Managing a medical practice involves more than providing excellent patient care. Your practice also needs an organized financial process to track insurance reimbursements, monitor unpaid claims, and collect patient balances accurately. Without a consistent system, payments can remain unposted, denied claims can go unresolved, and outstanding balances can become harder to manage.
Medical practice accounts receivable management helps healthcare providers understand how much money they are owed, who owes it, and what actions are needed to collect outstanding payments. By monitoring insurance payments and patient balances regularly, your practice can improve financial visibility, maintain accurate records, and make more informed business decisions.
In this guide, we explain how to track insurance payments, review accounts receivable aging reports, manage unpaid claims, and build a consistent accounts receivable workflow for your medical practice.
What Is Accounts Receivable in a Medical Practice?
Accounts receivable (AR) represents money owed to a medical practice for services already provided but not yet paid for. Depending on the billing arrangement and stage of the claim, the balance may be owed by an insurance company, a patient, or another responsible payer.
Medical practice accounts receivable generally includes:
- Insurance receivables: Payments expected from commercial health plans, Medicare, Medicaid, or other insurers.
- Patient receivables: Outstanding deductibles, copayments, coinsurance, and other properly established patient responsibilities.
- Pending claims: Claims submitted to an insurer that have not yet been fully adjudicated.
- Denied or underpaid claims: Claims requiring review, correction, appeal, or additional follow-up.
- Unapplied payments: Money received by the practice that has not yet been matched to the correct patient account or claim.
Keeping these categories organized helps your billing team distinguish between money that is genuinely outstanding, payments awaiting posting, and balances that require investigation.
Why Medical Practice Accounts Receivable Management Matters
An increase in outstanding receivables does not automatically mean your practice is losing money. However, an aging or inaccurate AR balance can make cash flow more difficult to predict and can hide problems in billing, payment posting, or patient collections.
Consistent AR management helps your practice:
1. Improve Cash Flow Visibility
When you know which claims are pending, which payments have been received, and which balances remain unpaid, you can better estimate expected cash inflows and plan for operating expenses.
2. Identify Insurance Payment Delays
Tracking claim submission dates, payer responses, and expected payment amounts helps your team identify claims that need follow-up instead of allowing them to remain unresolved.
3. Reduce Unresolved Claim Balances
A structured work queue makes it easier to identify rejected claims, denials, missing documentation, and underpayments that require additional action.
4. Improve Patient Balance Tracking
Separating insurance responsibility from patient responsibility helps prevent premature or incorrect patient billing. Patient statements should reflect the claim outcome, applicable payer adjustments, and the amount properly assigned to the patient.
5. Maintain More Accurate Financial Reports
Reconciling billing records, payment postings, bank deposits, and bookkeeping entries gives practice owners a clearer view of collected revenue and outstanding balances.
How to Track Insurance Payments in a Medical Practice
Insurance payments can be difficult to track when a practice works with multiple payers, different reimbursement arrangements, and a high volume of claims. A consistent process helps staff identify what was billed, what was paid, and what still needs attention.
Step 1: Maintain a Complete Insurance Claim Log
Every submitted claim should have a clear record that allows your team to identify its current status.
Useful fields include:
- Patient account or internal claim identifier
- Date of service
- Insurance payer
- Claim submission date
- Billed amount
- Expected reimbursement, where available
- Claim status
- Payment date and amount
- Adjustment or denial information
- Outstanding balance
- Next follow-up date
Use a practice management system or billing platform that supports claim tracking and reporting. If you use a spreadsheet, restrict access appropriately and avoid placing unnecessary patient information in it.
Step 2: Monitor Claim Status After Submission
Submitting a claim is only one part of the revenue cycle. Your team should monitor whether the payer has received the claim, whether additional information is required, and whether the claim has been processed.
Create a follow-up schedule based on payer guidance, contractual requirements, and applicable filing or appeal deadlines. Do not assume that every payer follows the same processing timeline.
When a claim remains pending beyond the expected timeframe, document the inquiry, reference number, representative details when appropriate, and agreed next steps.
