AR Inventory Analysis: How to Identify Trends & Create an AR Inventory Strategy
In Medical Billing Accounts Receivable (AR), one of the most important tasks is AR Inventory Analysis. It helps organizations understand the current claim inventory and create a strategy to resolve claims efficiently.
Proper AR inventory analysis helps answer important questions such as:
How should we start working on the inventory?
How many resources are required to complete the inventory?
Which claims should be prioritized first?
When done correctly, inventory analysis helps teams complete more work in less time and improves the overall revenue cycle performance.
For beginners, preparing AR inventory analysis may seem difficult because it requires AR knowledge and the ability to identify claim trends. However, once the analysis is prepared, managers can easily allocate work to team members and complete the inventory within the required timeline.
Below are the key steps to perform AR Inventory Analysis and identify important trends.
1. Identifying Workable vs Non-Workable Claims
The first step in AR inventory analysis is to separate workable claims from non-workable claims.
What are Non-Workable Claims?
Non-workable claims are claims that cannot be worked by the AR team due to specific restrictions.
Common examples include:
Specific payer restrictions (as instructed by the client)
Specific aging bucket restrictions
Claims already moved to the patient responsibility bucket
Claims with zero balance
Claims with negative balance
By removing non-workable claims, the team can focus only on actionable claims.
2. Identifying Callable and Non-Callable Inventory
Another important step is to classify claims into callable and non-callable inventory.
Since AR analysts have limited calling hours in a shift, this classification helps improve productivity.
Benefits of Callable vs Non-Callable Classification
Helps utilize the entire shift efficiently
Allows separate teams for calling and non-calling tasks
Improves work allocation strategy
Helps resolve more claims in a single day
What are Non-Callable Claims?
Non-callable claims are claims that do not require calling the insurance company.
These can often be resolved through insurance websites or internal workflows.
Examples include eligibility-related denials such as:
31 – Patient not identified
26 – Coverage terminated
22 – Other payer primary
If the insurance website provides claim status or eligibility information, these claims can be resolved without making a call.
This allows analysts to complete a higher volume of claims faster.
3. Defining Aging Buckets
Aging buckets help AR teams prioritize claims before they cross filing limits such as TFL (Timely Filing Limit) or AFL (Appeal Filing Limit).
Recommended Strategy
For No-Response Claims
Focus first on 90+ days aging bucket
Claims between 30–90 days may still be early to follow up
For Denied Claims
Start with 30–90 days aging bucket
These claims already have a denial and require quicker action
Using aging buckets properly helps prevent revenue loss due to filing limit expiration.
4. Identifying Denial Trends by Payers
Another powerful technique in inventory analysis is identifying denial trends by payer.
This can be done by creating a pivot table of Payers vs Denial Codes.
Why This is Important
This analysis helps identify:
High denial volume payers
Credentialing related issues
Common denial patterns
For example:
If a particular payer shows large volumes of credentialing denials, resolving the credentialing issue may automatically resolve a large number of claims.
This approach helps teams fix root causes instead of working claims individually.
5. Identifying TFL / AFL Crossed Claims
If the inventory contains very old claims, it is important to check whether Timely Filing Limits (TFL) or Appeal Filing Limits (AFL) have been crossed.
Once these limits are crossed, the claim cannot be reimbursed by the payer.
Example
Medicare claims generally have a 1-year filing limit from the Date of Service (DOS).
If a claim is older than 1 year, it may no longer be payable.
In such cases:
Obtain client approval
Adjust off the claims from AR inventory
This step helps clean up the inventory and reduce unnecessary workload.
6. Identifying Non-Insurance Claims
Sometimes AR inventory contains payers that are not insurance companies.
These can often be identified by reviewing the payer name.
Examples may include:
Third-party administrators
Government programs
Patient responsibility accounts
Although the volume of these claims is usually small, identifying them helps quickly remove or redirect these claims.
These claims can be:
Released to the patient
Billed to another active insurance
Final Thoughts
AR Inventory Analysis is a powerful strategy tool in medical billing. It allows organizations to optimize workload, allocate resources efficiently, and resolve claims faster.
A well-structured inventory analysis typically includes:
Workable vs Non-Workable Claims
Callable vs Non-Callable Inventory
Aging Bucket Prioritization
Denial Trends by Payers
TFL / AFL Crossed Claims Identification
Non-Insurance Claim Identification
When these steps are applied correctly, AR teams can improve productivity, reduce aging, and maximize reimbursement.
Proper inventory analysis ensures that the right claims are worked by the right resources at the right time.
