Some are pending, some are denied, while others have been paid the incorrect amount. In all of these situations, unpaid balances will build up, leading to cash flow challenges in healthcare practices.
Medical billing AR follow up allows healthcare facilities to handle outstanding claims, diffuse claim denials, check for late payments, and recover reimbursable payments. It ensures that the best cases are handled prior to submission or expiration of appeal period.
In healthcare practice, as a doctor, hospital, or clinic, managing accounts receivable is important in ensuring that your practice remains financially healthy.
This article provides the process of AR follow up, common reasons for denials, aging report, medical coding considerations, key performance indicators, and collection advice.
What Is AR Follow Up in Medical Billing?
AR follow up is the process of following up on outstanding claims, contacting the insurance payer, investigating unpaid balances, resolving any denials, and recovering payment for medical services rendered.
AR is an acronym for accounts receivable, which refers to the money owed by a healthcare facility for services provided.
For instance, a doctor makes an insurance claim for a medical service provided to a patient.
The claim remains unpaid. During follow-up, the practice discovers that the insurer needs additional documentation. Once the requested information is submitted, the payer can continue processing the claim.
Without timely follow-up, the balance may remain unresolved for months.
Accounts receivable generally includes two categories:
- Insurance AR: Outstanding amounts expected from insurance payers.
- Patient AR: Balances legitimately owed by patients, such as deductibles, copayments, and coinsurance.
Both require monitoring, but their collection procedures differ.
Why Is AR Follow Up Important in Medical Billing?
Unpaid claims have an immediate financial impact on a health care organization. While there’s enough patients, reimbursements can still lead to problems in operating costs.
Continuously achieves consistent cash flow.
1. Sustains regular cash flow.
There are continuous expenses involved in healthcare practices such as salaries of employees, equipment, supplies, and facility costs.
If claims are not paid, the expected reimbursement is deferred. Continual AR follow up will enable you to detect any payment issues and correct them in a timely fashion so that they are not hard to collect later.
2. Avoids revenue loss
Insurance companies have strict claim filing and appeal time limits. These deadlines will also lead to loss of the opportunity to get money back.
As a practice owner, one can utilize the claims that are outstanding to determine which accounts need corrections, documentation or appeal.
3. Reveals repeated billing errors
Increasing numbers of unpaid claims indicate that there are some problems associated with eligibility and prior authorization, coding or documentation.
For example, if there is a continual denial for the claim on the part of one of the payers, then there is an authorization problem and not claim denials.
4. Improves financial visibility
Healthcare administrators will be able to track accurate AR reports to determine the outstanding reimbursements, the payers responsible for the delay and the outstanding balances that need to be addressed.
This helps to make better revenue cycle decisions.
Medical Billing and Accounts Receivable: What Are They?
Medical billing and accounts receivable have common aspects, yet they are different. Medical billing is concerned with the creation and processing of claims. On the other hand, AR follow-up revolves around the clearing of outstanding balances.
| Medical Billing | AR Follow-Up |
| Verifies patient insurance information | Reviews unpaid insurance claims |
| Assigns supported CPT and ICD-10-CM codes | Investigates coding-related denials |
| Submits claims to payers | Tracks claim status |
| Processes remittance information | Reviews unpaid or underpaid claims |
| Posts payments and adjustments | Resolves remaining balances |
It is imperative for both procedures to be done concurrently.
This is because the denial discovered during the follow up will demonstrate that the procedure has been wrongly coded. The rectification of such an erroneous code is important; however, knowing why this denial occurred is equally important.
How Does the AR Follow-Up Process Work?
An effective AR process follows a structured workflow. Each step helps determine why a claim remains unpaid and what action should be taken.
Step 1: Identify Outstanding Claims
Begin by reviewing the practice’s accounts receivable report.
A useful report should include:
- Patient account and claim number
- Insurance payer
- Date of service
- Outstanding balance
- Claim status
- Previous follow-up activity
Filing / appeal deadline:
Make sure that payments received are posted properly before contacting the payer.
A claim may be marked “unpaid” because the payment was made but not balanced.
