When practices come to us after switching billing companies or after a period of internal billing, an AR audit is always the first step. These are the five metrics we look for — and what they reveal about a practice’s billing health.
## Metric 1: 85% of AR Should Be Under 90 Days Old
This is the primary benchmark for a healthy practice. If more than 15% of your total AR sits beyond 90 days from the **date of service**, you have a systemic collection problem.
Common causes of excessive AR over 90 days:
– Claims not submitted timely
– Denial management is reactive rather than proactive
– Insufficient follow-up on aging balances
*Note: Always measure from date of service, not date of billing. Date of billing can be manipulated and does not reflect true payer performance.*
## Metric 2: 40% of Blue Cross Patient Balance Under 90 Days
Blue Cross (and other major commercial payers) moves quickly when claims are clean. If less than 40% of your Blue Cross patient balance is in the current bucket, investigate your claim submission quality for that payer.
Blue Cross typically processes clean claims in 7–14 days. If you are seeing 30+ day payment timelines on Blue Cross, there is likely a contract, credentialing, or claim quality issue to resolve.
## Metric 3: Reimbursement Comparison to Like Providers
An AR audit should benchmark your reimbursement rates against your peers — practitioners with the same specialty, in the same geographic market.
This comparison reveals:
– Whether your payer contracts are competitive
– Whether coding patterns are consistent with peers
– Whether there are payers systematically underpaying based on contract terms
If you are being paid 15–20% below your specialty peers for comparable services, you likely have a fee schedule or contract negotiation issue.
## Metric 4: Days in AR Calculation
Days in AR is one of the most important single-number metrics in medical billing. It measures how many days, on average, it takes to collect a dollar of charges.
**Formula:**
Days in AR = Total AR Balance ÷ (Average Daily Charges)
Where Average Daily Charges = Total Charges over 90 days ÷ 90
**Industry benchmarks:**
– Primary care: 30–40 days
– Specialty practice: 40–55 days
– Surgical specialties: 45–65 days
If your days in AR exceeds your specialty benchmark, billing lag and denial rates are the most common culprits.
## Metric 5: Healthy Aging Buckets Across All Payers
Beyond the 90-day metric, a full aging analysis should show:
| Bucket | Target % |
|——–|———-|
| 0–30 days | 50%+ |
| 31–60 days | 20–25% |
| 61–90 days | 10–15% |
| 90+ days | Under 15% |
Any payer where the 90+ day bucket exceeds 20% deserves immediate attention.
## The Date of Service vs. Date of Billing Issue
We see this frequently in audits: practices that measure aging from **date of billing** rather than **date of service**. This creates a false picture of AR health. If your billing team submits claims 10–15 days after service, your aging report will look better than it actually is.
Always measure from date of service. Always.
## What to Do With the Audit Results
Once you have these five metrics in hand, prioritize:
1. Fix the highest-value payers with the most aging over 90 days first
2. Address root causes (not just symptoms) — denial codes, credentialing issues, authorization failures
3. Establish a monthly cadence for reviewing all five metrics
An audit is only valuable if it leads to action. If you would like MedLink to conduct a complimentary AR audit for your practice, contact our team.