Healthy margins in healthcare are rarely about a single big decision. More often, they are built in the quiet details of your billing and Accounts Receivable. When Medicare adjusts a payment system or tightens a rule, revenue does not just change on paper. It shows up in your AR aging, your cash flow, and your leadership conversations about staffing and growth.
In the last few years, providers have absorbed a steady stream of reimbursement changes across settings. Skilled nursing facilities saw a 4.2% net increase in Medicare Part A payments for FY 2025 under the SNF PPS, tied to PDPM and market basket updates (CMS SNF PPS 2025 final rule). Home health agencies are working through CY 2025 home health PPS changes under PDGM that include a modest net payment increase of about 0.5% alongside ongoing behavioral adjustments (AHA summary of CY 2025 HH PPS final rule). Hospices are planning around a 2.9% payment update for FY 2025 and an increased aggregate cap (CMS hospice payment update FY 2025).
Those percentage points matter. But what often matters more is whether you collect what you have already earned.
This is where optimized healthcare Accounts Receivable becomes central to financial health. Clean AR does not just reduce headaches in the billing office. It supports payroll, preserves access to care, and gives leadership real visibility into how PPS rate changes, PDGM or PDPM case mix, and hospice caps translate into actual dollars.
What “Healthy” Healthcare AR Really Looks Like
Every organization has claims that age, and you will always have a mix of payers and timelines. The goal is not perfection. The goal is control.
Healthy AR in a Medicare PPS world has a few common traits, regardless of whether you are a SNF, home health agency, hospice, or home care provider. Your Days in AR are stable and trending the right direction. Denials are tracked and understood, not just worked one at a time. Leadership can explain, in plain language, why cash flow looks the way it does this month, and how that connects to PDPM case mix, PDGM LUPAs, or hospice routine home care volumes.
In this environment, AR is not a vague bucket of “money that should come in eventually.” It is a mapped, segmented, and actively managed asset that you can tie back to specific operational and documentation patterns.
Why AR Gets Messy in a PPS Environment
Medicare prospective payment systems were designed to create predictable, fixed payments per stay, per day, or per 30 day period. In theory, that should make financial planning easier. In practice, PPS has layered new documentation and timing rules onto an already complex revenue cycle.
Under PDPM, SNFs must align MDS assessments, therapy documentation, and nursing intensity with the case mix groups that drive payment. Missed assessments or incomplete documentation can shift a resident into a lower paying group, which then shows up as underpayments or denials in AR. Recent SNF PPS updates for FY 2025 and FY 2026 have focused on rate adjustments but left PDPM’s underlying structure intact, which means documentation and coding discipline remain essential for cash flow (CMS SNF PPS 2026 final rule).
Home health agencies face something similar under PDGM and the 30 day payment model. OASIS accuracy, correct clinical group and comorbidity coding, and LUPA management all drive revenue. CY 2025 PPS rules show that CMS is continuing to apply behavioral adjustments tied to PDGM, even while slightly increasing the base market basket rate. That combination means there is less room for error in documentation and timing if you want claims to pay promptly.
Hospice reimbursement remains per diem, with tiered rates by level of care and a strict aggregate cap. FY 2025 rules increased rates by 2.9 percent and raised the cap, but also continued the trend of heightened attention to election statements, NOEs, and quality reporting through the new HOPE instrument beginning in future years. When NOEs are late or documentation does not clearly support hospice eligibility, those lapses tend to surface as denials, recoupments, or protracted ADRs that sit in AR far longer than budgeted.
None of this is theoretical. It shows up in daily worklists, in calls with MACs and MCOs, and in the backlog that busy staff try to tackle between patient visits and admissions.
The Financial Cost of Untended AR
When AR stretches out, the impact is broader than a single denied claim. Extended Days in AR can increase your reliance on lines of credit, delay capital projects, and force difficult staffing decisions. For smaller providers, a few weeks of delayed cash from a large payer can create real stress.
At the same time, aged receivables usually do not represent a single root cause. They reflect a mix of issues: incomplete eligibility checks at intake, documentation gaps, missed NOA or NOE timelines, incorrect patient status, secondary payer confusion, or simple lack of capacity for structured follow up.
The longer AR sits, the more expensive it becomes to collect. Staff time rises, appeal windows close, and some balances eventually become uncollectible. In a PPS environment where margins are already pressured, writing off avoidable loss is not a trivial decision. Optimizing AR is therefore not only a collections task. It is a risk management function.