Step 2: Read AR Aging Reports
Old claims must be categorized according to the age of the claim.
With the help of an AR aging report, one can find out which are the older claims which need more attention by the practices.
But there must be something else to do besides the age factor. If you anticipate receiving a high-dollar denial, the claim is due to expire soon, or if you are facing a repeating payer problem, then intervention is needed earlier.
Step 3: Status of the claim
Find out if the statement is:
- Received and processing
- Pending additional information
- Rejected
- Denied
- Paid or partially paid
- Awaiting another payer’s determination
Claim status can be checked through payer portals, electronic 276/277 transactions, or other payer-supported inquiry channels.
As per CMS claim status guidelines, claim status transactions serve as a standard process to ask and receive the information regarding the claim.
Do not resubmit the claims until you have checked the status of the primary claim.
Step 4: Understanding Payment Issue
Upon learning about the status of the claim, check the reason behind non-payment.
The important documents for the investigation process can include the original claim, electronic remittance advice (ERA), explanation of benefits (EOB), clinical notes, eligibility, and authorization.
For a denied claim, the CARC, RARC, and adjustment group code can be considered.
Collectively, these codes can help understand the rationale behind the denial.
Step 5: Correct, Submit, or Appeal the Claim
Depending upon the issue at hand, the next step can vary.
In case of a rejected claim, the practice will have to correct and submit a claim again. In case of a denied claim, the options include correcting a claim, reopening and reconsidering, or appealing the claim.
However, do not change a diagnosis code or a procedure code only for billing purposes.
Step 6: Verify Payment and Terminate the Account
Follow-ups are done until the outstanding balance is properly addressed.
Once the patient pays for his claim, it is important to verify the payment, address contract adjustments and determine what remains of the patient’s responsibility.
An account is considered closed when the balance is resolved properly.
AR Aging Reports and Follow-Up Priorities
AR aging reports group outstanding balances into time-based categories. They help healthcare practices identify delayed reimbursement and organize follow-up activities.
|
AR Aging |
Claim Status | Recommended Action |
| 0–30 days | Recently submitted claims | Confirm acceptance and monitor processing |
| 31–60 days | Claims requiring closer monitoring | Verify payer status and investigate delays |
| 61–90 days | Increasingly aged claims | Resolve documentation requests and denials |
| 91–120 days | Older outstanding balances | Escalate issues and review deadlines |
| Over 120 days | Long-standing receivables | Prioritize appeals and recoverability reviews |
These categories are operational guidelines, not universal insurance processing deadlines.
What AR Aging Category Should Receive Attention First?
Age can be an important parameter for claims that should receive more attention; however, age should not be the only criterion.
There are two claims that can be considered:
Claim A: $2,500; overdue for 45 days; approaching deadline for appeal.
Claim B: $100; overdue for 110 days; no approaching deadlines.
In such a case, Claim A might require more attention, as a deadline for appeal could be missed.
A good strategy would be to take into account age, amount, denial reason, payer requirements, and collectability of a particular claim.
Standard AR Denials in Medical Billing
Denials from insurance companies are one of the most significant sources of problems with accounts receivable.
Some of the denials are related to mistakes in claim submissions, while others are related to medical necessity, benefits limitations, authorization requirements, and so on.
It is helpful to understand standard denial codes.
Common Claim Adjustment Reason Codes
| CARC | Description | Recommended Follow-Up |
|
CO-16 |
Claim contains missing information or billing errors |
Review the accompanying remark information and correct the issue |
| CO-18 | Exact duplicate claim or service |
Check original submission and payment history |
|
CO-29 |
Filing deadline expired | Verify filing limits and possible exceptions |
| CO-50 | Service considered not medically necessary |
Review documentation and coverage policy |
|
CO-96 |
Non-covered charge | Confirm coverage and related remark codes |
| CO-197 | Required authorization or notification absent | Review authorization records and payer rules |
| CO-204 | Service not covered under the patient’s current benefit plan |
Verify benefits and coverage |
Important: CO is the contractual obligation group code. The CARC number identifies the adjustment reason. Actual remittances may use different group codes depending on payer adjudication and financial responsibility.
