heavier workload on AR teams. Practices that collect co-pays upfront, verify insurance during scheduling, and conduct pre-submission scrubs see dramatically lower denial rates. Clean front-end processes reduce the number of claims that require follow-up, allowing AR staff to focus on complex cases and strategic revenue recovery.
Our Verdict
Accounts receivable (AR) isn’t a back-office function—it’s a frontline strategy in revenue cycle management. For every coder, biller, or AR specialist, mastering AR means mastering the financial heartbeat of healthcare. From reducing Days in AR and tracking denial codes, to accelerating collections and preventing write-offs, AR is where technical precision meets business impact.
The CPC + CPB Medical Billing and Coding Certification by AMBCI trains you not just to understand AR, but to control it—using data, software, and decision-making frameworks that directly influence a provider’s bottom line. Whether you’re working in outpatient clinics, specialty billing firms, or hospital networks, AR competency signals that you’re not just processing claims—you’re driving revenue.
In a world of shrinking payer reimbursements and tighter compliance timelines, professionals who know how to manage AR don’t just stay employed—they get promoted. If you want to lead in RCM, AR isn’t optional—it’s your next edge.
Poll: What’s the biggest challenge you face in AR management?
