Days in AR (accounts receivable) is the number of days of revenue sitting unpaid. HFMA's formula, MAP Key FM-1, divides net patient AR by average daily net patient service revenue for the last three months: $1.35 million against $30,000 a day is 45 days. We found no authoritative behavioral health benchmark, so read it with your aging: more than about 15% of billed AR over 120 days is worse than the 2021 MGMA multispecialty median, a general healthcare figure.
This guide covers the formula and its variants, aging buckets, the published benchmarks, and why behavioral health (BH) and substance use disorder (SUD) AR runs slow. Then it turns to capital: how lenders score AR for healthcare AR financing, and what the Medicare and Medicaid anti-assignment rules allow. For broader revenue KPIs, see our guide to revenue leakage metrics in behavioral health.
The short version
- Net days in AR is net patient AR divided by average daily net patient service revenue over the last three months (HFMA FM-1). Pick a variant and keep it.
- Read the average with the aging: the share of billed AR over 90 and 120 days, by payer, aged from the date of service.
- We found no authoritative BH benchmark. General healthcare references: 47.3 days for Fitch-rated nonprofit hospitals (2022 data) and a 13.54% median share over 120 days for MGMA multispecialty groups (2021).
- Lenders score AR on eligibility and aging cutoffs, payer concentration, dilution, collection trend and documentation risk.
- Medicare and Medicaid payments can't be assigned or sold to a lender or factor. Financing runs through a deposit account the provider controls, swept to the lender: the double lockbox.
How to calculate days in AR
HFMA says its MAP Keys apply to every type of healthcare organization. FM-1 divides net patient AR from the balance sheet by average daily net patient service revenue from the income statement.
- Net AR is the patient receivable net of credit balances, allowances for uncollectible accounts, charity discounts and contractual allowances.
- Average daily net revenue is the last three months of net patient service revenue divided by the days in those months (April to June is 91).
The formula is simple. The variants are where programs fool themselves.
| Variant | Calculation | What it can hide |
|---|---|---|
| Net, three months (HFMA FM-1) | Net patient AR / three-month average daily net revenue | Allowances set too high make AR look faster |
| Gross (many billing reports) | Gross AR / average daily gross charges | High-charge, low-yield claims inflate it |
| MGMA (DataDive) | Total AR / (adjusted or gross FFS charges x 1/365) | An annual denominator lags census changes |
| Count-back | Subtract each month's revenue, newest first, until AR is used up | Little. It's fairer to growing programs, but slower to compute |
Worked example
Take a fictional two-site outpatient and IOP SUD program. On October 31, 2026, net patient AR is $1,350,000. Net revenue was $910,000 in both August and September and $940,000 in October: $2,760,000 over 92 days, or $30,000 a day. Trailing 12-month revenue was $10,220,000. Gross AR is $2,600,000 against $4,600,000 of gross charges in the last three months.
| Method | Calculation | Days in AR |
|---|---|---|
| Net, three months (FM-1) | $1,350,000 / $30,000 | 45.0 |
| Net, 12 months | $1,350,000 / ($10,220,000 / 365 = $28,000) | 48.2 |
| Count-back | October covers 31 days and leaves $410,000, which is 13.5 of September's 30 days | 44.5 |
| Gross, three months | $2,600,000 / ($4,600,000 / 92 = $50,000) | 52.0 |
Read the spread. The 12-month figure is worse because the program grew, so an annual denominator understates current revenue. Gross runs seven days above net, so the AR holds more high-charge, low-yield claims than current billing does. In BH that usually means out-of-network residential claims or denials nobody has adjusted. Report both, because the gap is information.
AR aging buckets and the share over 90 and 120 days
Days in AR is an average, and averages hide the tail. HFMA's AR-1 key sorts billed AR into five buckets that must sum to 100%: 0-30, 31-60, 61-90, 91-120 and over 120 days. For ambulatory and physician organizations the clock starts on the date of service, and credit balances and unbilled accounts stay out. AR-2 splits the view by payer group, and AR-3 and AR-4 add unbilled.
