What is Accounts Receivable Management?

Accounts Receivable (A/R) management is a structured process of monitoring outstanding balances and reducing aging receivables.

It covers insurance reimbursements that await payment, remaining patient balances after insurance claims are settled, and other patient responsibilities that include outstanding deductibles, copays, and non-covered services.

Are you looking to clear pending payments, prevent aging balances, and maintain a healthy cash flow to keep your practice running?

If yes, this blog helps you with that.

Here, we’ll discuss all the key aspects of effective dental A/R management, including core processes, components, best practices, and software automation, and learn how it helps in maximizing collections.

So, let’s get started.

An Overview of Dental Accounts Receivable

Before we deep dive into the process of A/R management, let’s begin with understanding dental accounts receivable, so you learn its basics and know how to manage it.

So, in the context of the dental revenue cycle, accounts receivable refers to the unpaid dues a dental practice is owed for the dental services rendered to the patients.

What makes up dental A/R?

Dental A/R usually consists of unpaid insurance claims and outstanding patient balances. It’s important to categorize insurance A/R and patient A/R separately as both require different practices and workflows for recovery, and to make collections effective.

So, let’s discover both of these segments and how they come into play while managing A/R.

Insurance A/R

Insurance A/R includes unpaid or underpaid claims from insurance carriers. In case of non-payment, claims are either in pending status due to lack of follow-up or completely denied.

Key challenges in insurance A/R include:

All that can be resolved with:

• Timely Claim Follow-ups: Checking claim status regularly to ensure faster processing and payment.
• Knowledge of Payer Rules: Understanding each insurance company’s policies for compliant workflows to prevent denials and delays.
• Strong Appeal Documentation: Providing complete evidence and records with appeal letters to support denied or underpaid claims.
• Automated Claim Tracking: Using software like a practice management system or a claim tracking tool to monitor unpaid claims and flag aging A/R.
• Effective Communication with Payers: Resolving queries or discrepancies quickly with insurance companies.
• Regular A/R Aging Reports: Reviewing outstanding balances to prioritize follow-ups.
• Denial Analysis and Trend Tracking: Identifying recurring denial reasons to fix systemic issues.
• Prompt Resubmissions: Correcting and resubmitting rejected or denied claims quickly

Patient A/R

Patient A/R includes outstanding patient balances that include their responsibilities, which they need to pay. 

These are often identified after proactive eligibility verification or tracking remaining patient balances after claim settlements. 

The table below explains key challenges that practices often encounter in patient A/R, with practical solutions.

Primary Goals of A/R Management

Effective A/R management is not just about maximizing collections or clearing outstanding patient balances and unpaid claims. Its goals are broader and more strategic.

The primary goals of A/R management in dental practices include:

Step-by-Step Process of Dental A/R Management

The dental A/R process begins even before a patient ever sits in the chair and continues until payment is fully collected, encompassing all the phases of a dental revenue cycle, including front-end, mid-cycle, and back-end.

Now, let’s review all the steps of A/R to see how A/R management fits into a practice’s complete revenue cycle.

Insurance Eligibility Verification

Dental insurance eligibility verification is essential to verify all aspects of a patient’s insurance plan, including benefits, coverage, limitations, and waiting periods. 

This step directly impacts A/R because confirming eligibility on the spot ensures that claims submitted are reimbursed, reducing the likelihood of denied claims or delayed payments. Knowing the patient’s coverage also allows practice staff to communicate any out-of-pocket responsibility, preventing unpaid balances or unwelcome surprises for patients later.

In fact, doing so in real-time delivers more effective results, as practice staff know patients’ insurance plan status on the spot and can proceed with the treatment quickly while communicating responsibilities to the patients, to speed up the process.

Pre-Authorization

Some high-risk or complex dental procedures, like bone grafting, crowns, dentures, and SRP (scaling and root planning), require prior authorization by insurance companies. Each insurer has its own criteria for approving these treatments. 

It’s important to obtain pre-authorization for such procedures from insurers. This step impacts A/R management by reducing the risk of denied claims, ensuring that expected insurance payments are secured before services are rendered. It also provides a clearer estimate of patient responsibility, minimizing delays in collections.

Accurate Treatment Coding

Assign correct CDT codes for dental procedures and document these treatments thoroughly. Ensure that the codes align with the latest code set published by the American Dental Association (ADA).

Accurate dental coding is crucial for A/R management because it ensures that claim submissions align with the actual procedures performed and insurance companies facilitate reimbursements faster.

Errors in coding can lead to claim denials or underpayments, which slow down the practice’s cash flow and increase outstanding receivables.

