In the world of psychiatric practice management, reducing Days in Accounts Receivable (A/R) is not just a matter of administrative efficiency—it’s critical for financial sustainability. Days in A/R, or the average number of days it takes a practice to collect payment after a service has been rendered, is one of the most important metrics in revenue cycle management (RCM). For behavioral health providers, this metric often suffers due to unique challenges, such as complex coding, authorization hurdles, and inconsistent payer rules.

Psychiatric practices often face longer A/R cycles than general medical practices due to the nuanced nature of mental health services, confidentiality regulations, and disparities in reimbursement models. If Days in A/R consistently remain high—typically above 45 days—it signals delayed cash flow, rising overhead burdens, and risk of write-offs. This comprehensive article delves into actionable strategies to reduce Days in A/R for psychiatric practice billing, ensuring faster collections and healthier revenue cycles.

Understand the Root Causes of High Days in A/R

Before implementing solutions, it is essential to analyze why Days in A/R are high. Common root causes include:

• Inaccurate patient demographic data
  Incorrect or incomplete details—such as wrong spelling of names, incorrect insurance ID numbers, or outdated addresses—can lead to immediate claim rejections or delays. Verifying and updating this data at every visit helps prevent unnecessary payment obstacles.
• Missing or incorrect authorizations
  Many psychiatric services, including therapy and medication management, require prior authorization. If the provider fails to obtain or properly document authorization, the payer may deny the claim regardless of the service provided.
• Coding errors or mismatches
  Using incorrect CPT or ICD-10 codes, mismatched modifiers, or omitting time-based elements for therapy sessions can lead to denials or underpayments. Behavioral health billing requires precision in both diagnosis and procedural coding.
• Delayed claim submissions
  Submitting claims days or even weeks after the date of service can push reimbursement far into the future. In worst cases, it may breach payer deadlines and lead to claim rejection for timely filing.
• Denials due to non-covered services
  Some psychiatric services, especially those related to certain therapies or wellness consults, may not be covered by the patient’s insurance plan. Submitting claims for such services without checking coverage can result in denials and wasted administrative effort.
• Lack of follow-up on unpaid claims
  Claims that are neither paid nor denied often fall into a backlog. Without a dedicated process to monitor and follow up on these pending items, they may eventually exceed the timely appeals window and be written off.
• Patient payment delays
  High deductibles, confusion about out-of-pocket costs, and lack of payment options can all result in delayed patient payments. This directly increases Days in A/R and impacts cash flow, especially when patient responsibility makes up a significant portion of revenue.

Understanding these variables allows your billing team to track key performance indicators (KPIs) and identify where breakdowns occur most often. Conducting a monthly A/R aging analysis can help distinguish between systemic problems and isolated issues.

Streamline Patient Intake and Verification Processes

One of the most overlooked contributors to high A/R is poor front-end performance. Inaccuracies in patient intake often create billing errors that delay payments down the line.

Action Steps:

• Verify insurance eligibility and benefits prior to the appointment.
  Use electronic eligibility tools to confirm mental health coverage, co-pays, deductibles, and pre-authorization requirements.
• Ensure accurate data collection.
  Patient names, policy numbers, and dates of birth must be consistent with payer records.
• Capture secondary insurance.
  Secondary payers can cover balances not paid by primary insurance. Failing to bill them leads to avoidable delays.
• Train front-desk staff.
  Equip staff to detect red flags (e.g., inactive policies, coordination of benefits issues) before services are rendered.

When front-end errors are minimized, claim denials and rework reduce significantly, leading to faster reimbursement.

Improve Coding Accuracy and Documentation

Psychiatric services often involve nuanced billing codes, time-based CPT codes, and complex ICD-10 mental health diagnoses. Mistakes in coding or documentation cause denials or downcoding, which extends A/R timelines.

Action Steps:

• Train clinicians on documentation best practices.
  Mental health notes should support the level of service billed.
• Utilize certified coders.
  Employ behavioral health-certified coders or outsource to a professional billing company.
• Stay current with payer guidelines.
  Some insurers require specific modifiers (e.g., GT for telepsychiatry), bundled service codes, or restrict certain diagnoses for reimbursement.
• Use templates or EHR prompts.
  Integrated documentation tools can guide providers toward compliant and complete charting.

Accurate coding upfront drastically cuts rework and denials, leading to quicker payment cycles.

Prioritize Timely Claims Submission

Delays in claims submission translate directly into delayed reimbursement. Some payers have strict filing deadlines (e.g., 90 days), and late submissions risk non-payment altogether.

Action Steps:

• Submit claims within 24-48 hours post-service.
  This practice accelerates payment processing and flags rejections faster.
• Automate claim scrubbing.
  Use billing software that checks for missing fields, invalid codes, and payer-specific rules before claims go out.
• Batch daily claims.
  Ensure claims are submitted on a daily basis rather than weekly or monthly to maintain consistent cash flow.

Quicker submission also means that rejected claims are returned earlier, giving you more time to correct and resubmit them within timely filing limits.

Proactively Manage Denials and Rejections

One of the top contributors to ballooning A/R is unaddressed claim denials. Many practices lose thousands each year by failing to rework claims.

