AR Laboratory Billing Services: How to Improve Cash Flow & Reduce Outstanding Claims

Why Accounts Receivable are the Lifeline of Every Laboratory

For most laboratories, the biggest financial challenge isn’t the number of tests performed; it’s the number of claims still sitting unpaid. 

Accounts receivable (AR) represent the cash your lab has already earned but hasn’t collected yet. The longer it takes to get paid (1) the less valuable the dollar amount becomes, (2) the harder it becomes to sustain operations and invest in new equipment, or (3) grow your services. More bluntly, it’s great having the latest testing/clinical/diagnosing equipment, but it means nothing if you’re not being paid.

That’s where AR laboratory billing services come in. Specialized AR management helps labs shorten payment cycles, recover aged claims, and maintain a steady cash flow even amid payer complexity.

At ADS, we’ve seen how strategic AR management transforms labs from chasing payments to controlling them. In this guide, we’ll break down how AR services work, why they’re essential, and the proven steps laboratories can take to reduce outstanding claims and improve their bottom lines.

Understanding AR in Laboratory Billing

In simple terms, Accounts Receivable (AR) is the money owed to your laboratory by payers and patients for services you’ve already provided. In healthcare, AR is often categorized by “aging buckets”:

• 0–30 days: Current, healthy claims.
• 31–60 days: Slightly delayed, requires follow-up.
• 61–90 days: At risk of becoming problematic.
• 91+ days: Likely to require rework, appeal, or write-off.
  
  

Healthy labs keep their AR in the 0–30 bucket. If most of your claims are sitting beyond 60 days, it’s a signal your AR management process needs attention. Again, this includes your patients’ AR as well.  

🔗 See how ADS’s Laboratory Billing Solutions help labs streamline claims and improve recovery.

The Cost of Inefficient AR Management

Every day a claim goes unpaid, your lab loses value. Delayed reimbursements don’t just slow cash flow, they create a chain reaction:

• Reduced working capital for reagents, supplies, and staffing.
• Increased write-offs due to expired timely filing limits.
• Higher administrative costs from manual follow-ups.
• Missed revenue due to untracked payer underpayments.
  
  

According to the Medical Group Management Association (MGMA), the industry average for days in AR should be under 35 days. Yet many labs operate at 50–60+ days, often because their internal billing teams are stretched thin or lack real-time denial visibility.

What AR Laboratory Billing Services Do

AR laboratory billing services (outsourced RCM) should focus exclusively on recovering and managing unpaid or delayed claims. A dedicated AR team or vendor handles:

• Aging analysis: Reviewing claim aging reports and prioritizing high-risk accounts.
• Follow-ups: Contacting payers to resolve pending claims.
• Denial prevention and resolution: Correcting coding errors, missing documentation, or authorization issues.
• Tracks submitted claims: in real-time to ensure they’re being processed.
  
• Appeals: Submitting timely and compliant appeals for denied claims.
• Payment posting and reconciliation: Ensuring payments match expected contract rates.
• Reporting: Providing visibility into trends, payer performance, and collection efficiency.
  
  

🔗 Learn how ADS’s Medical Billing & RCM Services strengthen AR management through automation and analytics.

How to Improve Laboratory Cash Flow with AR Optimization

1. Identify Root Causes of Delayed Payments

Start by analyzing your denial and delay patterns. Are claims getting stuck because of eligibility errors, missing modifiers, or payer policy changes? Data analytics can pinpoint the causes of AR slowdowns so you can fix them at the source.

Tip: Run monthly reports by payer and denial reason to identify the top three claim blockers.

2. Automate Follow-Up and Tracking

Manual claim tracking is a recipe for lost revenue. Modern labs use AR automation tools or work with an outsourced RCM vendor that:

• Flag unpaid claims by payer and age by each payer’s general turnaround times.
• Generate automated reminders for follow-up.
• Integrate directly with clearinghouses for real-time claim status updates.
  
  

Automation ensures no claim slips through the cracks and that staff time is used strategically, not reactively.