So, it’s essential to code procedures accurately, preventing A/R aging and increasing accounts receivable from the very beginning.

Claim Submission

Submit clean and accurate claims electronically within the payer’s required timelines and procedures. 

It helps with effective A/R management because timely and correct submissions reduce claim rejections and speed up payments. This keeps accounts receivable lower and improves the practice’s overall cash flow.

Payment Posting

Record insurance payments and patient payments accurately against each claim and reconcile them with the explanation of benefits (EOB) to evaluate if these payments match the expected amount for the treatment.

Proper payment posting maintains up-to-date A/R records, allowing the practice to track outstanding claims and those requiring follow-up. It ensures that revenue isn’t overlooked.

Denial Management and Appeals

Identify and address denied or underpaid claims promptly. This step is essential for A/R management because unresolved denials can sit in the accounts receivable ledger for months, delaying revenue. 

Correcting errors or submitting appeals for unfair claim denials or underpayments ensures that expected payments are collected and A/R aging remains under control.

Patient Billing and Collections

Patient billing is perhaps the most crucial phase in A/R management, as practices mostly struggle with recovering amounts from overdue patient balances.

To complete this step:

• Communicate patient financial responsibility clearly
• Send statements promptly via an official email, text, or SMS
• Provide flexible payment options (monthly installments, multiple payment gateways)

All these steps help win patients’ trust, prevent surprise expenses they aren’t expecting, and make it easier for them to clear balances according to their incomes.

This step impacts A/R by:

• Reducing unpaid patient balances
• Shortening collection times
• Ensuring that the practice receives timely cash for services rendered

Consistent follow-up with patients prevents receivables from aging too long. 

But, in case recovery is still challenging, forward the case to collections agencies.

A/R Aging Monitoring

Generating consistent A/R aging reports is the key to identifying overdue accounts and categorizing outstanding balances. It shows unpaid balances owed to a practice, grouped by how long each balance has been outstanding.

Regularly review A/R aging reports, as these help prioritize collections efforts. This proactive step ensures that older accounts receive immediate attention, minimizing bad debt and keeping overall A/R under control.

Financial Reporting and Forecasting

Use A/R data to:

• Generate revenue reports
• Identify denial or A/R aging patterns
• Forecast cash flow

This step supports strategic planning and budgeting, helping practices make informed decisions about staffing, investments, and financial goals. While it doesn’t directly collect money, it ensures A/R performance is monitored and optimized, making it crucial to the overall A/R management process.

A/R Aging Buckets

A/R aging buckets categorize outstanding balances by how long they’ve been unpaid. This helps practices prioritize follow-ups and identify risk.

The list below explains each bucket, so practices can identify actions required for these buckets.

• 0-30 Days: Newly billed balances, usually paid on time with minimal follow-up.
• 31-60 Days: Slightly overdue payments that need reminders or verification.
• 61-90 Days: High-risk balances requiring prioritized follow-up.
• 91-120 Days: Critically overdue accounts needing escalation or payment plans.
• Over 120 Days: Long-term outstanding balances, often requiring collections or write-offs.

Dental A/R Metrics and KPIs

The following metrics are usually tracked to monitor and manage accounts receivable

Days in A/R

Days in A/R measures the average number of days it takes a dental practice to collect payments. Lower numbers indicate faster collections and healthier cash flow. Tracking this metric helps identify delays in insurance claims, patient payments, or follow-up processes, enabling timely corrective action.

This metric can be improved with professional dental A/R management services by companies like TransDental, which ensures smooth recovery within an average 21 days.

Net Collection Rate

The net collection rate shows the percentage of total potential revenue actually collected. It’s calculated by dividing the total payments collected by the total amount of collectible charges (after accounting for insurance and approved write-offs), and then multiplying it by 100 to get a percentage.

Higher rates indicate efficient billing and effective follow-up. This metric helps dental practices evaluate overall financial performance and the effectiveness of their revenue cycle management.

Example: A practice provides treatments worth $100,000 in a month.

Insurance contracts require $20,000 to be written off, and the practice approves another $5,000 as write-offs.

This brings the total adjustments to $25,000, leaving $75,000 as the actual amount the practice can collect.

During the month, the practice receives $70,000 from insurance and patient payments.

The remaining $5,000 is still unpaid and needs regular follow-up to prevent A/R from increasing.

Since most of the collectible amount is recovered, the net collection rate is 93.5%, which reflects strong billing and follow-up performance.

Collection Effectiveness Index (CEI)

CEI evaluates how efficiently a dental practice collects outstanding balances over a specific period. 

It’s calculated by dividing the total payments collected during a period by the total expected collectible revenue, which includes beginning A/R plus new charges minus ending A/R.