Step 3: Match Insurance Payments to Remittance Advice
When an insurer issues a payment, review the associated explanation of benefits (EOB) or electronic remittance advice (ERA).
These documents help explain how the payer processed a claim, including the amount allowed, payment issued, adjustments applied, and any remaining patient responsibility. Electronic remittance advice can also support more efficient payment posting when integrated with billing software.
For each payment, verify that:
- The payment is associated with the correct claim or claims.
- The amount received agrees with the remittance information.
- Contractual adjustments are recorded appropriately.
- Denial or adjustment codes are reviewed when further action is needed.
- Patient responsibility is supported by the claim adjudication.
- Any remaining difference is documented for follow-up.
For Medicare, the Centers for Medicare & Medicaid Services (CMS) explains how remittance advice communicates claim decisions, adjustments, and related codes. Review the CMS guide to health care payment and remittance advice for additional information.
Step 4: Reconcile Insurance Deposits With the Books
A payment appearing in the bank account does not, by itself, prove that every related claim has been posted correctly.
Compare electronic funds transfers, checks, remittance records, billing system postings, and bank deposits. Where one deposit covers multiple claims, use the remittance detail to allocate the payment accurately.
Investigate differences such as:
- Deposits without identifiable remittance records
- Remittance records with no matching deposit
- Payments posted to the wrong patient or claim
- Duplicate payment entries
- Unexplained adjustments
- Amounts recorded as revenue that do not agree with the practice’s accounting method
Consistent reconciliation helps your practice maintain reliable financial records and identify posting problems before they accumulate.
Step 5: Investigate Denials and Underpayments
A denied claim should have a documented next action rather than remaining in an unresolved status indefinitely.
Common issues may include missing information, eligibility problems, coding or authorization requirements, documentation requests, and filing deadlines. The appropriate response depends on the payer’s explanation and the circumstances of the claim.
For each denial or underpayment:
- Review the remittance advice or denial notice.
- Identify the stated reason.
- Check the original claim and supporting documentation.
- Determine whether correction, resubmission, reconsideration, or an appeal is appropriate.
- Record the applicable deadline and responsible staff member.
- Track the outcome and update the account balance.
Medicare and other payers have specific rules and deadlines. Verify the requirements that apply to each claim rather than using one universal deadline for all insurers.
How to Track Patient Balances Accurately
Patient balances require a separate but connected process. The goal is to bill patients based on accurate information, communicate clearly, and document collections appropriately.
1. Confirm Patient Responsibility After Insurance Processing
Before sending a patient statement for an insurance-covered service, confirm whether the claim has been processed and review the payer’s explanation of benefits or remittance details.
Depending on the plan and service, patient responsibility may include a deductible, copayment, coinsurance, or another amount permitted under the applicable agreement and law.
Do not automatically transfer the entire unpaid insurance balance to the patient. A denied or underpaid claim does not necessarily mean the patient is responsible for the difference.
2. Keep Insurance and Patient Balances Separate
Your billing records should distinguish amounts owed by insurers from amounts properly owed by patients.
A useful account structure can show:
- Original charge
- Insurance payment
- Contractual adjustment
- Other payer adjustments
- Confirmed patient responsibility
- Patient payments
- Remaining balance
This breakdown helps staff explain the balance and reduces the risk of collecting an incorrect amount.
3. Send Clear and Timely Patient Statements
Patient statements should explain the amount due, the relevant service or account reference, payment options, and how to contact the practice with questions.
Use a consistent statement cycle that fits your practice’s workflow. If a patient disputes a balance, document the concern and review the account before continuing collection activity.
4. Record Every Patient Payment
Record patient payments promptly and apply them to the correct account. Reconcile card payments, electronic payments, checks, cash receipts, refunds, and adjustments to the relevant records.
Monitor unapplied cash and credit balances so they can be investigated and resolved according to your practice’s policies and applicable requirements.
5. Establish a Consistent Follow-Up Process
Create a documented process for outstanding patient balances. This may include statement reminders, account reviews, responding to billing questions, and offering payment arrangements where appropriate.
