Days sales outstanding: what your DSO is really measuring.
DSO is the average number of days it takes to collect a dollar after you bill it. It is the single clearest early signal of a cash-flow problem forming.
The formula, and the common mistake
Total AR net of contractual adjustments, divided by average daily net revenue, gives DSO in days. The frequent error is using gross billed revenue instead of net, which inflates the number and hides real trend movement.
Use net revenue and a 90-day trailing average so a single heavy or light billing week does not distort the reading.
Benchmarks
Under 35 days is strong. 35 to 50 days is typical for a Medicaid-heavy home-care agency. Over 50 days needs attention, and over 60 days is usually a symptom of stuck denials or unworked AR. These bands are Reeve's own internal reading of the payment law and common agency practice, not a published benchmark and not a Reeve result. We have not found a primary source that publishes home-care DSO bands, so treat them as a starting frame and measure your own. General medical billing benchmarks read the same way: 30 days or under high performing, 40 to 50 average, 60 and over below average (The Fox Group, https://www.foxgrp.com/assessment-benchmarks/medical-accounts-receivable-monitoring-and-measuring-performance/).
What drives it by payer
The federal floor is set by 42 CFR 447.45(d), which requires a state to pay 90 percent of clean claims within 30 days of receipt and 99 percent within 90 days, https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-447/subpart-A/section-447.45. States write their own prompt payment rules on top of it: Florida section 641.3155 puts the plan on a defined clock for an electronic clean claim, and New York Insurance Law 3224-a puts a plan on 30 days for an electronic claim. Managed care and private pay both run longer than the fee-for-service floor. The specific day counts above the federal floor are Reeve's internal reading rather than a published benchmark. Your payer mix sets your floor, and comparing your DSO against a single benchmark without accounting for mix will mislead you.
The four things that push DSO up
Submission lag, meaning the gap between service date and claim submission.
Denials and rework, meaning claims that go out, come back, and only pay on the second or third pass.
Unworked denials that never get written off, sitting in AR because nobody has closed them.
Authorization holds, meaning claims that never went out because the auth was not in place at billing.
How to use it
DSO leads a cash problem by 30 to 60 days. It is a warning light. AR aging is the diagnostic that tells you why.
We have not found a published source that treats Medicaid receivables older than 180 days as uncollectable, so Reeve does not say it. What the lending literature does say is that asset based lenders exclude receivables from a borrowing base at roughly three times standard terms, about 90 days past due, and treat Medicaid receivables beyond a lender defined age as ineligible (ABF Journal, https://www.abfjournal.com/understanding-the-concept-and-rationale-of-standard-accounts-receivable-ineligibles/; NCExaminers borrowing base ineligibles, https://www.ncexaminers.com/collateral-examination-resources-borrowing-base-ineligible-categories-accounts-receivables.php?common=1). Home health specific sources put an average DSO at 45 to 60 days (HealthRev Partners, https://healthrevpartners.com/resource-center/blog/days-sales-outstanding/), and a home care specific target keeps receivables aged over 90 days under 15 to 20 percent of the total (Carevoyant, https://www.carevoyant.com/home-health-blog/home-care-accounts-receivable-over-90-days-solutions).
Plain answers, on the record.
Collect is money you never captured. Cover is money a payer can still take back.
Reeve reports the two separately and never adds them together, because only one of them is yours to go and get. The Margin Review reads both on your own export and costs nothing.
One pass over your own export, in your browser. The findings are yours to keep, with no obligation.
The recovery lane. Care you delivered and never billed, units short of what was authorized, lines paid under the published rate.
Everything in Collect, plus the exposure lane. Retired codes, authorizations at the end of their period, care delivered past what was approved.
Month to month, no annual contract. Read-only in every tier. Run the free review.
See what your DSO is really telling you.
The Margin Review reads a closed period against authorization and payer clocks and returns the recoverable dollars driving your DSO up.