Use the complete remittance information rather than interpreting a CARC in isolation.
CARC vs. RARC vs. Group Codes
These three code types provide different information.
CARC: Explains why a payment was adjusted or denied.
RARC: Provides additional details about the adjustment, documentation requirements, or claim processing.
Group code: Identifies the category of responsibility associated with an adjustment.
Common group codes include CO for contractual obligation and PR for patient responsibility.
For example, an adjustment assigned to contractual obligation generally cannot simply be transferred to the patient.
The official X12 Claim Adjustment Reason Codes resource provides standardized adjustment code descriptions.
How to Reduce AR Denials in Medical Billing
Claim recovery is one thing but claim prevention can be equally crucial.
Verify Insurance Eligibility
Ensure that coverage is current on the date of service. Evaluate benefits information, payer information, and coordinate-of-benefits criteria when necessary.
Eligibility verification will not ensure payment but will help you discover problems with registration and coverage before submitting your claims.
Verify Prior Authorization
Some services may require prior authorization or notice as per certain insurance plans.
Make sure you verify all the required things prior to any treatment such as prior authorization requirements, prior authorization service, number of units authorized, authorized provider, and dates of service.
Keep in mind that having prior authorization does not mean that reimbursement is guaranteed.
Keep Proper Clinical Documentation
Lack of clinical documentation may lead to disputes about codes and medical necessity.
The clinical documentation should state all information about the patients’ illness, services performed, and medical decision making, if needed.
Track Denial Patterns
Look at the trends of denial by payer, provider, procedure, and reason.
When many claims are denied due to missing authorization, investigate the authorization process instead of fixing each claim individually.
It will help prevent recurring issues.
Medical Coding Considerations During AR Follow-Up
AR follow-up does not have a dedicated CPT or ICD-10-CM code because it is an administrative revenue cycle function.
However, coding issues frequently explain why claims remain unpaid.
Codes CPT and HCPCS
The CPT codes indicate procedures performed and professional services offered. The HCPCS Level II codes indicate other services, items, supplies, and equipment.
Claims may face denial on account of wrong code pairing, lack of modifier requirements, units not supported, or limitation of coverage.
The CMS National Correct Coding Initiative (NCCI) contains Procedure-to-Procedure edits and Medically Unlikely Edits.
ICD-10-CM Diagnosis Codes
ICD-10-CM codes will indicate the diagnosis documented and the appropriate reason for encounter.
If a claim is denied by the insurance company due to medical necessity, the provider needs to verify if there is an accurate diagnosis code indicated in the patient’s chart and whether the service provided meets the criteria.
A diagnosis code should never be altered unless there is documentation to support the change.
E/M Coding and Modifiers
Evaluation and management services can be selected based on either medical decision-making or time depending on the type of service.
The modifier 25 could be applied in the case of E/M service that is significantly different from the procedure performed on the same day. The modifier 59 could be used in appropriate cases of distinct procedural services.
Both modifiers should not be applied automatically just to override the denial.
Examples of Coding-Related AR Issues
| Code or Modifier | Possible Issue | Follow-Up |
| CPT 99213 | E/M level or reimbursement dispute | Review documentation and coding requirements |
| CPT 99214 | Medical necessity or service-level question | Verify supported MDM or applicable time |
| Modifier 25 | Same-day E/M and procedure edit | Verify separately identifiable E/M work |
| Modifier 59 | Procedure-to-procedure edit | Review NCCI guidance and clinical documentation |
| ICD-10-CM | Diagnosis-related coverage denial | Confirm documented diagnosis and payer policy |
| HCPCS Level II | Service coverage or unit issue | Review billing details and benefit requirements |
Code selection and reimbursement depend on the service date, clinical documentation, coding guidelines, and payer policy.
Corrected Claims vs. Appeals in AR Follow-Up
One common mistake is resubmitting a denied claim without determining whether an appeal is required.