A higher CEI means claims and patient balances are being collected promptly. Tracking CEI provides insight into the effectiveness of A/R processes, including follow-ups, claim accuracy, and patient communication.

Example: At the start of the month, a practice has $50,000 in unpaid accounts (beginning A/R). During the month, it bills $100,000 for new treatments. By the end of the month, $60,000 of balances are still unpaid (ending A/R). The practice collects $85,000 during the month. The CEI is 94.4%, indicating good collections from A/R over the month.

Denial Rate

The denial rate measures the percentage of claims rejected or denied by insurance carriers. High denial rates indicate frequent issues like coding errors, incomplete documentation, or payer issues. 

Each claim denial increases accounts receivable, so minimizing the denial rate is essential to protect revenue and maintain a healthy cash flow for the practice.

Monitoring this metric helps dental offices reduce delays, improve claim accuracy, and ensure faster reimbursements for treatments rendered.

Identifying High-Risk Payers in A/R

High-risk payers are insurance carriers or plans that consistently delay, deny, or underpay claims.

The table below explains some risk indicators that help you identify risky payers and take corrective actions to minimize A/R.

Using Payer Data to Prioritize Follow-Ups

Dental practices should analyze the following aspects of high-risk payers to categorize them and implement A/R management strategies:

• Aging by payer: Measuring how long unpaid claims or patient balances have been outstanding, broken down by each insurance carrier to:
  • Help identify which payers are slow to pay
  • Allow the billing team to prioritize follow-ups with high-risk or slow-paying payers
• Historical reimbursement trends: Tracking the amount actually reimbursed by each payer over time to:
  • View patterns like consistent underpayment or payment delays
  • Help predict future cash flow and adjust expectations or billing practices
• Denial reasons: Identifying the specific causes of claim denials, such as coding errors, missing documentation, or eligibility issues to:
  • Enable the team to address recurring issues
  • Reduce future denials and speed up collections

This data-driven approach allows billing teams to focus efforts where they have the highest financial impact.

How to Reduce A/R?

Let’s review some effective A/R reduction strategies before and after a dental procedure is performed.

Front-End A/R Reduction Strategies

Insurance Verification Before Appointments

Verifying a patient’s insurance before treatment:

• Ensures coverage
• Reduces claim denials
• Identifies patient responsibility upfront

This step prevents surprises, speeds up collections, and improves cash flow for the dental practice.

Pre-Treatment Estimates

Providing a pre-treatment estimate shows patients their expected out-of-pocket costs. It:

• Ensures transparency
• Encourages timely payments
• Reduces confusion about insurance coverage

This helps practices maximize collections from patients’ costs more efficiently.

Clear Financial Policies

Establishing clear financial policies before the treatment is important. These policies must include aspects like:

As a result, patients are aware of set expectations beforehand, and it also minimizes any future disputes. Proper written policies support consistent collections and protect the practice’s revenue.

Patient Education

Educating patients about insurance, treatment costs, and payment options empowers them to pay on time. Clear communication improves satisfaction, reduces billing confusion, and lowers the likelihood of delayed or unpaid balances.

Back-End A/R Reduction Techniques

Weekly Insurance Follow-Ups

Regular follow-ups with insurance carriers ensure claims are processed promptly. Weekly tracking keeps insurance A/R under control by:

• Reducing delays
• Identifying missing documentation
• Increasing reimbursement rates

Timely Appeals

Appealing denied claims quickly increases the chances of successful reimbursement. Prompt action ensures adjustments are handled efficiently, preventing long-term delays and minimizing revenue loss.

Multiple Payment Options

Offering various payment methods like credit cards, online payments, or financing plans makes it easier for patients to pay on time. Flexible options improve collections and reduce outstanding patient A/R.

Clear Patient Statements

A patient statement is a document (printed or electronic) sent to the patient showing what they owe for services rendered, including insurance payments, adjustments, and remaining balances.

When a patient statement is issued, make sure that it’s easy to read. It must itemize all the components of a dental procedure and payment structure, including:

• Services
• Insurance payments
• Remaining balances

Simple and transparent invoices encourage patients to pay promptly, so there is no confusion or disputes.

This is an example of a clear and easy-to-understand patient statement that clearly explains the total costs of a procedure, with expenses covered by the insurance plan and the remaining patient balance that the patient needs to pay:

Best Practices for Effective Dental A/R Follow-Up

Let’s review the entire process of following up on accounts receivable to ensure maximum collections and reduce it as much as possible.