Follow applicable consumer protection, insurance contract, state law, and patient communication requirements. Sensitive billing information should only be shared through appropriate, secure channels.
Use an Accounts Receivable Aging Report
An accounts receivable aging report groups outstanding balances by how long they have remained unpaid. It helps your team prioritize follow-up and identify trends in collection delays.
Common aging categories include:
| Aging category | What to review |
|---|---|
| 0–30 days | Recently submitted claims, payment posting, and routine follow-up |
| 31–60 days | Claims awaiting processing and accounts approaching payer follow-up milestones |
| 61–90 days | Delayed claims, denials, underpayments, and unresolved patient balances |
| Over 90 days | Older balances requiring documented investigation and an appropriate resolution plan |
These categories are useful reporting conventions, not universal payer deadlines. Your practice should adapt its work queues to payer requirements, filing limits, appeal periods, and internal policies.
Example of an AR Aging Report
Consider a hypothetical medical practice with the following outstanding receivables:
| Aging category | Outstanding balance |
|---|---|
| 0–30 days | $18,000 |
| 31–60 days | $9,000 |
| 61–90 days | $5,000 |
| Over 90 days | $3,000 |
| Total outstanding AR | $35,000 |
In this example, the practice has $35,000 in outstanding receivables. The report alone does not show whether the balance is collectible or overdue under every payer’s rules. Staff should review the individual accounts to determine what is pending, what requires action, and what adjustments may be necessary.
The most useful aging report is one that connects each outstanding balance to a clear next step, a responsible team member, and a follow-up date.
Key Accounts Receivable Metrics Medical Practices Should Monitor
Tracking a few consistent metrics can help practice owners understand changes in the revenue cycle over time.
Days in Accounts Receivable
Days in AR estimates how long it takes for a practice to collect its receivables. The calculation depends on the reporting method used.
One commonly used formula is:
Days in AR = Total AR ÷ Average daily charges
If a practice has $90,000 in AR and averages $6,000 in charges per day, its calculated days in AR would be 15 days using this formula.
This is an illustrative calculation, not a performance benchmark. Practices should use a consistent methodology and interpret the result alongside payer mix, charge patterns, adjustments, and collection trends.
AR Over 90 Days
Track both the dollar amount and percentage of receivables in the oldest aging category. A rising balance may indicate that claims, patient accounts, or payment posting issues need further investigation.
Denial Rate
Monitor the proportion of submitted claims denied during a defined period. Use a consistent denominator and distinguish initial denials from final claim outcomes so that the metric remains meaningful.
Net Collection Rate
Net collection rate measures collections relative to collectible amounts after applicable contractual adjustments, depending on the formula adopted by the practice. Define the calculation consistently before comparing periods or providers.
Unapplied Cash and Unmatched Deposits
Track payments that have not been linked to the correct accounts, along with deposits that do not reconcile to the billing records. These items can distort reporting if left unresolved.
Common Medical Practice Accounts Receivable Mistakes
Even a practice with experienced billing staff can develop gaps in its AR workflow.
Not reviewing aging reports regularly: Older balances may remain untouched when staff focus only on newly submitted claims.
Failing to post payments promptly: Delayed posting can make accounts appear unpaid even after money has been received.
Ignoring small discrepancies: Repeated small differences between remittances, deposits, and ledger entries can accumulate into larger reconciliation problems.
Billing patients before confirming responsibility: Transferring unresolved insurance balances to patients can lead to incorrect statements and disputes.
Using inconsistent follow-up procedures: Without clear ownership and documented next steps, claims may be worked twice or not followed up at all.
Mixing billing activity with bookkeeping records: A billing system may show claim activity while the general ledger reflects accounting entries. These systems need a documented reconciliation process so financial reports remain reliable.
How Bookkeeping Supports Medical Practice Accounts Receivable
Billing teams focus on submitting claims, following up with payers, posting payments, and managing patient accounts. Bookkeeping helps ensure that these financial activities are accurately reflected in the practice’s accounting records.
