How to Calculate AR Days in Dental RCM

If your AR days climb, you experience delayed revenue, aging claims, and potential patient balances slipping through the cracks.

The Simple Formula to Calculate AR Days

Here’s the standard method:

AR Days = Total Accounts Receivable​ ÷ Average Daily Charges

• Find your total AR balance from your PMS or financial reports.
• Calculate your average daily charges (Total charges for the past 90 days ÷ 90).
• Divide AR by average daily charges.

Example:

• Total AR: $120,000
• Charges in last 90 days: $360,000
• Average daily charges: $360,000 ÷ 90 = $4,000
• AR Days = $120,000 ÷ $4,000 = 30 days

That means your practice takes about 30 days to collect payments.

What’s a Healthy AR Days Range for Dental Practices?

Industry benchmarks suggest:

• Excellent: Under 30 days
• Acceptable: 30–40 days
• Warning: Over 40 days

High AR days usually mean there are gaps in your claim submission process, denial management, or patient collections.

What Impacts AR Days in Dental RCM?

Several factors influence AR performance:

• Slow or inaccurate insurance verification
• Delayed claim submission
• Frequent denials because of coding errors
• Weak follow-up on unpaid claims
• High patient responsibility and uncollected balances

Why AR Days and Claim Denial Management Go Hand-in-Hand

Most practices that struggle with high AR days also deal with frequent claim denials. If someone does not appeal rejected claims promptly, AR skyrockets. Effective accounts receivable claim denial management services are essential for:

• Reducing claim errors upfront
• Appealing denied claims quickly
• Shortening payment timelines

How to Reduce AR Days in Your Practice

If your AR days are creeping up, try these strategies:

• Submit claims within 24–48 hours of service
• Verify insurance coverage before appointments
• Implement automated claim submission in your PMS
• Track AR aging reports weekly
• Consider outsourcing AR and denial management to a dental RCM provider

Final Thoughts

Calculating AR days isn’t just an accounting task, it's a key performance indicator for your dental RCM health. Keeping AR under control means faster collections, improved cash flow, and less stress for your team.

If your AR days are consistently high, it’s time to look at your claim submission and denial management processes. Working with a dental RCM service provider can be extremely helpful. They focus on accounts receivable and claim denial management.

FAQs on AR Days in Dental RCM

1. What are AR Days in dental revenue cycle management?

AR Days indicate the average time your practice takes to receive payment from patients or insurance after providing services. A key metric for financial health exists.

2. What is the ideal AR Days benchmark for dental practices?

High-performing practices keep AR Days under 30 days. Anything above 40 days suggests inefficiencies in your billing and collections process.

3. Why do AR Days matter for dental practices?

High AR Days delay cash flow. This can create stress on operations and limit resources for improving patient care.

4. How can I reduce AR Days in my dental practice?

• Submit claims promptly within 24–48 hours
• Verify insurance before appointments
• Track AR aging reports weekly
• Automate claims and follow-ups with RCM tools
• Consider partnering with a dental RCM service provider

5. How do claim denials affect AR Days?

Claim denials cause payment delays and inflate AR Days. Effective denial management is crucial to keep revenue moving and reduce delays.

6. Should I outsource AR and claim denial management?

Yes, outsourcing to an expert RCM provider improves collections, shortens AR cycles, and minimizes administrative stress for your team.

7. Does the AR Days calculation include patient payments? Yes, it includes all money owed to the practice, from both insurance companies and patients. The formula measures the average time it takes to collect all of your accounts receivable, regardless of the source.

8. What's the difference between AR Days and Accounts Receivable (A/R)? Your Accounts Receivable (A/R) is a snapshot of the total amount of money currently owed to your practice. AR Days is a performance metric that shows you the average number of days it takes to collect that money. While a high A/R is a concern, a high AR Days number is the more telling metric because it reveals inefficiency in your collections process.

9. How long does it take for a professional service to actually reduce my AR Days?

You can often start to see a positive impact on your AR Days within the first three to six months of implementing a professional service. The most significant improvements come as the service works through your aged claims and implements proactive strategies to prevent future denials.