Introduction
Most practices start questioning their billing company when collections drop. A weak month on its own proves very little. Payer processing delays, a credentialing gap, a slow holiday schedule, or a change in service mix can all pull collections down without any failure on the billing side.
Your A/R aging report is a more reliable place to look, as long as you read it as a trend across several months and can trace the totals back to individual claims. The American Medical Association identifies first-pass resolution, denial volume, and days in A/R as separate measures. HFMA separately defines clean claim rate, aged A/R, remittance denial rate, and net days in A/R. That distinction is important to your decision. Your billing partner should be assessed on the visibility, control, and improvement of the entire revenue cycle rather than just the monthly deposit figure.
Below are seven warning signs that tend to show up in aging data, how to confirm each one, and how to decide whether to repair the relationship or replace it.
Check How the Report Is Built Before Comparing Months
An aging report can look better from one month to the next simply because the way it is calculated changed. HFMA's standard aged A/R measures for physician practices group balances into 0 to 30, 31 to 60, 61 to 90, 91 to 120, and over 120 days. HFMA treats clean-claim performance, unbilled inventory, and remittance denials as separate measures. Your reporting should likewise distinguish claims that have not reached adjudication from claims denied on a remittance. If your billing company calculates age differently, or quietly changed its method, month-over-month comparisons stop meaning much.
Ask your billing company to confirm the following before you draw conclusions:
Question to Ask | Why |
|---|---|
Is claim age measured from date of service, first submission, or last billing activity? | If age restarts on resubmission, old claims can reappear in the 0 to 30 bucket. |
Are unsubmitted and rejected claims included, or kept in separate queues? | A billed A/R report can leave out claims that never reached the payer. |
Were any balances moved to bad debt, collections, another vendor, or a different financial class? | Transfers shrink the older buckets without any money being collected. |
Are credit balances handled the same way every month? | Netting credits against debits can understate what is actually owed. |
Are insurance and patient balances reported separately? | Patients' balances age differently and need a different collection approach. |
Did payer groupings, locations, providers, or exclusions change during the period? | Any change in scope makes trend comparisons unreliable. |
If one month is out of line with the rest then start by asking for the report definition, the unsubmitted claim queue, the rejection report and the transaction detail behind the change. A single anomaly will usually have an explanation (a definition change, for instance, or an incomplete export). It only becomes a real issue when the company can't reconcile it.
Reference Points, Not Pass/Fail Lines
No one number should ever be the end of a billing relationship. Specialty, payer mix, patient responsibility, enrollment status, and claim complexity all affect what "normal" looks like for your practice. External benchmarks provide context, but your own recent baseline (calculated the same way each month) is the more meaningful comparison.
Metric | AMA Suggested Goal | Source |
|---|---|---|
First pass resolution | 95% | |
Denial volume | Below 10% | |
Clean claim rate | Claims passing edits with no manual intervention (definition, not a target) | |
Aged A/R | Each aging bucket as a percentage of total billed A/R (definition) |
1. The Share of A/R Over 90 Days Keeps Climbing After You Account for Volume
Having balances older than 90 days is normal. The warning sign is when those older buckets grow faster than charges, patient volume, or payer mix can explain.
Percentages are more informative than dollar amounts here. Assume total A/R increased from $400,000 to $460,000 while visit volume increased approximately 10%. The larger A/R balance requires context (new providers, a seasonal surge, a payer mix shift). The stronger warning is that the share over 90 days increased from 14% to 22% over the same period. That means older claims are accumulating faster than the growth in new business can account for.
To test it, ask for six months of aging split between insurance and patient responsibility, plus the charges and payments for that same period. Then ask for the largest open claims in the oldest buckets, with the last action date, the next planned action, the latest payer response, and the filing or appeal deadline for each.
A well-run billing team can tie older balances to specific causes: a payer system problem, a credentialing delay with named plans, records still owed by the practice, or a batch of claims under medical review. Every material aged claim or worklist segment should have an owner and a next step. If you have significant balances that have been inactive for months and the company cannot explain what is being done about them, the age of the balance is a secondary concern. The primary problem is that no one is working those accounts, and the clock on their filing and appeal deadlines is still running.
