Streamline Your Cash Flow: Effective Accounts Receivable Clean Up Tips
Healthcare organizations do not fall behind on cash flow because leadership is careless. They fall behind because the rules keep changing while patient care never slows down. A few missed Notice of Elections, a run of PDGM billing edits, a batch of SNF claims coded to the wrong PDPM category, and suddenly your aging report is full of money that looks harder and harder to collect.
Cleaning up Accounts Receivable is not about heroics or one-time “AR sweeps.” It is about putting structure around what you already do: caring for patients, documenting services, and billing for the work. When you align those daily activities with how PPS, PDGM, and PDPM now pay you, you can steadily pull cash out of old receivables and keep new claims from aging in the first place.
This article walks through practical Accounts Receivable clean up tips that fit the realities of home health, hospice, SNFs, and other post-acute providers, with a focus on stabilizing cash flow without overwhelming your team.
Why AR Clean Up Matters More Under Today’s PPS Models
Medicare’s prospective payment systems were designed to pay you a fixed amount per stay, episode, or period of care, not to cover every line of cost. That structure has only tightened over time. Under the home health final rule for Calendar Year 2025, CMS projects only a 0.5 percent net payment increase after applying a permanent PDGM adjustment of negative 1.975 percent to the 30‑day payment rate, intended to correct for assumed versus actual behavior changes when PDGM and the 30‑day unit went live.
(CMS CY 2025 HH PPS final rule fact sheet)
Skilled nursing facilities see a different pattern. For FY 2025, CMS finalized a 4.2 percent increase in aggregate SNF PPS payments, driven by a market basket update and a one‑time forecast error correction, while also rebasing the SNF market basket and adjusting PDPM ICD‑10 mappings.
(CMS FY 2025 SNF PPS final rule fact sheet)
Hospice providers are working within a capped per‑patient environment. For FY 2025, CMS finalized a 2.9 percent payment update and increased the hospice aggregate cap to 34,465.34 dollars per patient, while adopting updated wage index delineations that can reduce rates in some markets.
(CMS FY 2025 Hospice payment update final rule)
In all of these settings, margin pressure is a given. The room for error sits in your operations: documentation, coding, claims submission, and AR follow up. Every avoidable denial or write‑off is harder to absorb when base rates are flat and adjustments work against you. That is why disciplined AR clean up is one of the fastest ways to protect cash flow without cutting into care.
Start With a Clear, Honest View of Your AR
Aged AR reports can be overwhelming, especially when they run to dozens of pages with multiple payers and locations. The instinct may be to “start with the biggest balances,” but that can hide patterns that are costing you the most.
Begin by segmenting AR in a way that reflects how your organization is actually paid. For PPS, PDGM, and PDPM providers, that means looking at receivables by payer, program, and time bucket, then layering in denial and adjustment codes. The goal is not to memorize every code, but to see clusters: recurring medical necessity denials under PDGM, frequent overlaps on SNF stays, or hospice claims repeatedly hitting wage index or NOE related edits.
If you have already explored our piece on optimizing healthcare Accounts Receivable for better financial health, use that framework here. Clean up work becomes far more manageable when you can say, “We have a PDGM issue with one Medicare Advantage plan in the 61 to 120 day bucket,” instead of, “Everything over 60 days looks bad.”
As part of this review, pay attention to small balance clean up. Many organizations carry a long tail of underpayments, coinsurance variances, and takebacks that no one has reconciled. Individually they seem minor. In aggregate, they can equal multiple payrolls.
Prioritize by Recoverability, Not Just Age
It is tempting to focus only on the oldest AR. In reality, age is just one part of recoverability. A 45‑day‑old claim with a clinical documentation issue and no easy appeal path may be less collectible than a 150‑day‑old claim held for a simple eligibility update.
For each major segment of AR, ask three questions.