Insurance A/R Follow-Up Protocols

Initial Follow-Up at 14-21 Days

After submitting a claim, dental practices should check its status within the first 14-21 days. Staff should:

• Verify that the claim is received
• Check for errors or missing information
• Document the follow-up in the practice management system. 

Early monitoring prevents small delays from becoming long-term issues. 

With smart dental billing services, insurance aging can be prevented. Partners like TransDental help get claims reimbursed within 48 hours of submission.

Second Follow-Up at 30 Days

If payment is not received within 30 days, contact the payer with detailed claim information. Include all the essential details like:

• Claim number
• Date of service
• Patient details
• Treatment codes

Follow up via phone or insurer portal, and log all interactions. Consistent follow-ups increase the likelihood of timely reimbursement.

Escalation After 45-60 Days

Claims unpaid after 45-60 days require escalation, as their aging makes their reimbursement more difficult. The escalation process may include contacting a payer supervisor or submitting a formal appeal. 

Do the following:

• Track escalations carefully
• Maintain documentation
• Review for recurring issues with high-risk payers. 

Escalation ensures older A/R doesn’t become uncollectible.

Patient A/R Follow-Up Guidelines

First Statement Within 5–7 Days of Insurance Payment

Once insurance has processed the claim, send a clear patient statement within 5-7 days. The statement should show the treatment provided, insurance payment, and remaining balance. Prompt billing encourages timely payment and reduces confusion.

Reminder Calls or Texts

If payment is not received within the expected timeframe, follow up with gentle reminders via phone or secure text/email. Include balance details and payment options. Consistent reminders improve collections without harming patient relationships.

Payment Plans Before Collections

For patients who cannot pay in full, offer structured payment plans before sending accounts to collection agencies. Clearly communicate terms and due dates, and document agreements. Offering flexibility preserves patient goodwill while improving cash flow.

Improving Cash Flow with A/R Forecasting

A/R forecasting estimates when outstanding balances will be collected. Knowing the data in advance helps practice:

• Make better staffing decisions
• Improve budgeting
• Reduce reliance on credit

Inputs Used in Dental A/R Forecasting

The table below explains metrics used to forecast future trends in dental A/R. These include:

Common Dental A/R Forecasting Mistakes

Some mistakes in A/R forecasting result in an increase in A/R that leads to delayed reimbursements and eventual claim denials.

Overestimating Insurance Payments

Many dental practices assume insurance pays the full billed amount on time, leading them to expect higher reimbursements. This can create gaps in budgeting and staffing decisions.

Example: The practice bills $10,000 and expects insurance to pay it all within 30 days. Some claims are paid late or partially, so the practice is only paid $7,500. It affects income and overall practice revenue.

Solution: Base forecasts on previous payment patterns for each payer, considering elements like denials, downgrades, and processing delays, to expect what you’ll receive in claim reimbursements.

Ignoring Past Write-Offs

Neglecting past write-offs or uncollectible balances can inflate expected revenue, causing inaccurate forecasts and unexpected shortfalls.

Example: The practice usually writes off $2,000 a month for unpaid patient balances. If this isn’t counted, practice expects to collect $12,000 but really gets only $10,000.

Solution: Incorporate past write-off data into forecasts, adjusting expected collections for patients and insurance to predict actual collectable revenue.

Failing to Track Aging Trends

Forecasts that don’t consider how long claims remain unpaid can underestimate delays, especially for high-risk payers or patient balances.

Example: Some insurance claims sit unpaid for 90+ days. If a practice assumes all claims are paid in 30 days, they won’t see the delays coming.

Solution: Use A/R aging reports to accurately predict collections by aging buckets (0–30, 31–60, 61–90+ days).

Ignoring Payer Mix Differences

If you don’t consider how long different insurers take to approve or pay claims, your revenue forecasts may be off.

Example: PPO claims usually pay in 25 days, but Medicaid claims take 60 days. Forecasting both claims in the same way overestimates lesser collections.

Solution: Analyze collections by payer, and forecast separately for each group, adjusting for historical processing times and denial rates.

Neglecting Seasonal or Practice Volume Trends

Not accounting for busy seasons, holidays, or changes in patient visits can make revenue forecasts inaccurate.

Example: December is usually busy because patients use year-end benefits, while July may be slower. If the practice doesn’t adjust for this, forecasts and staffing decisions can be inaccurate, affecting financial performance and productivity.

Solution: Review past patient trends and seasonal patterns, and adjust your forecasts for expected highs and lows for each season.

Automating A/R Management with Technology

Modern A/R management depends heavily on technology, leveraging AI-powered automation for efficiency in tasks. Automation reduces manual errors, speeds up processes, and improves all aspects of A/R, including monitoring, segmentation, follow-ups, and forecasting.