What Each Aging Bucket Should Trigger
An aging report shows where balances sit. It does not tell your team which accounts to work first. Priority depends on claim value, payer status, deadlines, and whether a realistic correction path still exists.
A/R Bucket | What to Review | Action |
|---|---|---|
0 to 30 days | Clearinghouse and payer acceptance | Correct unsubmitted or rejected claims before they age. |
31 to 60 days | Claim status and expected payer response | Investigate claims with no acknowledgment or normal processing activity. |
61 to 90 days | Denials, record requests, follow-up history | Escalate high-value claims and recurring payer issues. |
91 to 120 days | Filing and appeal deadlines | Prioritize accounts that still have a viable correction or appeal path. |
Over 120 days | Collectability, deadlines, prior actions | Separate recoverable claims from balances that need financial, contractual, or compliance review. |
Add balance, expected allowed amount, last action date, denial reason, deadline, days remaining and owner to each line and you've got a work plan rather than a static report. It also stops people spending the same amount of time on a $40 balance as they do on a $4,000 balance.
2. One Payer or Financial Class Is Getting Worse and Nobody Is Responding
A combined A/R total can hide a problem concentrated in one place. Commercial claims might be paying normally while one Medicaid managed care plan, a workers' compensation carrier, or Medicare Advantage plan drives nearly all of the increase. HFMA tracks aged A/R by the payer group as its own measure for this reason.
Ask for aging broken out by payer, plan, provider, location, and patient versus insurance responsibility. Once you find the segment that is deteriorating, request a sample of its open claims along with the payer responses.
A payer-specific slowdown is not automatically your billing company's fault. Some causes sit with the practice, some with the billing company, and some with the payer. What matters is whether your billing partner identified the cause and acted on its share of the fix.
Likely Cause | Usually Owned By | What a Response Looks Like |
|---|---|---|
Provider enrollment or credentialing gap | Practice and billing company (shared) | Enrollment status tracked by plan, with claims held or rerouted appropriately |
Missing prior authorization | Practice authorization, scheduling, or clinical team | Billing company reports the pattern and recommends a pre-service check |
Coordination of benefits errors | Shared | Primary/secondary order corrected and claims rebilled in sequence |
Fee schedule or contract loaded incorrectly | Billing company or PM vendor | Underpayments identified and system corrected |
Payer processing backlog or system issue | Payer | Documented escalation through provider relations, with dates |
Switching becomes reasonable when a material payer segment keeps getting worse, the same cause repeats month after month, and your medical billing company has neither escalated with the payer nor changed how it works those claims.
3. Claims Are Aging Before the Payer Ever Processes Them
Some of your oldest balances may never have been adjudicated at all. They could be sitting in an unsubmitted queue, failing a clearinghouse edit, or bouncing off a payer's front-end intake. These are rejections, not denials, and the two need to be reported separately because they follow different correction paths and deadlines.
| Rejection | Denial |
|---|---|---|
When it happens | Before adjudication, at the clearinghouse or payer intake | After the payer adjudicates the claim |
Typical causes | Invalid member ID, missing NPI, formatting errors, inactive coverage | Medical necessity, authorization, bundling, coverage limits |
Is the claim on file with the payer? | Usually not | Yes |
Correction path | Fix and resubmit as a new claim | Corrected claim, reconsideration, or formal appeal |
Risk if ignored | Timely filing clock keeps running with no claim on file | Appeal window closes |
HFMA defines clean claim rate as the share of claims that pass edits without manual intervention, and it separates edit holds and submission rejections from adjudicated denials.
If your billing company only reports final denials then a significant portion of the problem may never actually reach you. Ask for charge lag, claim creation date, first submission date, clearinghouse acceptance date, payer acceptance date and rejection reason. Then look at the oldest unsubmitted and rejected claims by dollar amount and days remaining before each payer's filing deadline.
A capable team can tell you which rejections come from incomplete charts, missing demographics, invalid coverage, coding questions, or enrollment problems. It should also be able to show how rejected claims return to a work queue and how quickly they are corrected. A high volume of preventable rejections combined with no visibility into the submission queues and claims drifting toward filing limits is a strong argument for change.