Is the denial or delay administrative, clinical, or contractual. Administrative issues, such as missing attachments, incorrect patient information, or late RAP / NOA filings with allowed exceptions, are often the quickest wins. Clinical denials that turn on documentation or medical necessity require more effort and coordination with your clinical team. Contractual issues, such as noncovered services under a Medicare Advantage plan, may not be recoverable at all.
Is the claim still within appeal timeframes. Medicare and most commercial payers have defined windows for redeterminations and appeals. Claims that fall outside those windows might still be collectible in limited circumstances, but the odds decline. Knowing these timelines, and building them into your AR worklist logic, helps you attack claims while you still have full rights available.
What is the dollar impact versus the time required. Not every claim deserves the same level of effort. A labor intensive chart reconstruction for a low per‑diem hospice day near the aggregate cap may not be the best use of scarce staff time. On the other hand, a pattern of short‑stay outliers in SNF PDPM that are consistently underpaid can add up quickly.
When you rank AR segments using these filters, you build a workplan that is grounded in recoverability, not just the sense that “old equals urgent.” That in turn provides a clearer story for leadership and board reporting.
Align AR Clean Up With How PPS, PDGM, and PDPM Actually Pay You
Effective AR clean up is tightly connected to payment methodology. For smaller providers, especially, it is not enough to know that “Medicare pays prospectively.” You need to understand how your AR problems map to each system.
In home health, PDGM and the 30‑day payment model mean that each 30‑day period is its own unit of payment, with case mix driven by clinical grouping, functional impairment, comorbidities, and admission source. CMS is applying prospective rate cuts to offset its view of behavioral changes under PDGM, including the 1.975 percent permanent adjustment in 2025.
(CMS CY 2025 HH PPS final rule fact sheet)
In SNFs, PDPM pays per diem based on case mix across five components. CMS continues to refine ICD‑10 code mappings to improve alignment between diagnosis and clinical category, as reflected in the 2025 SNF PPS rule.
(CMS FY 2025 SNF PPS final rule fact sheet)
Hospice payments remain per‑diem with tiered rates for routines, continuous care, respite, and general inpatient, subject to an annual aggregate cap per patient.
(CMS FY 2025 Hospice payment update final rule)
When we look at AR in these settings, we pay close attention to where the PPS model explains the denial pattern. For example, in home health, a cluster of underpayments may reflect a missing comorbidity or functional score rather than a true payer error. In SNFs, claims paid at unexpectedly low PDPM rates might point to incorrect clinical category assignment. In hospice, claims near or above the aggregate cap need special attention so you are not investing time in dollars you may have to return.
Using your PPS knowledge to drive AR clean up helps in two ways. First, you recover more on existing receivables because you can present clearer appeals that speak the payer’s language. Second, you surface process changes, such as improved intake documentation or coding workflows, that reduce future denials.
Tighten Front-End Processes While You Work the Backlog
If all of your effort goes into the current backlog, it is easy to recreate the same AR problems next year. The best clean up projects always run in parallel: one track focused on historical claims, another focused on front‑end process changes that prevent new aging.
Eligibility and intake are usually the fastest places to start. Confirm that patient eligibility is verified and documented before services begin whenever possible, and that any coverage limitations or managed care carve‑outs are clear to clinical and scheduling staff. Simple improvements here can eliminate a surprising number of registration and coverage related denials.
Next, look at the handoff between clinical documentation, coding, and billing. Under PDGM and PDPM, subtle documentation differences have material payment consequences. When clinicians understand which elements drive case mix and payment, and coders have timely access to clear notes, your first pass payment rate typically improves. Over time, that translates into fewer accounts landing in AR for complex rework.
Finally, make sure your billing calendar is aligned with regulatory requirements. Late RAPs, NOEs, and other time sensitive submissions can disrupt cash flow for an entire episode or length of stay. With payment rates moving only incrementally, providers have less tolerance for the avoidable revenue loss that comes with simple timing errors.
Build a Consistent, Measurable Follow Up Rhythm
AR clean up does not succeed through sporadic “blitz” efforts. It depends on a steady follow up rhythm and clear accountability. Even a small billing team can do this if the structure is right.
