How to Reduce A/R Days in a Therapy Practice

Days in Accounts Receivable measures the average number of days it takes for your practice to get paid after a session is completed.

To calculate your days in A/R:

• Calculate Average Daily Charges: Divide your total gross charges over the last 90 days by 90.
• Calculate Days in A/R: Divide your total current accounts receivable by your average daily charges.

For example, if your practice has $120,000 in outstanding A/R and billed $240,000 over the past 90 days:

• Average Daily Charges: $240,000 / 90 = $2,666
• Days in A/R: $120,000 / $2,666 = 45 Days

How does your practice compare to sector standards set by organizations like the Medical Group Management Association (MGMA) and the Healthcare Financial Management Association (HFMA)?

Claims that sit unpaid past the 90-day mark have less than a 50% probability of full collection. Once a claim passes 120 days, that recovery probability drops below 20%.

Behavioral health billing comes with particular operational challenges that general medical practices rarely face. If your A/R is climbing past 40 days, the delay usually comes from one of four areas:

1. Behavioral Health Carve-Outs and Routing Errors

When a client provides a commercial insurance card from a large insurance company, the intake team bills the primary medical payer’s ID but are later rejected 30 days afterwards since the mental health benefits are handled by a different third-party administrator, for example Optum Behavioral, Carelon, or Magellan. This error brings the entire billing cycle back to day zero.

2. Time-Based CPT Code Inconsistencies

Therapy billing relies heavily on time-based CPT codes:

• 90832: Psychotherapy, 30 minutes (16 to 37 minutes)
• 90834: Psychotherapy, 45 minutes (38 to 52 minutes)
• 90837: Psychotherapy, 60 minutes (53+ minutes)
• 90791: Psychiatric diagnostic evaluation

If the clinician bills for procedure code 90837 without giving exact start and stop times, or if the clinical record does not include documentation which proves the medical necessity of the extended session, then the payers will initiate pre-payment audits or reject the claim, thus indefinitely delaying the payment.

3. Clinician Documentation Delays

A claim cannot be submitted until the clinical progress note is written, signed, and locked. When clinicians take a week or more to complete notes, the billing team cannot submit claims. This delay adds 7 to 10 days to your A/R before the insurance company sees the bill.

4. Delayed Client Balance Collection

With high-deductible health plans now standard, much of your revenue comes directly from clients. Practices that send paper statements monthly instead of collecting automatically via a card-on-file system carry thousands of dollars in patient-portion A/R past 60 days.

Lowering your A/R days requires tightening your workflow before, during, and after each appointment.

1. Run Complete Verification of Benefits (VOB) Before the Intake

Never let a new client attend a session without a verified breakdown of behavioral health coverage. Your intake staff must verify:

• Is mental health covered under the primary plan or carved out to a separate entity?
• Does the plan require prior authorization before 90791 or ongoing 90834/90837 sessions?
• What is the client’s deductible, how much has been met, and what is their copay or coinsurance?
• Are there specific telehealth modifier requirements (such as 95 or GT)?

2. Enforce a 24-to-48-Hour Note Completion Rule

Set a firm policy requiring all clinical documentation to be locked within 24 to 48 hours of service. Once locked, claims should be generated and submitted through your clearinghouse the same day. This shortens the time between service date and claim submission.

3. Work Clearinghouse Rejections Daily

Clearinghouse rejections are front-end data mismatches (wrong subscriber ID format, missing rendering NPI, invalid diagnosis code) that stop a claim before it reaches the payer. If reports are reviewed only weekly, claims sit in limbo without reaching the payer. Assign staff to resolve scrubber rejections within 24 hours of notice.

4. Require a Card on File for Every Client

Eliminate mailing paper invoices and waiting for checks. Store a secure payment method in your EHR or merchant portal during client onboarding. Set your system to charge patient responsibility (copays, coinsurance, and deductibles) immediately after the Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) posts.

To keep overall A/R days under 35, your unpaid claims distribution must match healthy revenue cycle targets:

• 0 to 30 Days: Should represent 60% to 70% of total unpaid A/R
• 31 to 60 Days: Should represent 15% to 20% of total unpaid A/R
• 61 to 90 Days: Should represent 10% to 15% of total unpaid A/R
• 90+ Days: Should stay under 10% of total unpaid A/R

How to Work Down an Aging Backlog

• Sort by Dollar Amount: Pull an aging report from your EHR or clearinghouse and sort from highest balance to lowest. Resolving five $1,000 claims brings in revenue faster than chasing twenty $50 balances.
• Detecting Systemic Payer Issues: If one specific payer holds the majority of your 60+ day claims, check for credentialing gaps, outdated provider demographic files, or missing claims address updates.
• Track Timely Filing Deadlines: Insurance payers enforce strict timely filing limits, ranging anywhere from 90 days to one year (see guidelines established by the Centers for Medicare & Medicaid Services (CMS) for government plans versus commercial rules). If a claim crosses that deadline without proof of initial submission, the revenue is lost permanently.

Your Clean Claim Rate (CCR) is the percentage of claims that get processed and paid on the first submission without rejections, denials, or manual adjustments.

Top-performing practices maintain a clean claim rate of 95% or higher. If your clean claim rate falls below 85%, your staff spends more time reworking past errors than submitting new revenue.

Common Denial Reason Codes in Therapy Billing

• CO-4: The procedure code is inconsistent with the modifier used or a required modifier is missing.
• CO-16: Claim or service lacks required information (e.g., missing primary diagnosis linkage).
• CO-27: Expenses incurred after coverage was terminated.
• CO-50: Non-covered services due to lack of medical necessity documentation.
• PR-1 / PR-2: Patient deductible or coinsurance amounts that need immediate transfer to the client ledger.

Tracking these specific adjustment codes on your remits shows you exactly which front-end step needs adjustment to prevent future payment delays.

Lowering your A/R days is all about establishing clear daily habits: verifying coverage details before the first session, submitting locked claims daily, reviewing clearinghouse reports within 24 hours, and automating client payments.

When your days in A/R drop below 35, practice cash flow becomes predictable, write-offs decrease, and your administrative team can spend less time chasing old claims.