4. The Same Denial Reasons Keep Coming Back
A denial report that only counts denied claims gives you almost nothing to act on. A useful report shows why each claim was denied, what happened next, how much money was involved, and what process change will keep the same denial from returning.
HFMA calculates the remittance denial rate at the claim-level rather than the service line. On the remittance itself, CMS standards require standardized group codes and Claim Adjustment Reason Codes to explain adjustments, with Remittance Advice Remark Codes providing additional detail when applicable. CARCs, RARCs, and group codes provide a standardized starting point for categorizing denials. The billing team may still need payer correspondence, plan policies, authorization records, clinical documentation, and claim history to confirm the underlying cause.
Ask for denial counts and dollars by payer, reason, provider, location, procedure family, and month. You should also see initial denials, corrected claims, reconsiderations, formal appeals, upheld denials, and recovered payments as separate figures.
Strong denial management shows two kinds of work: recovering money on individual claims and preventing the next denial. Prevention usually looks like this:
- Eligibility denials lead to earlier verification and front desk retraining.
- Authorization denials result in a clearer handoff from scheduling to the clinical team before the service.
- Coding and documentation denials lead to provider feedback and review by a qualified coder.
- Payer errors result in documented escalation and appeals.
If the same high-value denial reasons appear every month, deadlines are being missed, and the reports show plenty of activity but little resolution, the billing company is working claims without fixing the reasons they deny.
5. Payments, Adjustments, and Write-Offs Don't Reconcile
Steady collections can hide posting errors and adjustments that nobody approved. This warning sign is easy to miss because the top-line numbers may look fine.
According to CMS, electronic remittance advice reports payment and adjustment details at the service line, claim, and provider level. That means every posted dollar and every adjustment should trace back to a source document. HFMA tracks denial write-offs and credit balances as separate measures, and growing credit balances often point to posting or payment process failures.
The following should tie out every month:
- Electronic funds transfers and check deposits against posted payments
- Remittance files against payment postings
- Contractual adjustments against your payer contracts and fee schedules
- Refunds and recoupments against payer correspondence
- Write-offs against an approval record showing who authorized them
- Credit balances against a resolution plan with dates
Ask to see the largest manual adjustments from the past quarter and who approved each one. If transaction-level records cannot support the reports you receive, leadership has no reliable basis for financial decisions. Repeated reconciliation gaps, write-offs nobody can explain, or missing remittance records call for escalation, not just a conversation.
6. Claims Are Nearing Filing or Appeal Deadlines With No Plan
Old claims become more urgent as payer deadlines approach, and those deadlines differ by payer, plan, contract, claim type, and the action required.
For Medicare Fee-For-Service, federal regulation generally requires claims to be filed no later than one calendar year after the date of service (42 CFR 424.44). CMS also states that a denial on the grounds of untimely filing is not an initial determination and therefore generally cannot be appealed (Medicare Claims Processing Manual, Chapter 1). Commercial and Medicaid filing limits vary by state, program, plan, contract, claim type, and required action. Verify each deadline in the applicable contract, provider manual, regulation, or payer communication.
Ask your billing company for every unsubmitted, rejected, denied and underpaid claim within a given window of a filing, reconsideration, appeal or documentation deadline. For each claim the report should include the source of the deadline (contract, payer manual or regulation), days to go, owner and next action. A good team will also be able to tell the difference between an original filing deadline and a corrected claim, reconsideration or appeal deadline as these are often very different.
One missed deadline deserves an investigation. A pattern of avoidable timely filing or late appeal losses means the work queues, staffing, or oversight cannot be relied on. Once a filing or appeal deadline passes, the balance may become unrecoverable unless a documented exception or another permitted correction pathway applies.
7. Your Billing Company Can't Show What Is Being Worked
If you receive only a collection total and a static aging report each month, you cannot verify anything. The AMA encourages physician leaders to review claim status, remittances, denials, and payer and patient A/R aging regularly. That is only possible if the reporting package gives you enough detail.