MGMA uses the same buckets but starts the clock when the claim is billed. On day 40 after service, a residential claim that sat 25 days waiting for an authorization is 40 days old under HFMA's convention and 15 under MGMA's. Long charge lag makes bill-date aging look better than it is, so tell any lender which date you used.
| Bucket (fictional program, from date of service) | Net AR | Share |
|---|---|---|
| 0-30 days | $560,000 | 41.5% |
| 31-60 days | $300,000 | 22.2% |
| 61-90 days | $170,000 | 12.6% |
| 91-120 days | $110,000 | 8.1% |
| Over 120 days | $210,000 | 15.6% |
| Total | $1,350,000 | 100% |
Forty-five days looks fine. The aging doesn't. Over 90 days holds $320,000, or 23.7%, and 15.6% sits past 120 days, above the 13.54% MGMA median. Run AR-2 next. If one managed care plan or the out-of-network residential book owns most of the over-120 dollars, you know where to start.
Filing limits make old unbilled dollars the most dangerous. Medicare claims must be filed within one calendar year of service (42 CFR 424.44), and state Medicaid agencies must require claims within 12 months (42 CFR 447.45). Managed care contracts can be shorter.
Days in AR benchmarks: what's published, and what good looks like
HFMA's benchmark values go only to MAP App subscribers, and MGMA's full tables are paid. We found no behavioral health benchmark from an authoritative body. Vendor blogs quote 30 to 45 days without a source, and we don't treat that as one. Here's what can be cited:
| Reference | Figure | Population and label |
|---|---|---|
| Fitch, 2023 Median Ratios | 47.3 days in AR (44.6 to 49.3 over 2013-2022) | 215 rated nonprofit hospitals and systems, audited 2022 data. General healthcare |
| MGMA DataDive, 2021 | Median 13.54% of total AR over 120 days | Multispecialty practices. General healthcare |
| MGMA DataDive, 2025 (2024 data) | Hospital- and IDS-owned groups: 120-plus share up 9.5 to 15.9 points. Physician-owned: mostly flat | Medical groups. General healthcare |
| Medicare claims rules | Clean electronic claims aren't paid before day 14. Interest is due after day 30 | Medicare contractors. A structural floor |
| 42 CFR 447.45 and 447.46 | 90% of clean practitioner claims paid within 30 days, 99% within 90 | Medicaid agencies, and MCOs unless the contract sets another schedule |
Those payment rules let you reason about what good looks like. By that arithmetic, a program that bills within a few days and passes the first time should land around 20 to 35 days. Charge lag and every held or reworked claim add to that. In MGMA's July 2026 poll, the 32% of leaders reporting higher days blamed slower payment, initial denials, downcoding, records requests and prepayment audits.
Our working view, not a published benchmark: an outpatient BH program billing mostly in-network Medicaid and commercial plans should hold net days in the mid-30s to mid-40s, with the over-120 share under 13.54%. Residential programs with out-of-network and single-case volume run longer. Measure them separately so they neither hide nor excuse the rest.
Why behavioral health AR behaves differently
MGMA puts the mechanism plainly: each denied claim restarts the collection clock and pushes the balance into older buckets. BH has plenty of ways to restart it. Our CARC denial code guide covers the denials.
| Driver | How it shows up in AR | First fix |
|---|---|---|
| Authorization and utilization review | Claims held for missing or expired authorizations, or days billed past the last approved review | An authorization log with each patient's next review date |
| Medicaid eligibility churn | Mid-episode lapses, and self-pay that should have been Medicaid | Re-verify at admission and monthly |
| MCO carve-outs | The BH claim belongs to a different plan than the member's card shows | A payer routing table used at intake |
| Single-case agreements | Per-patient rates priced by hand, and underpayments | Store the terms with the authorization |
| Out-of-network residential | High charges paid low and slow | Report it as its own segment |
| Credentialing gaps | Clinicians see patients before enrollment is effective | A credentialing calendar tied to start dates |
| Documentation-driven denials | Medical necessity gaps and missing signatures | Documentation review before the claim goes out |
Authorizations. CMS's prior authorization final rule (CMS-0057-F) requires Medicare Advantage organizations, plus Medicaid and CHIP fee-for-service programs and managed care plans, to decide standard requests within 7 calendar days and expedited ones within 72 hours, generally from January 1, 2026. Employer plans aren't covered. See our CMS prior authorization playbook. And a Medicaid claim under medical necessity review isn't a clean claim under 42 CFR 447.45, so prompt-pay timelines don't protect it.
