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Unlocking the Secrets to Collecting on Aging Receivables in FQHCs


If you live and breathe the world of healthcare, you likely know that in Federally Qualified Health Centers (FQHCs), managing accounts receivable is crucial for maintaining financial stability and providing quality healthcare services to the community. However, the challenge lies in effectively collecting on AR that is older than 90 days. Over time, this can be frustrating and discouraging for health centers that are trying to serve their communities efficiently. Together, we will explore the impact of aging accounts receivable, strategies to keep them under 20%, and actionable steps FQHCs – yes, even yours! – can take to improve bill payment rates, ensuring bills are paid in full the first time.

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The Problem with Accounts Receivable Older than 90 Days

AR older than 90 days can significantly impact the financial health of FQHCs. These aging receivables create a strain on cash flow, hinder resource allocation, and affect the overall sustainability of the organization. But why 90 days? The longer AR remains unpaid, the more challenging it becomes to collect it, increasing the risk of write-offs and revenue loss.

Keeping Old Accounts Receivable under 20%

Reducing the percentage of old accounts receivable is crucial for the financial stability of FQHCs.The Healthcare Finance Management Association (HFMA) sets the guidelines, and they say that as long as 20% or less of your AR is older than 90 days, you are in the clear as the industry standard.

While we believe no AR is possible, 20% is a good rule of thumb and a good starting point for efficient revenue cycle management. Here are some effective strategies to help keep your aging receivables under 20%:

  • Streamline the billing process – Implement efficient billing systems and workflows to minimize errors, reduce delays, and ensure accurate and timely submission of claims.
  • Verify patient information – Thoroughly validate patient insurance coverage, demographic data, and eligibility to avoid claim denials and delays in reimbursement.
  • Enhance coding accuracy – Invest in continuous improvement for coding staff to ensure accurate and compliant coding, reducing the risk of claim denials and rejections.
  • Implement denial management processes – Establish a robust denial management system to identify and address claim denials promptly, preventing them from aging and becoming uncollectible.
  • Offer multiple payment options – Provide patients with convenient payment options such as online portals, mobile apps, and payment plans, encouraging timely payments and reducing accounts receivable aging.
  • Monitor revenue cycle performance – Regularly monitor and analyze key performance indicators such as days in AR, denial rates, and collections ratios. This data provides insights into areas requiring improvement and helps identify trends or patterns affecting payment collection. 
  • Provide education & training for all staff – Invest in continuous staff training to ensure they are up-to-date with industry regulations, best practices, and billing guidelines. Well-trained staff can optimize billing processes, minimize errors, and improve payment collection efficiency.

 Steps to Improve First-Time Bill Payment

Improving first-time bill payment rates is key to reducing the workload associated with collections and nipping aging AR in the bud. Consider the following steps to enhance your FQHC's bill payment process:

  • Clear and concise patient communication – Ensure that billing statements and explanations of benefits are easily understandable, providing clear information about services rendered, costs, and payment options.
  • Financial counseling and education – Connect patients with financial counseling services. This can provide guidance on insurance coverage, payment options, and available financial assistance programs.
  • Verify insurance coverage upfront – Before scheduling appointments, verify patients' insurance coverage and eligibility, and communicate any potential financial responsibility, ensuring transparency and avoiding surprises.
  • Collect at the point of service – Train front desk staff to collect co-pays, deductibles, or any patient responsibility amounts at the time of check-in or check-out, minimizing outstanding balances. 
  • Utilize technology solutions – Leverage technology to automate payment processes, such as sending electronic statements and implementing secure online payment portals, facilitating convenient payment transactions. 
  • Proactive follow-up on outstanding balances – Implement a structured follow-up process for outstanding balances, including timely reminders, phone calls, or email communication to encourage prompt payment. 
  • Collaborate with revenue cycle management experts – Consider partnering with revenue cycle management experts who specialize in FQHC billing, like Synergy Billing, to gain valuable insights, optimize processes, and improve collection rates.

What if my DAR is low but cash is low too?

You may be thinking that if your DAR number is low then your billing operation is both efficient and effective. This isn’t always the case. Especially if you are having cash flow issues. Write-offs and adjustments will reduce your overall A/R and in turn, could make the DAR metric appear more favorable than it actually is. To rule this out, FQHCs should review full balance adjustments.

What Should My Days-In-AR (DAR) be?

The answer to this question depends on a number of factors. Mostly your payer mix. Medicare usually pays about 14 days after receiving a claim.  Some state Medicaid programs remit payment weekly. Meanwhile, some managed care carriers pay claims at 45 days after receipt, the time allowed by law in some states. When Synergy’s experts are reviewing performance, we use these guidelines:

  • 30 days or less for a High performing Billing Department.
  • 40-50 days for an Average performing Billing Department.
  • 60 days or more for a Below Average Billing Department.

Accounts Receivable: “Aging Buckets”

The other measure is the distribution of A/R in each “aging bucket”, for instance, 0-30 days, 31-60 days, 61-90 days, etc. To calculate it, you will need a report showing the dollar amount of the A/R in each aging bucket.  Simply convert each bucket to a percent of the total A/R.   The graph below shows the contrast between Better-performing billing departments vs. Average-performing billing departments.

Effectively managing aging accounts receivable is crucial for the financial sustainability of FQHCs. By implementing streamlined billing processes, reducing accounts receivable aging, and improving first-time bill payment rates, your health center can be better equipped to provide a better experience for your patients and more successful processes for your staff. Remember – AR isn’t necessarily a bad thing. AR within the 0 to 30-day range is acceptable. It is when AR begins creeping to a higher age than that that it gets a little more complicated. So, remain encouraged that there are solutions available to you and a road to a no-AR future, especially with Synergy Billing as your partner.

Interested in having a conversation? Give us a call at 877-242-8475.


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