Building a Clear AR Strategy Around Your Payment Model
An effective AR strategy starts with recognizing that not all revenue is created, documented, or collected in the same way. A home health episode under PDGM behaves very differently from a hospice routine home care day, and very differently again from a SNF stay under PDPM.
For SNFs, AR optimization should begin with a close look at how PDPM case mix translates into actual collections. If clinical documentation supports higher acuity nursing or non therapy ancillary components but coding does not capture it, the payment shortfall will show up as systematically lower per diem rather than open denials. That is still an AR problem, just a quieter one. Tying revenue by case mix group back to documentation patterns can reveal where you are leaving money on the table before claims even go out the door.
For home health agencies, AR strategy must account for the full 30 day cycle. OASIS timing, RAP/NOA processes, visit scheduling, and order management all influence whether you bill promptly and accurately. Under the CY 2025 home health PPS final rule, behavioral adjustments are partially delayed but not abandoned, and CMS has indicated that remaining reductions will be applied in future years (AHA CY 2025 HH PPS final rule). That reinforces the need for tight alignment between clinical practice and billing.
In hospice, AR strategy must sit on top of clean NOEs, accurate levels of care, and disciplined length of stay monitoring in light of the aggregate cap. FY 2025 updates increased the cap amount but did not relax compliance requirements. The move toward the HOPE data collection instrument, with new process measures for symptom management, points to continued scrutiny of documentation and outcomes. When hospices maintain robust eligibility documentation and timely NOEs, they are not only protecting revenue; they are reducing the future risk of retroactive denials that can destabilize cash flow months or years after services were delivered.
Across all settings, that strategy lives or dies with clear, specialty specific workflows. AR optimization is not something you fix once with a spreadsheet. It is a daily operating discipline aligned with how your PPS or per diem system works.
Turning AR Data Into Actionable Insight
The most effective AR clean up work does not start with “work the oldest accounts first.” It starts with questions. Which payers or programs represent the majority of our aging? Are there spikes in denials tied to a specific reason code, diagnosis range, or level of care? How do Days in AR differ between Medicare fee for service, Medicare Advantage, Medicaid managed care, and commercial payers?
Leadership reporting plays a critical role here. When financial reports are clear, consistent, and tailored to your team, it becomes easier to connect operational decisions to AR outcomes. For example, if you notice that Days in AR for home health Medicare Advantage plans are climbing faster than for traditional Medicare, that may point to the need for payer specific pre billing checks and stronger contract review.
For SNFs, tracking AR by PDPM case mix group can highlight whether higher acuity residents are driving disproportionate denials or whether certain groups tend to be under coded. For hospice, monitoring AR against both the aggregate cap and levels of care can reveal where high cost general inpatient stays are not fully supported by documentation, increasing denial risk.
Clean reporting also helps separate chronic, structural AR issues from short term, fixable ones. A temporary backlog after a software transition looks very different on a dashboard than a persistent rise in 91 to 120 day balances with one specific MAC.
Practical Steps to Stabilize and Improve AR
Although every organization is different, a practical approach to AR optimization usually follows a clear path: assess, implement, monitor.
Assessment begins with a focused review of your existing AR. That means more than printing an aging report. It involves sampling claims, reading denial letters, and mapping trends by payer, service line, and reason code. For a home health agency, this might reveal that a large share of aging claims involve missing physician signatures or incomplete face to face documentation. For a hospice, it might uncover a pattern of late NOEs and election statement deficiencies. For a SNF, it may show that certain admission sources correlate with higher ADR rates under PDPM.
Implementation is where process changes are put in place. That could include tightening intake and eligibility checks, building pre billing review steps around PPS and per diem rules, implementing structured denial appeal workflows, and clarifying internal responsibilities. For Medicaid home care providers, implementation often involves aligning EVV records, visit documentation, and payer requirements so that clean claims go out the first time.
Monitoring closes the loop. Once new processes are live, regular, understandable reports keep the team aligned. Days in AR, denial rates by category, and recovery rates on previously aged claims are all useful indicators. Equally important is giving clinical and operational leaders access to this information so they understand how documentation and scheduling choices affect revenue.
Many organizations find value in having a dedicated AR specialist who knows their agency, their payers, and their systems. Whether that role is in house or supported by a specialized billing partner, the key is consistency and accountability rather than episodic clean up every few years.
Avoiding Common AR Pitfalls in Home Based Care
Home health, hospice, and home care providers face a unique mix of AR pitfalls because services are delivered in decentralized settings and staff are often stretched thin.