Eligibility. Churn is set to rise in expansion states. CMS guidance (SMD #26-001, March 6, 2026) confirms six-month renewals for most expansion adults, starting with renewals scheduled on or after January 1, 2027. For expansion adults applying on or after that date, retroactive eligibility drops to one month. Our post on six-month redeterminations covers intake changes.
Carve-outs and credentialing. In Pennsylvania, each HealthChoices member is assigned a county-contracted behavioral health MCO, separate from the physical health plan. Medicare has enrolled marriage and family therapists and mental health counselors since January 1, 2024, and under 42 CFR 424.521 practitioners can bill retroactively for up to 30 days before their effective date, and only if circumstances prevented enrolling sooner.
What lenders look at: AR credit scoring in plain words
When you seek healthcare AR financing, a line secured by receivables or a receivables purchase, the lender asks one question: how much of this AR turns into cash, and how surely? Call it AR credit scoring. The toolkit comes from general asset-based lending, described in the OCC's Comptroller's Handbook. Healthcare lenders value AR at net collectible value, estimated from past collections by payer.
| What the lender checks | What they compute | What hurts you |
|---|---|---|
| Eligibility and aging cutoffs | Which AR counts. In general ABL, accounts past due by three times their terms are normally ineligible, as is unbilled AR | A large over-120 bucket, an unbilled backlog |
| Cross-aging | Whether one payer's ineligible AR disqualifies all its AR | One slow payer dragging down good balances |
| Payer concentration | Share from one payer. The OCC treats 10% or more as a concentration, often capped at 10% to 20% of the borrowing base | One payer dominating |
| Dilution and denials | Noncash reductions such as denial write-offs and recoupments. General ABL usually expects 5% or less | Recoupments after audits |
| Collection trend | Cash collected against net revenue (HFMA FM-2) | Cash flat while revenue grows |
| Documentation risk | How much AR would survive a payer's medical review | Weak charts in a government-heavy book |
Treat the OCC figures as general reference points. If most of your AR sits with one or two Medicaid plans, a general ABL cap would bite at once, and healthcare lenders set their own limits. The OCC puts common advance rates at 70% to 85% of eligible receivables. Here's the fictional program with hypothetical terms:
| Step (hypothetical terms) | Amount |
|---|---|
| Net billed AR | $1,350,000 |
| Less AR over 120 days from the date of service | ($210,000) |
| Less denied claims in appeal | ($95,000) |
| Less self-pay balances | ($45,000) |
| Eligible AR | $1,000,000 |
| Availability at an 80% advance rate | $800,000 |
If half the over-120 dollars were still under 120 days, availability would rise by $84,000. That's an illustration, not financial advice. Documentation risk is where BH differs from most collateral: a residential day is worth only what survives medical necessity review, and audit findings come back as recoupments from future payments. Be ready to walk a lender through open audits, denial trends and your fixes.
Medicare and Medicaid anti-assignment rules, and how lockboxes work
In 1972 Congress barred paying Medicare and Medicaid amounts to anyone but the patient or whoever provided the service, after buyers of discounted receivables became a source of inflated and fraudulent claims, and a 1977 law closed the power-of-attorney workaround. CMS's claims manual says the rules bar payment to anyone financing the provider, whether claims are sold or pledged as collateral.