Tools include:

Practice Management Systems

A practice management system is a unified platform that centralizes all key details, including:

• Patient records
• Billing
• Scheduling
• Claims tracking

A robust PMS tool helps:

• Maintain accurate dental coding
• Monitor aging reports
• Manage both patient and insurance A/R efficiently

Using practice management solutions by service providers like TransDental ensures all A/R activities are organized, reducing errors and improving cash flow.

Automated Claim Tracking

Automated claim tracking monitors insurance submissions in real-time, flagging:

• Unpaid
• Denied
• Partially paid claims

This:

• Reduces manual follow-up
• Ensures timely appeals

In fact, tracking claims in real-time with consistent follow-up allows practices to review progress regularly and prevent A/R from aging.

Automated alerts allow billing staff to prioritize high-risk claims and improve insurance reimbursement rates.

Patient Portals

Online patient portals allow patients to pay securely and conveniently. Payment systems are integrated in these portals, so patients can view their outstanding balances anytime and fulfill their responsibilities.

A/R Automation Tools

Dedicated A/R automation tools help manage accounts receivable efficiently and forecast data based on past insurer and patient payment patterns, enabling practices to make informed decisions and implement strategies.

These tools can perform all the tasks fast, accurately, and at extremely low costs as compared to hiring an A/R management team.

These tools help:

• Automate Data Collection and Billing: Automatically pulls patient balances, insurance claims, and payment data, reducing manual entry errors and saving time for billing staff.
• Claim Submission and Tracking: Tracks claims in real time from submission to payment, highlighting delayed, denied, or partially paid claims so the team can act promptly.
• Prioritize High-Risk Accounts: Segments A/R by payer, procedure, or aging bucket, so staff can focus on accounts that have the biggest impact on cash flow.
• Automate Follow-Ups and Reminders: Sends reminders for unpaid patient balances, pending insurance claims, or recurring denials, helping reduce overdue accounts and write-offs.
• Denial Management: Flags claims likely to be denied, provides insights into common denial reasons, and automates resubmissions and appeals.
• Forecast Revenue: Uses historical data, payment trends, and seasonality to predict cash flow and help practices plan budgets, staffing, and investments.
• Analytics and Reporting: Provides real-time dashboards showing A/R performance, aging trends, collection rates, and payer performance for data-driven decision making.

Should Dental Practices Consider Outsourcing A/R Management?

Outsourcing can be a viable solution for dental practices due to a lack of effective A/R management, including factors such as:

• Delayed Insurance Payments: Claims take longer than expected to be reimbursed, slowing cash flow.
• High Denial Rates: Incorrect coding, missing documentation, or eligibility errors lead to frequent denials.
• Patient Balances Aging: Outstanding patient balances go unpaid due to unclear statements or inconsistent follow-ups.
• Staffing and Resource Constraints: In-house billing staff may be overworked, leading to missed claims or follow-ups.
• Complex Insurance Rules: Multiple payers, CDT codes, and changing policies make accurate billing difficult.
• Manual Processes and Errors: Paper-based or manual tracking increases mistakes and slows collections.
• Limited Reporting and Forecasting: Lack of analytics makes it hard to see trends, predict revenue, or prioritize high-risk accounts.
• High Staff Salaries: The average salary of an A/R executive is over $93,000 per annum, which might be costly for a small-sized dental practice.
• Lack of Expertise: In-house teams may lack specialized knowledge.

Partnering with professional A/R service providers like TransDental offers many benefits to practices, including:

• Faster Collections: Claims and patient balances are collected more quickly, improving cash flow.
• Reduced Denials and Errors: Expert billing staff handle coding, documentation, and appeals accurately.
• Less Administrative Burden: In-house staff can focus on patient care instead of chasing payments.
• Access to Expertise: Professional billing teams stay current with the payer rules and latest CDT codes.
• Automated Processes: Streamlined workflows minimize manual work and human errors.
• Accurate Reporting and Forecasting: Real-time dashboards and A/R insights help with financial planning.
• Cost Savings: Outsourcing is often more affordable than hiring full-time A/R staff.
• Improved Patient Experience: Timely and clear statements reduce confusion and enhance communication.

Conclusion

By implementing strong A/R management workflows and effective follow-up, you can recover outstanding balances from patients and insurers that practices usually write off. But this requires effort and strategic planning. This might be difficult and time-consuming as it requires you to hire a dedicated staff. 

And this can be made easier and stress-free if you transfer the task to a reliable dental A/R management company, which supervises all the processes. It allows your staff to focus on patient care and helps your practice maintain healthy finances.

Frequently Asked Questions (FAQs)