You know that feeling when you check your claims and see a bunch of payments still pending? That can be really frustrating as you have done all the hard work, submitted claims, and reviewed notes, but the money hasn’t come in yet. This is exactly the part where accounts receivables follow up in medical billing is important. It isn’t merely sending reminders; it is understanding the reasons for the delay and taking some action on it before a small delay evolves into a larger issue.
In fact, you don’t need a complicated management system or staff of dozens to do this. You simply need to be tracking a handful of key metrics that will tell you exactly what is going on in regards to your receivables. Understanding information around certain metrics is like having a roadmap. You will know right where the money is stuck, or the reason it is stuck, and best, how to resolve the problem.
5 Simple Metrics to Keep Your Accounts Receivable Healthy
1. Days in Accounts Receivable (AR Days)
Let’s start with AR Days. It sounds little fancy, but it’s simple. It’s the average number of days it takes for your practice to get paid after submitting a claim. We can call it a speedometer for your cash flow. Ideally, claims should be paid within 30–40 days. Once it goes over 50, that’s a signal that something is slowing things down.
Why does this happen? Sometimes, certain insurance companies are slower. In others, claims may have minor errors that create processing delays. Tracking AR Days gives you the ability to identify patterns in a timely manner. You’ll identify delays in payment from which insurance companies, which types of claims take longer than others, and what part of your submissions process may need tightening up. Reducing AR Days keeps the cash moving and reduces the stress of payment follow-up.
2. Denial Rate
No one likes denied claims. They eat up your staff’s time and delay cash flow. The denial rate provides information on how many claims are denied – which usually occurs due to missing documentation, coding errors, or authorization.
A healthy practice keeps initial denials under 6%, and after corrections, under 3%. But here’s the key: don’t just fix the denials. But, figure out why they happened. Maybe there’s a recurring documentation mistake or a payer requirement that’s being missed. Once your team understands common issues, it can stop many denials before they start. The fewer denials, the fewer issues, the faster payments, which is ultimately what you want.
3. Net Collection Rate (NCR)
Billing patients or insurers is one thing; collecting the money owed to you is a different aspect altogether. This is where the Net Collection Rate is applied. The Net Collection Rate (NCR) reflects the percentage of the allowed revenue that actually makes it into your account following the contractual adjustments.
A solid NCR of >95% means that your team is effectively converting the charges to payments and keeping write offs to a minimum. If you are tracking this on a monthly basis, it will give you a good indication of your financial health. When you see NCR lower, take that as a potential sign to take a deeper dive into your follow up process, find out whether there are claims that are still pending, and take action before it becomes a bigger issue. You can think about the Net Collection Rate as a report card of sorts for your revenue cycle.
4. First Pass Resolution Rate (FPRR)
Wouldn’t it be great if every claim was paid on the first attempt? The FPRR (First Pass Resolution Rate) measures that. It is the percentage of claims that are accepted, initially, without modifications. FPRR exceeding 90% is great. Anything lower suggests there may be issues; perhaps your team could use additional training on documentation or payor-specific coding rules. Monitoring the FPRR pinpoints opportunities for improvement and alleviates the errors that slow down collections. When FPRR is higher, collections come faster and your team spends fewer hours chasing errors.
5. Percentage of AR Over 120 Days
The older a claim gets, the harder it is to collect. That’s why it’s so important to keep an eye on your percentage of AR over 120 days. The ideal percentage is anything under 25% of total receivables.
Higher numbers tend to mean follow-up procedures are weak or certain payers are chronically slow payers. Regular aging reports help to prioritize old claims, escalate old claims that have resolved, and keep the practice from allowing small delays to become larger problems. In addition, addressing long-stagnated accounts is good for maintaining a healthy, predictable revenue cycle.
Putting It All Together
While it is helpful to analyze each metric individually, the real evidence will arise when metrics are assessed in combination with each other. For instance, high AR Days, low FPRR, and a large proportion of AR over 120 days all indicate that it would be wise to improve your follow-up system. On the flip side, when all five metrics look good, your billing process is running smoothly, and cash flow is predictable.
Knowing these numbers isn’t about micromanaging. It’s about being proactive. When your team knows where claims sit and/or are delayed in the process, they can address those issues before payments are past due. That helps reduce the number of any unnecessary write-offs, the stress levels, and allows for a clearer understanding of your practice’s overall financial position.
Simple Ways to Improve AR Follow-Up
Automate reminders: Use your billing system to to identify overdue claims so your staff will not have to search for them.
Train your staff: Educate all employees that handle claims about documentation and coding requirements.
Focus on older claims: Attempt to collect the 120+ day accounts first for a larger revenue.
Analyze trends: Track which payer deny often or take the longest to pay and modify workflows where possible.
Follow up early: Do not wait for claims to age to follow up. A timely follow up will avoid loss of payments over time.
Closing Thoughts
Effective AR follow up in medical billing isn’t just about chasing checks. It is regarding maintaining financial wellness of your practice, alleviating stress of your staff, and liberating you to attend to patients. When you pay attention to AR Days, Denial Rate, NCR, FPRR, and AR over 120 days, you get actionable insight. You can see where problems lie, fix them fast, and keep revenue flowing.
Partnering with a reliable medical billing expert can make this even easier. They handle the tracking, the follow-ups, and the day-to-day billing challenges, so your staff doesn’t have to juggle it all. That leaves you focused on patient care and running your practice, not chasing unpaid claims.
At the end of the day, strong AR follow-up turns a potentially frustrating part of running a practice into a manageable system. Track these five metrics, act on what they tell you, and you’ll see fewer denials, faster payments, and a steadier cash flow. It’s the difference between constantly worrying about revenue and confidently knowing your billing process works.