| Rule | Citation | What it means for financing |
|---|---|---|
| Medicare, providers of services such as hospitals | 42 U.S.C. 1395g(c), 42 CFR 424.73 | No payment to anyone else under an assignment or power of attorney. Exceptions cover government agencies and court orders, plus billing agents paid without regard to amounts billed or collected |
| Medicare, suppliers such as practitioners and groups | 42 U.S.C. 1395u(b)(6), 42 CFR 424.80 | The same ban on reassignment, with employer and contractual exceptions |
| Medicaid | 42 U.S.C. 1396a(a)(32), 42 CFR 447.10 | Payment goes to the provider or a listed exception. Under 447.10(h), never to or through a factor |
| Medicare payments to a bank | Claims Processing Manual, ch. 1, 30.2.5 | The account is in the provider's name only, and a lending bank waives offset in writing. The provider can rescind any standing transfer order. No financing party may buy Medicare receivables |
So how does anyone lend against government AR? The rules still let a provider grant a security interest. In a double lockbox, government payments land in an account in the provider's name, under its sole signing authority, and a standing instruction sweeps it, usually daily, to a lender-controlled account. The provider counts as paid when funds reach its account, and it must keep the right to revoke the sweep. Commercial payments can go straight to the lender's lockbox.
That also answers the medical receivables factoring question. Medicare receivables can't be sold to a financing party, and Medicaid can't pay to or through a factor. Commercial receivables fall outside these federal rules, so a sale is possible there, subject to the payer contract and state law. Treatment of Medicaid managed care and Medicare Advantage receivables is a question for the lender's counsel and yours.
One practical point. A billing company paid a percentage of collections, a model covered in our in-house vs outsourced RCM breakdown, can't be the payee on Medicare or Medicaid payments, because the agent exception requires pay unrelated to amounts billed or collected. This is general information, not legal or financial advice.
An AR quality scorecard you can compute yourself
Score your AR before a lender does. Every line comes from reports you already run.
| Metric | How to compute | Watch level (source, or our view) |
|---|---|---|
| Net days in AR (FM-1) | Net AR / three-month average daily net revenue | Up three months running (our view) |
| Gross-to-net gap | Gross days minus net days | Widening month over month (our view) |
| Over 90 and over 120 (AR-1) | Billed AR by bucket, from the date of service | Over 120 above 13.54% (MGMA 2021, general healthcare) |
| Over 120 by payer (AR-2) | The same split per payer group | Any payer with most of its AR past 90 days (our view) |
| Largest payer share | Top payer's AR / total AR | 10% or more is a concentration in general ABL (OCC) |
| Dilution | Denial write-offs and recoupments / expected net billings, trailing three months | Above 5% (OCC, general ABL) |
| Cash collection (FM-2) | Cash collected / average monthly net revenue | Under 100% for months while volume is flat (our view) |
| Credit balances (AR-9) | Credit balances / average daily net revenue | An identified Medicare overpayment still held at 60 days (42 CFR 401.305) |
| Documentation hold rate | Claims held for documentation / claims built | Rising, or concentrated in a few clinicians (our view) |
Free calculator
Denial loss calculator (Excel)
Put a dollar figure on what denials cost your program before you decide which part of the AR to work first.
Get the denial loss calculator Free, with a work email.
A 30-day plan to bring days in AR down
Thirty days won't fix a payer contract. It will clear the backlog you control and stop new AR from aging the same way.
| Week | Focus | Actions | Output |
|---|---|---|---|
| 1 | Measure | Pull the aged trial balance by payer, from the date of service, and reconcile it to the ledger. Compute FM-1 on one documented method, plus gross | Baseline scorecard |
| 2 | Unbilled and held claims | Work every held claim. Measure charge lag by site. List claims within 60 days of a filing limit | Hold list with owners and dates |
| 3 | Over 90 and denials | Sort by dollars and filing deadline. Decide whether each needs a corrected claim or an appeal. Group denials by root cause | Worked list, top five root causes |
| 4 | Prevention | Set eligibility re-checks, the authorization log, a credentialing calendar and pre-claim documentation checks. Review the scorecard monthly | Owners and a monthly review |
Three things not to do. Don't write off balances to make days look better: AR drops while denial write-offs rise, and lenders read both. Don't re-age accounts, which the OCC lists among those commonly ineligible. And don't change the formula midstream without restating history.
I'd start with prevention before adding collectors. Resilient Recovery Treatment, a multi-site SUD network in Los Angeles, saw A/R days drop from 53 to 38 and first-pass denials fall 62% after it began reviewing documentation with Adentris before claims went out, per its 90-day audit in Q4 2025.
