Your Revenue Cycle: Over 120 Days in Accounts Receivable

In this six-minute presentation, find out how to measure your practice’s ability to get paid in a timely manner and more. After watching you will know how to:

• Obtain a better understanding of days in A/R greater than 120 and find out why it’s important for your practice.
• Learn how to calculate days in A/R greater than 120.
• Discover problems to avoid, such as using the charge entry date to age claims.

Calculating accounts receivable (A/R) greater than 120 days will give you the amount of receivables older than 120 days expressed as a percentage of total current receivables. This metric is a good indicator of your practice’s ability to collect timely payments. Factors that can influence timely payment include your payer mix and/or your staff’s efficiency in addressing denied or aged claims. High or rising percentages indicate there may be problems with your practice’s revenue cycle management.

Best Practice Tips

• The amount of receivables older than 120 days should be between 12% and 25%; however, less than 12% is preferable.
• To get the most accurate picture of your practice’s financial standing, base your calculations on the actual age of the claim, i.e., the date of service, not the date on which the claim was filed or when it changes hands from one financially responsible party to another (primary insurance to secondary insurance; insurance to patient).

Calculating A/R Greater Than 120 Days

1. To calculate, divide the dollar amount of accounts receivable that is greater than 120 days by the dollar amount of total current accounts receivable.
2. Multiply by 100.

Sample Calculation

• (Total Receivables Greater Than 120 days/Total Receivables) X 100
• Receivables 121 to 150 days: \$114,000
• Receivables 151+ days: \$145,000
• Total receivables: \$2,120,000
• (\$114,000 + \$145,000/\$2,120,000) x 100
• (\$259,000/\$2,120,000) x 100
• 0.1222 x 100
• Receivables greater than 120 days: 12.22%