Quick answer: In month one of a new billing arrangement, 80% to 90% of your cash comes from old AR (accounts receivable). So pull full AR reports before you give notice. Then meet the outgoing team weekly through the transition period. Change your billing service and your software in an order that protects that old AR.
In this episode of the NatRevMD Podcast, Dr. Heather Signorelli explains where the revenue risk in a billing transition really comes from. It is not the change itself. It is the order of the changes and how the old AR gets managed.
Why month one runs on old AR
A claim sent today doesn’t pay today. Medicare often pays in about 14 to 20 days. Most commercial payers pay closer to 30 days. So cash in July mostly comes from patients seen in June, and that’s at the earliest.
That’s why the new team’s first month is mostly about the old team’s work. The ramp looks like this:
| Point in the transition | Where the cash comes from |
|---|---|
| Month one | 80% to 90% old AR, 10% to 20% new claims |
| Months two and three | Revenue shifts toward the new team |
| Month four | 95% to 100% new team |
The outgoing team usually works its claims for 30, 60 or 90 days. If nobody manages that work, the money can stall. In practice, this is where most of the revenue risk sits.
How to manage the outgoing team
- Read your contract first. Check the notice period, the transition terms, data provisions and any auto-renewal window.
- Pull raw AR reports before you give notice. Get insurance claims AR and patient AR while you still have full cooperation.
- Set a defined transition period. Everyone should know what the old team is working on and when it ends.
- Meet weekly with the outgoing account manager. Review status on every open claim. Work denials together, and watch the AR shrink on schedule.
- Get admin access to every payer portal. Do this before you decide anything. Admin access can take months, and government payers are often the slowest.
Also check your AR aging now. The show notes give a simple test: if more than one month of gross charges sits past 45 days, plan an AR cleanup sprint before the new team starts. Claims over 365 days are usually in write-off range. If your over-90 bucket is already large, that problem won’t fix itself when the current team becomes the old team.
Who works the AR left behind
Most billing companies will take on leftover AR. We usually do it hourly, because nobody knows what’s inside it until they look. Old AR can hide eligibility problems that were never fixed, timely filing misses, or claims paid but never posted. So the budget depends on how many FTEs (full-time staff) you assign to it.
Track it week by week. How many claims were worked? What got paid, and what had to be written off? In our process, the practice reviews and approves any write-off before it happens.
Should you change billing service and software at the same time?
Changing both at once creates two learning curves and two threats to revenue. So start with three questions: Are you replacing an in-house team or an outsourced vendor? Who owns the software? Is the software working, or is it part of the problem?
- Replacing an in-house team: Knowledge often lives in people’s heads. It’s often better to move the billing service first, with strong in-house staff helping hand off that knowledge. Then change the software.
- Leaving an outsourced vendor that owns the software: You’ll have to leave that software anyway. Changing both at once often makes sense, and the old vendor keeps working old claims in the old system for its transition period. Dr. Signorelli recommends that you own your own software going forward.
- You own working software: Keep it, move the service first, and revisit the software after things settle, around months four to six.
- You own software with major gaps: Examples include outdated ICD-10 or CPT codes, no clearinghouse link, or poor reporting. Moving both at once may be cleaner.
For the full decision on whether and how to change billing companies, see our guide to switching medical billing companies and our episode for practices that are unhappy with their billing but afraid to switch.
Frequently asked questions
It can, if the old AR is not managed. In month one, most cash still comes from claims the old team submitted. Pull AR reports before giving notice and hold weekly calls with the outgoing team to protect it.
The outgoing team usually works its claims through the notice or transition period, often 30 to 90 days. After that, the new team can take over what is left, usually billed hourly because the condition of old claims is unknown.
Usually not. Claims over 365 days are typically in write-off range. That’s why a large over-90-day bucket should be worked now, before any transition.
Yes. Make sure the owner or office manager has admin access to every payer portal. Getting admin rights can take months, especially for government payers.
Planning a billing transition? Start with our free EMR / PM software assessment. It walks you through the checks we use to decide whether your current software is an asset or a liability, so you can sequence the change and protect your old AR.