A reasonable monthly package includes:
Report | What It Should Show |
|---|---|
Charges and submissions | Charges entered, claims submitted, charge lag |
Front-end performance | Clean claim rate, first-pass resolution rate, and rejections by reason |
Payments and adjustments | Payments, contractual adjustments, write-offs with approvals |
Denials and appeals | Denials by reason and payer, appeals filed, amounts recovered |
A/R aging | Insurance and patient A/R by bucket and payer, days in A/R |
Old claim inventory | High-value aged claims with last action, next action, and deadline |
Exceptions and dependencies | Open items waiting on the practice, payer escalations, next review date |
Formulas and exclusions should remain the same month over month. Your account manager should be able to go from any summary figure down to the individual claims that support it. If the company is repeatedly unable to provide claim-level support, consistent definitions, or proof of follow-up, you are being asked to trust numbers you cannot audit.
Repair or Replace: A 30-Day Decision Gate
A single metric going in the wrong direction is rarely sufficient to justify a change of billing provider. Give the existing provider a defined period of time to explain the results and fix what can still be fixed. The scorecard below will help structure that discussion.
Score each condition 0 to 2. A 0 means no material concern. A 1 means there is a concern but a corrective plan is in progress. A 2 means a material concern, a repeated concern, or one not supported by evidence.
Condition | Score |
|---|---|
Older A/R keeps growing after adjusting for volume and payer mix | (0, 1, or 2) |
Material claims have no recent action or assigned owner | (0, 1, or 2) |
Unsubmitted and rejected claims are not visible in reporting | (0, 1, or 2) |
The same denial causes recur with no prevention work | (0, 1, or 2) |
Payments, adjustments, or credit balances do not reconcile | (0, 1, or 2) |
Filing or appeal deadlines have been missed | (0, 1, or 2) |
Reports cannot be supported with claim-level records | (0, 1, or 2) |
Total Score | Recommended Next Step |
|---|---|
0 to 3 | Continue with routine monitoring. Document any isolated issue and confirm it is resolved. |
4 to 7 | Issue a written 30-day corrective action plan with a baseline, required actions, responsible party, due dates, and evidence of completion. |
8 to 14 | Begin transition due diligence while the corrective plan runs. Preserve data, confirm system access, identify claims near deadlines, and review contract terms. |
This scorecard is an internal decision aid, not an industry standard. Weigh it alongside the dollars involved, your contractual obligations, the impact on patients, payer circumstances, and whether the practice itself contributed to the problem.
Some issues need to be escalated immediately, regardless of score. These include a material reconciliation concern, repeated loss of filing rights, write-offs nobody can explain, loss of access to essential systems, and any privacy or security incident. Bring these to your financial, compliance, legal, or security leadership right away.
Secure These Records Before Giving Notice
Before you terminate a billing agreement, make sure you have everything needed to protect cash flow and finish outstanding work. Review the termination and transition terms in your service agreement, and get legal advice where your rights are unclear.
Category | What to Obtain |
|---|---|
Claims | Full A/R aging with payer, patient, provider, location, date of service, balance, status, last action, and next action; all unsubmitted and rejected claims; all denied and underpaid claims with reason codes, appeal status, and deadlines |
Money | Payment posting and reconciliation reports, unapplied cash, credit balances, and adjustment and write-off detail with approval history |
Transactions | Clearinghouse reports, claim acknowledgments, and remittance files available to the practice |
Access | Logins for the practice management system, EHR, clearinghouse, and payer portals that the practice owns or controls |
Enrollment | Payer enrollment records and the status of EFT and ERA arrangements |
Patients | Open patient statements, payment plans, and collection agency placements |
Open work | Tasks waiting on provider records, signatures, coding review, or payer escalation |
HIPAA Obligations at Termination
Billing and claims processing are business associate functions under HIPAA when they involve protected health information. Your business associate agreement should cover how PHI is returned or destroyed when the relationship ends. HHS sample contract provisions reflect the regulatory requirement that a business associate return or destroy PHI at termination where feasible. If return or destruction is not feasible, the agreement should continue to protect the retained PHI and limit further use or disclosure to the reason retention is necessary (45 CFR 164.504). Plan for access removal and subcontractor obligations as well. State law and contract-specific questions should go to qualified counsel.