Intake is a frequent pressure point. When eligibility, insurance verification, and benefit checks are rushed, problems surface weeks later as denials or partial payments. Under PDGM, for example, misunderstanding the primary diagnosis or failing to capture key comorbidities at intake can shape the entire 30 day period’s revenue profile. In hospice, incomplete election statements or uncertainty about attending physician designation can delay or deny payments.
Documentation is another recurring theme. Field staff did not go to nursing school or social work school to chase claim edits. Yet their notes, visit timing, and coordination with physicians are central to revenue. Without practical feedback loops and training tied to AR outcomes, it is easy for clinical teams to feel that “billing is someone else’s problem.” In reality, clean AR depends on everyone understanding the financial impact of missed signatures, vague narratives, or late orders.
Finally, home based care organizations often carry aged AR from older software systems, prior billing vendors, or periods of rapid growth. Those balances are easy to mentally write off as “too messy” while the team focuses on current claims. In many cases, however, structured triage and targeted appeals can recover a meaningful portion of that revenue. The key is to separate what is still collectible from what is not, so leadership can make informed decisions rather than assuming that old AR is entirely lost.
Bringing Accounting Discipline Into Billing
Optimizing AR is not just about faster claim submission. It is about bringing accounting level discipline to the entire revenue cycle. That means looking beyond individual claim outcomes and considering how AR trends interact with financial statements, cost reporting, and strategic planning.
For smaller SNFs, for example, understanding how SNF PPS rate updates and PDPM case mix distribution affect AR can inform staffing, therapy contracting, and capital planning. When leadership can see that current collections, not just published rates, will support or constrain planned investments, decisions become more grounded.
Home health agencies preparing for future PPS cuts and ongoing behavioral adjustments under PDGM benefit from linking AR performance to multi year financial projections. Cash flow patterns, not just revenue recognition, influence whether an agency can weather temporary downturns or payer delays.
Hospices navigating per diem rates, wage index changes, and the aggregate cap need AR insight that connects collections to cap exposure. When retroactive cap liability is a possibility, conservative AR management and rigorous documentation are part of the same risk strategy.
In all of these cases, transparent, understandable reporting is critical. When “mystery numbers” disappear and leaders can clearly see how much revenue is tied up in AR, where it sits, and why, AR stops being a black box. It becomes a managed, measurable component of financial health.
When to Consider Outside AR Support
There is no single right answer to the question of when to bring in external AR or billing support. It depends on your size, payer mix, staffing capacity, and strategic priorities. However, a few patterns tend to signal that outside help may be appropriate.
If Days in AR are trending upward for more than one or two quarters, and internal process tweaks have not reversed the trend, a deeper external review can help identify blind spots. If leadership reports feel inconsistent, late, or hard to reconcile with cash in the bank, that may indicate underlying AR issues that an experienced billing and accounting team can unpack.
When your clinical and administrative staff are spending an increasing share of their time on claim follow up rather than patient care, you are effectively carrying a hidden cost in labor and burnout. In that situation, shifting the burden of complex follow up, denials management, and legacy AR clean up to a dedicated specialist can protect both revenue and staff well being.
Finally, if you are entering new programs or markets, such as expanding from traditional Medicare into Medicare Advantage, or from facility based care into home based services, there is value in aligning AR processes with those changes from the beginning. Building clean workflows around PDPM, PDGM, hospice NOEs, and Medicaid managed care before significant AR accumulates is far easier than unwinding problems years later.
Conclusion: AR as a Lever for Sustainable Care
In an environment shaped by prospective payment systems, regulatory updates, and shifting payer expectations, AR is not just a back office metric. It is one of the most direct levers you have to stabilize your bottom line, protect access, and invest in your teams.
Optimizing healthcare Accounts Receivable does not happen overnight. It requires honest assessment, consistent process, clear reporting, and a willingness to address root causes rather than treating each denial as an isolated event. When that work is done with specialty specific insight into SNF PPS and PDPM, home health PPS and PDGM, hospice per diem rules, and Medicaid home care requirements, the payoff is more than reduced Days in AR. It is a more resilient organization that can navigate future PPS changes with confidence.
If you would like to explore what cleaner AR could look like for your organization, including a focused review of your current aging and denial patterns, click the button below to schedule a time to chat.
Appendix: Sources
CMS: Fiscal Year 2025 Skilled Nursing Facility Prospective Payment System Final Rule
AHA: CMS releases CY 2025 home health PPS final rule
CMS: Fiscal Year 2025 Hospice Payment Rate Update Final Rule
CMS: FY 2026 Skilled Nursing Facility Prospective Payment System Final Rule