A consistent bookkeeping process can help your practice:
- Reconcile insurance deposits with remittance records and accounting entries.
- Identify differences between billing reports and recorded revenue.
- Review unapplied payments and unexplained adjustments.
- Maintain organized records for monthly financial reporting.
- Understand collected revenue, operating expenses, and cash flow.
- Prepare more reliable financial information for tax planning and business decisions.
Medical practice bookkeeping should reflect the practice’s accounting method and specific billing workflows. For additional support, explore bookkeeping and tax services for medical offices and audit-ready bookkeeping.
Protect Patient Information During AR Management
Accounts receivable records may contain identifiable patient and payment information. Practices should limit access to authorized personnel, use secure systems, follow appropriate retention policies, and train staff on handling sensitive records.
When working with external billing, bookkeeping, or technology providers, evaluate the applicable privacy and security responsibilities and required contractual safeguards. HIPAA obligations depend on the organizations involved, the services provided, and the information handled.
For an overview, consult the U.S. Department of Health and Human Services’ HIPAA guidance for healthcare providers.
A Practical Monthly Accounts Receivable Checklist
Use this checklist to maintain a consistent review process:
- Review the AR aging report by payer and patient responsibility.
- Identify claims awaiting payer responses.
- Review denials, underpayments, and upcoming filing or appeal deadlines.
- Match insurance remittance advice to payments received.
- Reconcile insurance deposits and patient collections to accounting records.
- Investigate unapplied cash, credit balances, and unmatched deposits.
- Review older patient balances and disputed statements.
- Assign a next action and responsible staff member to unresolved items.
- Compare key AR metrics with previous reporting periods.
- Document adjustments and follow-up outcomes.
The exact review frequency may vary with claim volume, staffing, payer mix, and the complexity of your practice. High-volume practices may need more frequent work-queue reviews, while monthly reporting provides a useful checkpoint for financial oversight.
Frequently Asked Questions
What is accounts receivable in medical billing?
Accounts receivable in medical billing is the money owed to a medical practice for services already provided but not yet paid. It may include outstanding insurance claims, confirmed patient balances, and other unpaid amounts.
How do medical practices track insurance payments?
Practices track insurance payments by maintaining claim records, monitoring payer status, reviewing EOBs and ERAs, posting payments to the correct accounts, and reconciling deposits with billing and accounting records.
What is an AR aging report in healthcare?
An AR aging report organizes outstanding balances by the length of time they have remained unpaid. It helps a practice identify older claims, unresolved balances, and accounts that need follow-up.
Why do medical practices have unpaid insurance claims?
Claims may remain unpaid because they are still being processed, require additional information, contain errors, need authorization review, or have been denied. Each claim should be reviewed individually to determine the appropriate next step.
How often should a medical practice review accounts receivable?
The appropriate frequency depends on claim volume and operational needs. Practices often benefit from frequent review of pending claims and denials, supported by a formal monthly AR and financial reconciliation process.
How can bookkeeping help improve accounts receivable reporting?
Bookkeeping supports AR reporting by reconciling deposits, payment postings, adjustments, and revenue records. This helps practice owners identify discrepancies and make decisions using more reliable financial information.
Final Thoughts: Keep Your Medical Practice Accounts Receivable Organized
Effective medical practice accounts receivable management depends on consistent tracking, accurate payment posting, timely claim follow-up, and reliable financial reconciliation. When your team knows what is outstanding, why it remains unpaid, and who is responsible for the next action, it becomes easier to manage the practice’s financial operations.
Regular AR reviews can also help uncover gaps between billing activity and bookkeeping records, giving practice owners a clearer understanding of their financial position.
Need clearer financial records for your medical practice? Giesler-Tran Bookkeeping supports medical offices with bookkeeping and tax services designed around their financial workflows. Visit our bookkeeping and tax services page to learn more about our approach.
Disclaimer: This article provides general educational information and is not a substitute for individualized accounting, legal, billing, coding, or tax advice. Payer rules, contracts, patient billing requirements, and applicable laws vary. Verify requirements with the relevant payer and qualified professionals.