How to Change Billing Companies With Less Disruption
- Set a cutover date and assign ownership in writing. Determine which company will submit new claims after cutover and who will be responsible for the legacy A/R. Be clear about who handles rejections, denials, corrected claims, appeals, patient balances, and payment posting so no group of accounts falls between the two companies.
- Save a baseline before any access changes. Capture the final pre-transition reports using the same definitions as before: total and aged A/R by payer, days in A/R, unsubmitted claims, rejections, denials, open appeals, unapplied cash, credit balances, write-offs, charges and payments.
- Work the deadline-sensitive claims first. Build a deadline report before handoff, get the most urgent claims submitted immediately, and confirm completion via acknowledgments or payer confirmations.
- Verify systems and payment paths. Confirm access to the PM system, EHR, clearinghouse, payer portals, deposit accounts, EFT, and ERA delivery. Avoid changing a payment path that already works unless you have a documented reason and a verification plan.
- Handle privacy and security before data moves. Execute a business associate agreement with the new company before it receives any PHI. Limit its access to what the work requires, and remove access that is no longer needed.
- Validate the initial claims. Take a sample across all major payers, providers, locations and service types and check that claims reach the payer, remittances come back to the correct system, and payments reconcile.
- Review at 30, 60, and 90 days. Compare results against the saved baseline and report claims created after the cutover separately from legacy A/R. This keeps old problems from being blamed on the new vendor and keeps new problems from hiding inside the old inventory.
Questions to Ask a New Medical Billing Company
A sales presentation should end with specific operating answers that you can later write into the contract or service scope.
Question | What a Solid Answer Includes |
|---|---|
How do you define clean claim rate, first pass resolution, denial rate, and days in A/R? | Written formulas, ideally aligned with HFMA definitions, that stay consistent month over month |
Can you report insurance and patient A/R separately by payer, provider, location, age, and status? | Sample reports, not just a verbal yes |
How do rejected claims return to a work queue, and how is completion verified? | A defined workflow with turnaround times |
How do you connect denials to prevention work? | Root-cause grouping by CARC/RARC and examples of process changes |
Who can approve adjustments and write-offs? | Named roles, dollar thresholds, and practice sign-off above set limits |
How do you reconcile payments, recoupments, refunds, and credit balances? | A monthly reconciliation process tied to bank deposits |
Who owns legacy A/R, and how is it priced and reported? | A separate scope, fee structure, and reporting line |
What data can we export during and after the relationship? | Full claim, payment, and notes history in standard formats |
Which systems, subcontractors, and offshore resources will handle PHI? | Disclosure of PHI-handling systems and subcontractors, with confirmation that applicable business-associate obligations flow down through subcontractor agreements |
What are the termination, transition support, record return, and access removal terms? | Specific notice periods and written transition obligations |
Need an Independent Review of Your Aging Report?
Dastify Solutions can review your A/R trends, rejection and denial inventories, deadline exposure, reconciliation controls, and reporting gaps before you decide whether remediation or a billing transition is appropriate.
Frequently Asked Questions
Should I switch medical billing companies after one bad month?
Usually not on that basis alone. First check whether the month was affected by volume, payer delays, credentialing, or posting timing. The case for switching is much stronger when a material problem repeats and the company cannot explain or correct it.
What percentage of A/R over 90 days is too high?
No single percentage fits every practice. Use the same formula over time and break the result down by payer, patient responsibility, provider, and claim status. External benchmarks give you context, but the accounts actually driving the change tell you what to do next.
Who should work old A/R after the switch?
The outgoing company, the incoming company, your internal team, or a separate recovery team can all handle it. What matters is that each group of accounts is assigned to exactly one party, with a defined fee and reporting method, and that access is kept in place until the work and reconciliation are complete.
Can a new billing company guarantee higher collections?
A responsible company can commit to scope, workflow, reporting, staffing, response times, and service levels. It should not guarantee payment or reimbursement, because results also depend on payer decisions, patient benefits, documentation, contracts, and the condition of your existing A/R.
Editorial and Compliance Note
This article provides general operational information for healthcare practices. It is not legal advice, payer contract advice, coding advice, or a patient specific payment determination. Payer rules and contract terms vary. Verify current requirements and obtain qualified legal, compliance, coding, or financial review when appropriate.