Action Steps:

• Track denial trends.
  Identify which CPT codes, providers, or payers are triggering denials most often.
• Categorize denials.
  Use standardized reason codes to sort denials into actionable categories—eligibility, medical necessity, pre-authorization, etc.
• Develop a denial management workflow.
  Assign rework tasks within 24–48 hours of receipt. Prioritize high-dollar claims and recurring issues.
• Appeal denied claims.
  Don’t give up on first-level denials—many insurers reverse decisions upon review.

Implementing a robust denial management strategy can significantly reduce Days in A/R by ensuring fewer claims languish in collections limbo.

Enhance Patient Collections

Psychiatric practices increasingly rely on patient payments due to high-deductible health plans and limited mental health coverage. Delays in collecting co-pays or balances lead to increased Days in A/R.

Action Steps:

• Collect co-pays at check-in.
  Train staff to ask for payment before service delivery.
• Offer transparent billing.
  Provide patients with estimates and explanations of their out-of-pocket costs.
• Enable digital payment options.
  Use portals, card-on-file systems, or mobile payment solutions to facilitate faster payments.
• Implement reminder systems.
  Automate follow-up emails, texts, or calls for outstanding balances.

By making it easy for patients to pay, you shorten the revenue cycle and avoid sending balances to collections.

Segment and Prioritize A/R Follow-Up

Not all outstanding claims are created equal. Strategic follow-up efforts can accelerate collections on high-impact receivables.

Action Steps:

• Segment A/R by aging buckets (0–30, 31–60, 61–90, 91+ days)
  Breaking down Accounts Receivable into aging categories allows you to see which claims are becoming overdue. This segmentation helps prioritize follow-ups and provides insight into whether your overall collection process is effective or lagging.
• Prioritize high-value claims and older balances
  Focusing efforts on high-dollar claims and those that are over 90 days old helps recover revenue before it becomes uncollectible. Older claims have a higher risk of denial due to timely filing limits, so timely action is critical.
• Assign specific team members
  Allocating dedicated staff to work on certain payers, service types, or patient groups improves efficiency. These team members become experts in specific workflows and payer policies, reducing rework and improving resolution rates.
• Use color-coded A/R dashboards
  Visual A/R tools with color coding (e.g., red for 91+ days, yellow for 61–90, green for 0–30) help your team quickly identify and act on urgent or problematic claims. Dashboards also aid in tracking team performance and overall A/R trends.

Frequent A/R audits and proactive follow-ups are essential to keep the cash flow cycle tight.

Invest in Behavioral Health Billing Software

Technology can be a game-changer in reducing Days in A/R. Many generic billing platforms fail to accommodate the unique requirements of psychiatric care.

Action Steps:

• Use mental health-specific EHR and RCM tools. These platforms are built with the workflows of therapists, psychiatrists, and social workers in mind.
• Leverage automation. From eligibility checks to claim submissions, automation reduces human error and saves time.
• Enable integrated reporting. Real-time A/R dashboards help managers stay on top of trends and make informed decisions.
• Set custom alerts. Get notifications for claims aging beyond 30 days or exceeding expected payment timelines.

The right software stack reduces manual intervention, improves data accuracy, and accelerates reimbursement.

Monitor A/R Metrics Regularly

If you can’t measure it, you can’t improve it. Ongoing monitoring of A/R metrics keeps your billing team accountable and your revenue cycle efficient.

Key Metrics to Track:

• Average Days in A/R: Aim for <40 days in psychiatric practices
• % of A/R > 90 Days: Should be <15% of total A/R
• First Pass Resolution Rate (FPRR): The percentage of claims paid on first submission—target >90%
• Denial Rate: Should be below 5% for optimal performance

Use monthly reports to benchmark progress and identify opportunities for improvement.

Educate Providers and Involve Stakeholders

Billing isn’t just the job of the back office. Provider behaviors, documentation quality, and administrative oversight all impact Days in A/R.

Action Steps:

• Train clinicians on documentation standards. Explain how their notes impact coding, reimbursement, and compliance.
• Share A/R reports with leadership. Engage decision-makers in revenue discussions.
• Set performance goals. Link A/R improvements to team KPIs or staff incentives.
• Create a culture of accountability. Make reducing Days in A/R a shared objective across departments.

When the entire practice is aligned toward efficient billing, improvements in A/R follow organically.

Outsource When Needed

If your in-house billing department is overwhelmed or underperforming, outsourcing may be the best move to reduce Days in A/R.

When to Consider Outsourcing:

• Chronic denials or long A/R timelines
• High staff turnover in billing roles
• Lack of expertise in behavioral health billing
• Poor collection rates despite internal efforts

Choose a firm with deep knowledge in psychiatric billing, mental health payer rules, and credentialing requirements. A specialized partner can bring consistency, speed, and better overall performance.

Conclusion

Reducing Days in A/R is not a one-time fix—it’s a continuous process that requires vigilance, technology, training, and teamwork. For psychiatric practices, where reimbursement systems are especially complex, it is vital to optimize every step of the revenue cycle. From the initial patient intake to claim submission, denial management, and patient collections, each phase must be carefully managed to avoid delays. Investing in specialized billing software, standardizing workflows, engaging providers, and staying ahead of denial trends are not just best practices—they are necessities. With consistent application of these strategies, psychiatric practices can lower Days in A/R, improve financial stability, and continue delivering critical mental health services without disruption.