How Adentris helps
In BH, AR problems usually start in the chart, weeks before they show up in the aging. Our AR Audit and RCM Insights service is a 3-day diagnostic built from your billing, clearinghouse and EHR exports. It covers aged AR, denial root causes, payer behavior, underpayments, eligibility and authorization gaps, and documentation risk, once or continuously.
To keep new AR clean, Adentris reviews every active chart, not a sample, against payer and regulatory rules before claims go out. Each finding cites the rule that fired and comes with a drafted correction for staff to approve. It runs on top of any EHR, usually with no IT project on your side. To see it on your own AR, book a 30-minute call with our team.
Related reading
- Revenue Leakage in Behavioral Health: Where SUD and Mental Health Programs Lose Money, and How to Measure It
- In-House vs. Outsourced RCM for Behavioral Health: The 2026 Math
- CO-50 Denials in Behavioral Health: Why Medical Necessity Gets Denied and How to Appeal (Template Included)
Sources
- HFMA, MAP Keys definitions, 2023 edition (FM-1, FM-2, AR-1 to AR-4, AR-9) and HFMA MAP Keys overview
- MGMA, 2025 DataDive Definitions Glossary
- MGMA Stat, Days in A/R holds steady for most practices, but payer pressure persists in 2026 (July 2026)
- MGMA Stat, Not-so-graceful aging: half of practices saw days in A/R increase in 2021
- Fitch Ratings, 2023 Median Ratios: Not-for-Profit Hospitals and Healthcare Systems (Vermont Legislature copy)
- OCC, Comptroller's Handbook: Asset-Based Lending
- U.S. Code: 42 U.S.C. 1395g(c), 1395u(b)(6), 1396a(a)(32)
- eCFR: 42 CFR 424.73, 424.80, 447.10, 447.45, 447.46, 424.44, 424.521, 401.305
- CMS, Medicare Claims Processing Manual, Chapter 1 (30.2, 30.2.5 and 80.2)
- Skadden, Health Care Accounts Receivable Financing (February 2024)
- ABF Journal, It's About Collections, Not Billings
- CMS, SMD #26-001 on six-month redeterminations, Public Law 119-21 (March 6, 2026)
- CMS, CMS-0057-F prior authorization final rule fact sheet
- CMS, Marriage and Family Therapists and Mental Health Counselors and Pennsylvania DHS, Behavioral HealthChoices
Frequently asked questions
What is a good days in AR for a behavioral health provider?
We found no authoritative behavioral health benchmark. General healthcare references: a 47.3-day median for Fitch-rated nonprofit hospitals on 2022 data, and a 13.54% median share of AR over 120 days for MGMA multispecialty groups in 2021. Our working view is that an outpatient program billing in-network payers promptly should hold net days in the mid-30s to mid-40s.
How do you calculate days in AR?
Divide net patient accounts receivable by average daily net patient service revenue. HFMA's MAP Key FM-1 uses the last three months of net revenue divided by the days in those months. MGMA divides total AR by adjusted or gross fee-for-service charges times 1/365. Pick one method and trend it monthly.
What are the standard AR aging buckets?
0-30, 31-60, 61-90, 91-120 and over 120 days. HFMA ages billed AR from the date of service for ambulatory and physician organizations. MGMA starts the clock when the claim is billed, which makes the same AR look younger when charge lag is long.
Can a behavioral health provider factor Medicare or Medicaid receivables?
Not in the usual sense. Medicare does not pay amounts due a provider to anyone else under an assignment or power of attorney, and CMS's claims manual says a financing party cannot purchase Medicare receivables. Under 42 CFR 447.10(h), Medicaid may not pay to or through a factor. This is general information, not legal advice.
What is a double lockbox in healthcare AR financing?
Government payments go to a deposit account in the provider's name, under the provider's sole signing authority, and a standing instruction sweeps the balance, usually daily, to an account the lender controls. The provider must be able to revoke the sweep at any time.
Why is days in AR higher in behavioral health and SUD programs?
Authorization holds, Medicaid eligibility churn, carve-outs that route claims to a separate behavioral health plan, single-case agreements, out-of-network residential claims, credentialing gaps and documentation-driven denials all add days. Each denial restarts the collection clock.
