Understanding AR in Medical Billing

You probably know that the acronym “AR” in medical billing stands for “accounts receivable.” In fact, AR is such a familiar term that it’s often taken for granted. However, AR plays a huge role in a healthcare organization’s revenue cycle. It represents money owed to the provider for services already delivered. AR is also where money gets “stuck,” causing revenue stream disruptions that ripple across the organization.

In this article, we’ll review the AR process in medical billing, some of the common challenges inherent with AR, and how better AR management can boost collections and reduce payment delays.

At its most fundamental level, AR means money owed to the provider. It comes into play after a claim is submitted to the payer, but before payment is received. Both insurance claims and patient balances can be part of the AR process. Steps in AR typically involve:

A delay at any of these junctures can result in “aging AR,” known in lay terms as “overdue balances.” An even worse outcome is a write-off…revenue that is never captured.

A strong AR follow-up program can significantly reduce payment delays and unpaid balances, supporting the financial health of your organization. By AR follow-up, we mean tracking and resolving unpaid claims and balances. These steps can encompass both insurance claims and patient collections. Done effectively and consistently, AR follow-up will shorten the AR cycle and prevent bad debt.

A growing challenge for healthcare organizations is patient collections. Specifically, collections pertain to the outstanding balance of a patient account, which is the total amount owed by the patient after insurance payments and adjustments.

Patient collections have always been challenging for healthcare organizations. However, this area of AR has become increasingly problematic, thanks to the growing popularity of high-deductible health plans. While typically offering a lower premium, these plans also saddle members with an increased financial responsibility when they require medical care.

Transparent billing, budget-friendly payment plans, and other best practices can help reduce the risks associated with patient collections. In addition, digital collection tools can make the task easier and more productive.

Indeed, for many healthcare organizations, technology plays a significant role in resolving aging accounts, whether it’s managed in-house or by an outside AR recovery services provider.

In recent years, the combination of staffing shortages and limited IT budgets has prompted more and more of rural and community hospitals to hand off this crucial function to a partner that specializes in various AR recovery services, including denial management, appeals, patient billing services, and AR clean-up projects.

Whether you manage accounts receivable (AR) internally or partner with an outsourcing provider, adopting proven best practices is essential to maintaining healthy cash flow and minimizing revenue leakage. A strong AR strategy doesn’t just shorten payment cycles—it also enhances patient trust and ensures your organization remains financially resilient.

1. Regular Reviews of Aging Reports: Consistently monitoring aging reports allows your team to spot trends, identify slow-paying accounts, and prioritize follow-up efforts. By analyzing these reports, providers can prevent overdue accounts from becoming uncollectible bad debt.
2. Staff Training on Denial Follow-Up: Denied claims represent one of the largest obstacles to efficient AR management. Ongoing training equips staff with the knowledge to quickly resolve denials, understand payer requirements, and prevent similar issues in the future.
3. Automated Reminders and Workflows: Leveraging automation tools for reminders, payment notifications, and claims tracking reduces manual errors while freeing staff to focus on higher-value tasks. Automation also ensures patients receive timely, consistent communication.
4. Clear and Patient-Friendly Communication: Transparent communication around balances, payment plans, and billing expectations fosters a positive patient experience. When patients understand their financial responsibilities upfront, they’re more likely to pay on time and less likely to become frustrated with the billing process.

By embedding these best practices into AR management, healthcare organizations can accelerate collections, reduce bad debt, and strengthen long-term financial stability—all while supporting a patient-first billing approach that balances financial goals with compassionate service.

By incorporating these and other best practices into your AR management, you’ll take a big step toward optimizing your entire billing process and protecting the long-term financial health of your organization.

Selecting a partner for medical AR management is a critical decision that directly impacts both your cash flow and patient relationships. The right vendor should do more than just recover payments—they should enhance efficiency, support compliance, and uphold a patient-first billing philosophy. Below are key factors to consider when evaluating potential AR management service providers.

As you assess your current AR strategy, ask yourself this question: “Are we doing everything possible to reduce write-offs and increase cash flow, all while operating with the utmost efficiency?” If there are nagging doubts or questions about your AR management, it may be time to consider a change.  

At TruBridge we’ve been helping rural and community healthcare providers across the country achieve their AR goals. Our proven AR Recovery Services include AR Recovery Workdown, which can help you reach your collections objectives without burning out your staff.  

With this customizable service, our collections experts take over aging small-balance copays and low-dollar insurance claims, handling the time-consuming details, removing a burden from your team’s shoulders, and streamlining a typically cumbersome part of your revenue capture process. 

Another popular TruBridge AR Recovery Service is Insurance Follow-up. Also customizable for various criteria, such as defined time periods and payer types, this service frees your staff from the tedious task of following up on old claims. Our experts recover as much revenue as possible and remove excess work from your AR team.  

Both of these services come with the stipulation that TruBridge doesn’t get paid until you get paid, ensuring maximum effort with every claim.