A corrected claim and an appeal are not interchangeable.
| Corrected Claim | Claim Appeal |
| Corrects inaccurate claim information | Challenges an adverse payer determination |
| May involve coding or demographic corrections | May involve medical necessity or payment disputes |
| Follows payer correction procedures | Follows applicable appeal procedures |
| Subject to correction deadlines | Subject to appeal deadlines |
For example, an incorrect provider identifier may require claim correction.
However, if an insurer denies a properly submitted service despite supporting documentation, an appeal may be appropriate.
Medicare Filing and Appeal Deadlines
For Original Medicare fee-for-service claims, initial claim filing is generally subject to a one-calendar-year deadline, with limited exceptions.
The first appeal level, called redetermination, generally requires submission within 120 days of receiving the initial claim determination, subject to applicable rules.
These deadlines should not be applied automatically to Medicare Advantage, Medicaid, or commercial plans.
Practices should verify payer-specific requirements before submitting corrected claims or appeals.
Reference: CMS Medicare Redeterminations.
Practical AR Follow-Up Examples
Understanding real-world claim situations can help healthcare providers recognize issues before they develop into long-standing balances.
Example 1: Claim Pending for Additional Documentation
A clinic submits a $450 outpatient claim. After 35 days, payment has not arrived.
The payer confirms that supporting records are required.
Solution: Submit the requested documentation securely, retain confirmation, and monitor the claim until adjudication is complete.
Example 2: E/M Claim Denied for a Coding Edit
A physician performs an office visit and a minor procedure during the same encounter. The E/M claim line is denied.
The practice reviews whether the documented E/M service was significant and separately identifiable from the procedure.
Solution: Determine whether the documentation supports the reported E/M service and modifier 25. Use the appropriate payer correction or appeal process only when justified.
Example 3: Insurance Underpayment
A practice expects an allowed reimbursement of $250 according to its contract, but the payer reports an allowed amount of $180.
Solution: Review the payer contract, provider participation status, applicable adjustments, and payment policy. If an underpayment is confirmed, request payer review.
Key AR Follow-Up Performance Metrics
Monitoring AR performance helps healthcare administrators measure collection efficiency and identify areas requiring improvement.
1. Days in Accounts Receivable
Days in AR estimates the relationship between outstanding receivables and average daily charges.
Formula (Google Docs ready):
Days in AR = Total Accounts Receivable / Average Daily Charges
Example:
Days in AR = $180,000 / $5,000 = 36 days
This is an aggregate operational estimate, not the exact payment time for every claim.
2. AR Over 90 Days Percentage
This metric measures the proportion of outstanding balances older than 90 days.
Formula:
AR Over 90 Days (%) = (AR Over 90 Days / Total AR) × 100
Example:
AR Over 90 Days (%) = ($45,000 / $180,000) × 100 = 25%
A rising percentage may indicate unresolved denials, payment delays, or collection problems.
3. Denial Rate
The denial rate shows the proportion of adjudicated claims denied during a reporting period.
Formula:
Denial Rate (%) = (Denied Claims / Total Adjudicated Claims) × 100
Example:
Denial Rate (%) = (80 / 1,000) × 100 = 8%
Practices should use consistent claim-level or claim-line-level definitions when tracking this metric.
4. Net Collection Rate
Net collection rate measures reimbursement collected relative to eligible collectible amounts after applicable contractual adjustments.
Formula:
Net Collection Rate (%) = (Payments Collected / (Charges – Contractual Adjustments)) × 100
Example:
Net Collection Rate (%) = (85,000/(100,000 – $10,000)) × 100 = 94.44%
For accurate reporting, use a consistent measurement period or reconciled cohort and account for refunds and applicable adjustments.
5. Denial Resolution Time
This measures how long it takes to resolve denied claims.
Formula:
Average Denial Resolution Time = Total Days to Resolve Denials / Number of Resolved Denials
Tracking this metric helps identify problems with payer communication, documentation, and internal claim review.
No single benchmark applies to every practice because specialty, payer mix, and billing complexity differ.
Common AR Follow-Up Mistakes
Several avoidable mistakes can extend payment delays.
Ignoring Recent Claims
Focusing only on accounts older than 90 days can allow newer denials and filing problems to go unresolved.