3. Prioritize Aged Claims Strategically

Not all unpaid claims are equal. Prioritize high-value claims, those nearing timely filing deadlines, and those by payers who should have paid by now. Segment your AR by payer, claim amount, and denial type so your billing team can focus on where recovery potential is highest. An outsourced RCM vendor should do this for you.

4. Strengthen Denial Management Workflows

Effective AR recovery depends on effective denial management. Every denial is both a problem and a data point.

Action steps:

• Have an accurate denial prevention mechanism to avoid them in the first place.
• Categorize any others not pre-detected by root cause (coding, eligibility, missing documentation).
• Implement payer-specific edits to prevent repeats.
• Train staff regularly on evolving payer rules and prior authorization requirements.
  
  

🔗 Explore ADS’s Behavioral Health RCM insights for examples of proactive denial prevention in specialized billing.

5. Improve Communication with Payers

Payer follow-up is a skill that requires persistence and process. Standardize how and when your team contacts payers. Maintain call logs, reference numbers, and escalation procedures for every claim inquiry.

Pro tip: Assign specific payers to individual AR specialists. Dedicated contacts improve familiarity with payer quirks and shorten resolution times. A comprehensive outsourced RCM service should do this for you.

6. Monitor Key AR Metrics

To truly improve cash flow, you need visibility into performance. Key AR metrics include:

• Days in Accounts Receivable (A/R): Goal = under 35 days.
• Aged AR Percentage (90+ days): Goal = less than 15%.
• Net Collection Rate (NCR): Goal = above 95%.
• Denial Rate: Goal = below 5%.
  
  

Dashboards and monthly reports ensure that you spot trends early and stay ahead of revenue risks. And remember, your patients’ responsibility balances must be included!

🔗 See how ADS’s Healthcare RCM tools use analytics to track A/R performance.

7. Reconcile Payments Consistently

Posting payments isn’t just about logging revenue, it’s about confirming accuracy. Regular reconciliation helps catch underpayments and contract discrepancies that might otherwise go unnoticed.

Action steps:

• Compare actual payments against payer contracts.
• Flag any variances automatically.
• Escalate chronic underpayments to contract management.
  
  

When payment reconciliation is automated, labs can recover untold funds in missed revenue annually.

8. Outsource When Internal Resources Are Overloaded

When your internal billing team is overwhelmed or lacks advanced tools, outsourced RCM can dramatically improve results.

Benefits of outsourcing AR:

• Dedicated recovery specialists who focus exclusively on your claims.
• Advanced analytics and denial prevention and tracking technology.
• Scalability during periods of high claim volume.
• Lower cost-to-collect and higher recovery rates.
  
  

Outsourcing doesn’t mean losing control, it means gaining specialized support.

🔗 Learn how ADS’s RCM Outsourcing Solutions help laboratories improve cash flow without adding headcount.

9. Close the Loop with Continuous Feedback

AR optimization isn’t a one-time project; it’s a cycle of measurement and improvement. The most successful labs use AR insights to strengthen upstream processes.

For example:

• If most denials stem from authorization errors, improve your scheduling or pre-test workflows.
• If claims frequently require rework, enhance documentation templates.
• If specific payers delay payments, renegotiate contracts or escalate through payer reps.
  
  

The goal is not just to recover revenue but to build a system that prevents AR from growing.

Turning Outstanding Claims Into Reliable Cash Flow

For laboratories, cash flow is the oxygen that keeps operations running. Uncollected revenue sitting in AR isn’t just a financial issue, it’s a workflow issue. The key is visibility, accountability, and automation.

By analyzing root causes, automating follow-ups, tracking metrics, and leveraging AR laboratory billing services, your lab can transform how it manages revenue. Whether you improve processes internally or partner with a specialized RCM provider, the outcome is the same: faster payments, fewer denials, and stronger financial health.

Outsourcing with ADRCM is built for exactly that. We combine advanced analytics, AI-powered automation, laboratory-specific expertise, and our behind-the-scenes team to help you recover revenue efficiently and sustainably while consolidating your in-laboratory effort. Alternatively, our MedicsPremier platform is available if in-laboratory automation is preferred.

🔗 Ready to reduce outstanding claims and improve cash flow? Explore our Laboratory Billing Services or request a live demo today.