The Real Causes of High Accounts Receivable in Dentistry and the Cure

Introduction

A high Accounts Receivable (A/R) balance is a silent threat to a dental practice's cash flow. It means that you've completed the clinical work, but the money you've earned is stuck in a state of limbo, waiting to be collected from insurance companies or patients. When your A/R gets too high, especially in the 90+ day aging bucket, it can strain your practice's finances. Understanding the root causes of a high A/R balance is the first step toward fixing the problem and ensuring a steady, predictable cash flow.

Key Takeaways

• A healthy dental practice should have less than 5% of its A/R in the 90+ day aging category.
• The primary causes of high A/R are almost always rooted in an inefficient insurance claims process.
• The most effective way to reduce A/R is to be proactive, focusing on preventing issues like claim errors and diligently following up on unpaid claims.

The Root Causes of an Inflated A/R Balance

A high A/R balance is not a sign of a failing practice, but rather a symptom of a broken process. Industry experts and financial analysts consistently point to a few key areas within the insurance revenue cycle as the primary culprits.

1. Inefficient or Incomplete Insurance Verification This is the foundational step where many A/R problems begin. When a patient's eligibility and benefits are not thoroughly verified before their appointment, you risk providing services that their plan doesn't cover. This leads to surprise bills for the patient and claims that are immediately denied by the insurance company. These denied claims then sit in your A/R aging report, often for months, while your team tries to sort out the coverage issues.

2. Claim Errors and Denials A "clean claim" is one that is completely free of errors. Even a minor mistake, like a misspelled name, an incorrect CDT code, or a missing attachment, can cause a claim to be rejected. Each rejected claim has to be manually corrected and resubmitted, a process that can add weeks or even months to the payment timeline. These delayed claims are a direct cause of an inflated A/R balance, as they represent earned revenue that is stuck in administrative limbo.

3. Lack of Consistent Follow-Up Even perfectly submitted claims can get lost or delayed by insurance companies. Without a systematic and consistent process for following up on unpaid claims, it's easy for them to "age out" and become increasingly difficult to collect. Your insurance aging report is a list of all money owed to you, and when it isn't worked on diligently every week, your A/R balance will inevitably grow.

The common thread among all these causes is their reliance on manual, error-prone processes. A modern AI assistant like <u>Toothy</u> is designed to solve this by <u>automating the entire workflow</u>. It proactively verifies insurance benefits, scrubs claims for errors before submission, and automatically follows up on unpaid claims, directly targeting the root causes of a high A/R balance.

FAQ Section

1. Will my front office team need extensive training to use new automation software? Not necessarily. The best modern solutions are designed to work in the background with your existing Practice Management Software (PMS). An AI assistant like <u>Toothy</u>, for example, <u>integrates with your current system</u>, so your team continues to use the software they already know. The AI handles the repetitive tasks automatically, reducing their workload without requiring them to learn a complex new platform.

2. How long should it take to get paid by an insurance company? While it can vary, most "clean" electronic claims should be paid within 14-21 days. If your practice is consistently waiting longer than 30 days for payments, it's a strong sign that there are inefficiencies in your billing process that need to be addressed.

3. Can software really help reduce my A/R? Yes, absolutely. The primary causes of high A/R are process-related and often due to human error or a lack of time for follow-up. An AI assistant like <u>Toothy</u> is specifically designed to handle these repetitive, rules-based tasks with perfect consistency. By automating insurance verifications and claims follow-up, it prevents the errors and delays that cause A/R to become inflated in the first place.

Conclusion

The primary causes of a high A/R balance are almost always breakdowns in the insurance billing process. By shifting from a reactive approach of chasing down old claims to a proactive strategy of preventing them in the first place, you can take control of your A/R. An AI-powered system that automates verification, ensures clean claim submission, and handles consistent follow-up is the most effective way to reduce your A/R, improve your cash flow, and allow your team to focus on patient care.

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