Assign clear responsibility for specific payers or AR segments, and give those staff members the tools to track their work. Ideally, each person has a daily worklist driven by payer, age bucket, and denial code, rather than a generic report they have to filter manually.
Set realistic but firm expectations for follow up intervals. For example, if a payer typically reprocesses claims within 14 to 21 days after a correction, your team should be back on those claims shortly after that window, not several months later. The goal is persistent, professional pressure that signals to payers that your organization is watching its receivables.
Most importantly, connect AR activity to results. Track trends in days in AR, percentage of AR over 90 days, first pass payment rate, and cash collections compared to net revenue. When you can show leadership that denial appeals on PDGM claims moved the over‑90‑day bucket by a specific number of days, or that better PDPM coding reduced underpayments in a specific payer group, it gets easier to secure ongoing support for AR resources.
If you would like more depth on how to structure healthcare AR management overall, you may find our article on healthcare Accounts Receivable management services helpful as a companion to this clean up focused discussion.
Use Reporting to Tell the Story to Leadership
Leadership teams and boards do not need to know every billing code. They do need a clear view of where cash is stuck, why it is stuck, and what is being done about it.
Begin by simplifying the story. Present AR trends over time by major payer category and age bucket. Highlight any significant changes, such as a rise in Medicare Advantage denials or a drop in self‑pay collections. Tie these trends back to operational changes where you can. For instance, if your AR improved after standardizing PDGM coding workflows, call that out.
Then connect your AR metrics to the broader Medicare reimbursement environment. When base rates are rising only modestly or shrinking after prospective adjustments, as is the case in home health under PDGM, there is less room to absorb variability in collections. In SNFs, a 4.2 percent PPS rate increase can be quickly offset by uncollected receivables, fines tied to enforcement actions, or higher wage and supply costs.
Clear, consistent reporting does two things. It builds internal alignment around the importance of AR clean up work, and it provides a basis for evaluating whether your current mix of internal staff and external partners is sufficient to manage the revenue cycle.
Know When to Bring in Specialized AR Support
For many organizations, the barrier to effective AR clean up is not knowing what to do. It is having enough trained, focused staff to do it while still keeping up with current billing. When backlogs grow and internal teams are stretched thin, bringing in external AR specialists can be a practical way to stabilize cash flow without adding permanent headcount.
Good AR support is not just extra hands making phone calls. It should bring deep familiarity with PPS, PDGM, and PDPM, strong denial management discipline, and the ability to produce leadership ready reporting. The right partner will help you identify systemic issues and recommend concrete changes to prevent new backlogs, whether that involves documentation workflows, coding practices, or payer contracting strategies.
At Walters Billing Solutions, our Accounts Receivable clean up work starts with a structured assessment, then moves into targeted resolution and ongoing monitoring. If you are exploring whether outside help makes sense, our overview on insights into healthcare Accounts Receivable management services outlines what to look for and how to measure value.
Bringing It All Together
Effective Accounts Receivable clean up is less about a one‑time push and more about building habits that keep your revenue cycle aligned with today’s payment rules. When you segment AR by payer and program, prioritize by recoverability, connect your work to PPS, PDGM, and PDPM structures, and strengthen front‑end processes, you can steadily pull cash out of aging balances while reducing future denials.
In an environment where Medicare payment updates are modest and prospective adjustments continue to tighten margins, every collected dollar matters. A clear AR strategy is one of the most direct ways to protect your organization’s ability to invest in staff, technology, and patient care.
If you would like to explore where your AR stands and what a focused clean up plan could look like for your organization, click the button below to schedule a time to chat.
Appendix: Sources
CMS CY 2025 Home Health Prospective Payment System Final Rule Fact Sheet (CMS‑1803‑F)
CMS FY 2025 Skilled Nursing Facility Prospective Payment System Final Rule (CMS 1802‑F)
CMS Fiscal Year 2025 Hospice Payment Rate Update Final Rule (CMS‑1810‑F)
