Why Better AR Days Can Hide Lost Revenue

One interesting pattern we've observed is that over time a clinic's billing function can start to deteriorate. The worst case I've seen is 20% revenue leakage. These are hard-earned procedures and considerate care that a clinic rightfully earns but doesn't collect.

This problem can happen whether you handle billing in-house or use an outside company. Over time, clinic leaders may get used to collecting less money because it's hidden by faster cash flow or better AR Days. Money still comes in, income looks good, and there are fewer collection headaches. But eventually, these hidden costs add up.

Why does this happen?

Well, it's a slippery slope.

Billing teams face many small pressures that can slowly affect their accuracy. First, coding correctly is difficult. You need proper documentation and must understand each payer's rules. You also have to be ready to appeal denials. Over time, teams may choose the easier path to avoid extra work.

Second, teams are often busy and need to send out bills quickly. If providers don't have the right documentation, it can feel uncomfortable for billing staff to interrupt a doctor's work. This is even harder when billing is outsourced, since it involves working with another organization. As a result, it's easier to leave things as they are instead of getting full support for a higher-level code.

Third, many teams start to think that underbilling is normal. They worry that coding higher could be seen as fraud or overbilling. But when compared to similar clinics, they actually stand out as an exception. For example, I once saw a patient with five health conditions marked as low complexity because the team was afraid of overcoding.

All these factors put real pressure on teams to undercode. Since faster collections can hide the problem, people celebrate the progress and blame payers for lower payments. While that's partly true, you might also be billing for less than you should.

Questions to consider

• Do you get claim denials but never appeal them? (Remember, 50-60% of appeals are successful)
• Do you review your code distribution at least twice a year?
• Do you regularly train your teams on the best practices for medical documentation?
• Are your Days AR getting better, but your collections are not improving? Undercoding could be the reason.

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If you're not sure where your clinic stands, you can reach out to us below. We can help diagnose this issue quickly.

With a decaf in hand,
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