Review claims according to age, risk, and deadline.
Submitting Duplicate Claims
Resubmitting a claim without checking its status can generate duplicate denials.
Verify whether the original claim was accepted and whether a corrected claim is actually required.
Failing to Document Follow-Up
Incomplete account notes can result in repeated inquiries and missed actions.
Record the payer response, reference number, contact date, required documentation, and next follow-up date.
Writing Off Balances Prematurely
A balance should not be written off simply because collection is difficult.
First review contractual obligations, payer decisions, appeal opportunities, and applicable financial policies.
Best Practices for Improving AR Follow-Up
Medical practices can strengthen collection performance by building consistent procedures around outstanding claims.
Establish follow-up schedules. Review unpaid accounts according to payer processing expectations, claim age, and approaching deadlines.
Use dedicated work queues. Separate pending claims, denials, underpayments, missing documentation, and appeal cases so each receives appropriate attention.
Automate routine tasks. Electronic claim status inquiries, aging reports, and worklist alerts can reduce manual administrative work.
Monitor payer-specific trends. Identify insurers with recurring reimbursement delays or denial patterns and investigate the underlying causes.
Improve communication. Ensure that coding, clinical documentation, registration, and administrative processes support accurate claims.
Maintain HIPAA safeguards. Protect patient information when reviewing claims, communicating with insurers, and sharing documentation with authorized service providers.
A strong AR process combines timely follow-up with improvements that prevent the same errors from recurring.
When Should Healthcare Providers Outsource AR Follow-Up?
Managing large volumes of unpaid claims can become difficult for growing practices.
Professional AR support may be helpful when accounts remain unresolved for extended periods, denial rates increase, or internal resources cannot maintain consistent payer follow-up.
An experienced medical billing company may assist with outstanding claim tracking, denial investigations, appeal coordination, underpayment reviews, and AR reporting.
Before outsourcing, healthcare providers should evaluate the company’s reporting transparency, payer experience, compliance procedures, and ability to identify recurring revenue cycle problems.
The goal should be better accountability and claim resolution, not simply transferring unpaid accounts elsewhere.
Conclusion
AR follow up in medical billing is essential for managing outstanding claims, identifying payment problems, and protecting legitimate reimbursement opportunities.
Effective follow-up requires accurate aging reports, timely payer communication, proper coding, denial resolution, and consistent payment reconciliation.
For healthcare providers, the most sustainable approach combines active accounts receivable management with improvements to the processes that cause repeated billing errors.
When every outstanding claim receives appropriate attention, medical practices gain better financial visibility and greater control over their revenue cycle.
Frequently Asked Questions
1. What does AR follow up mean in medical billing?
AR follow-up means tracking unpaid medical claims, investigating payment delays, resolving denials, and collecting eligible reimbursement from insurance payers or patients.
2. What is the difference between AR follow-up and denial management?
AR follow-up covers all outstanding receivables, including pending claims, underpayments, and payment discrepancies. Denial management specifically addresses claims denied by insurance payers.
3. How often should AR follow-up be performed?
Follow-up frequency depends on the payer’s processing expectations, claim status, age, and applicable deadlines. Practices should prioritize urgent denials and use routine status monitoring for other outstanding claims.
4. What causes high AR in medical billing?
Common causes include insurance processing delays, claim rejections, incomplete documentation, missing authorizations, coding errors, unresolved denials, and inaccurate payment posting.
5. Can denied medical claims be recovered?
Some denied claims can be recovered through corrections, documentation submission, reconsideration, or appeals. Recovery depends on payer rules, coverage requirements, documentation, and deadlines.
6. What is the difference between AR aging and days in AR?
AR aging categorizes outstanding balances by age. Days in AR is a financial indicator estimating the collection cycle based on outstanding receivables and average daily charges.
7. Does AR follow-up require CPT or ICD-10-CM codes?
AR follow-up itself does not require clinical billing codes. However, reviewing CPT, HCPCS, ICD-10-CM codes, and modifiers may be necessary to resolve coding-related denials.