Measuring the Impact of Prior Authorization on AR Days

Have you noticed your Accounts Receivable (AR) days going up lately? One big reason could be prior authorization. It is a process that can slow things down and delay your payments. In this blog, we will discuss how prior authorization affects your cash flow, why many providers like you choose to work with a prior authorization company, and how prior authorization outsourcing can actually help you reduce AR days and keep your practice running smoothly. 

Let’s understand AR days and why do they matter 

AR days tell you how long it takes to get paid after you have provided care to your patients. In simple terms, it shows how long your money is tied up and waiting to come in. You should try to keep your AR days under 50, and ideally between 30 and 40. This helps you keep a healthy cash flow in your practice. 

How does prior authorization slow things down? 

Prior authorization is when your patient’s health insurance company wants to double-check if a service, treatment, or medication is really necessary, before they agree to pay for it. More and more insurance plans are using this process. Did you know in 2022, Medicare Advantage plans had to review almost 46 million prior authorization requests, and they denied 7.4% of them approximately.  

How can prior authorization affect AR days? 

Here’s how it usually goes for you: 

• A patient comes in for checkup or consultation with the doctor. 
• Your staff realize that the service needs prior authorization. 
• Someone on your team has to gather all the documents and send them to the insurance company. 
• Then, you sometimes wait for days for approval. 
• Only after that can you send the claim and start the billing process. 

If the insurance company takes a week or more to approve it, your AR days go up by that same number of days. That means you are waiting longer to get paid. Some industry experts say these delays directly cause billing problems and increase your AR days. If you are in a specialty like cardiology, it can get even worse. Claims can’t move forward until everything is approved, so your payments get stuck in the system. 

Why do providers partner with a prior authorization company? 

To deal with AR delays caused by prior authorizations, many providers like you choose to work with a prior authorization company. These companies are experts at handling insurance paperwork and know exactly what each insurance plan needs. When you partner with them, you get access to people who understand the rules and know how to get approvals done right the first time. 

Outsourcing for better AR metrics 

When you choose prior authorization outsourcing, it can really help your practice in a few important ways: 

Faster submissions – The specialists handle the requests right away, so there is less waiting between the time you treat a patient and the time you send the bill. 

Higher approval rates – Since the experts know what insurance companies need, your approvals go through more often on the first try. That means fewer denials and quicker payments for you. 

Lower AR days – One cardiology practice that outsourced reported that only 14% of their claims were unpaid after 90 days. Plus, they got a 92% approval rate on the first submission. 

Easier to scale – When your prior auth volume goes up, outsourcing can keep up without you needing to hire more staff or stretch your team thin.  
 

They track why certain approvals get denied, watch for patterns with insurance companies, and help you improve how things are done over time. 

Measuring the impact 

To find out if your prior authorization process is actually helping lower your AR days, here are a few simple things you can track: 

Average AR days – Look at how many days it took to get paid before and after you made changes. If your AR days go down, that’s a good sign. 

AR over 90 days – Check what percent of your payments are still unpaid after 90 days. It’s healthy to keep this under 15–20%. If you are doing well, it might even be under 10%. 

Denial rates – Keep an eye on how often your claims or authorizations get denied.  

First-pass approval rate – This tells you how often your prior authorizations get approved on the first try. 

Time your staff saves – Think about how much time your team used to spend handling prior auths. If they’re saving hours each week, that’s a big win. 

Final Thoughts! 

Prior authorization can quietly slow down your payments. It might be adding days, or even weeks to when you finally get paid for the care you have already provided. If you decide to team up with a prior authorization company like PriorAuth Online or choose prior authorization outsourcing, you can cut those delays. When you combine that with the right technology, you will see even better results. This means you can send out claims faster, get fewer denials, and reduce your AR days. That helps your cash flow and takes the pressure off your staff, so you all can spend more time focusing on your patients.