Important RCM Metrics that Every Practice Should Monitor

A practice owner will often tell you about revenue when you ask how the medical billing company is doing. Last month's revenue was either unchanged, down, or increased. When you ask why, the discussion becomes more difficult.

That's the issue. What transpired is revealed by revenue. It doesn't explain why. It is possible for a clinic to see more patients this year than last, charge more, and yet have less money in the bank. When that occurs, the solution is almost always hidden somewhere in the revenue cycle, and the only way to find it is to examine the appropriate data.

These are the metrics that are worth seeing.

The Significance of RCM Metrics for Medical Billing Services and Practices

Whether your billing is completed by an outside billing company or by an in -house team, down the hall does not really matter. In any case, you need a method to determine if it is effective. You get that from metrics. They eliminate uncertainty from a dialogue that is often motivated by dissatisfaction. 

Additionally, they are the simplest method for practices that depend on medical billing services to hold everyone to the same standard and monitor if things are improving month over month. Additionally, they identify issues early on, before a little leak develops into a serious cash flow issue.

Days in A/R

This is the number you should monitor if you only have one.

Days in A/R indicates the average time it takes to get payment following billing. To calculate it, divide your average daily costs by the entire amount of outstanding A/R. Thus, $360,000 over the last ninety days would be $4,000 each day. You have 75 days if $300,000 is still in A/R.

That is too high. The majority of practices need to last between thirty and forty days. Something is wrong as you start to approach 50. Perhaps charges are being submitted after the deadline. Perhaps a missing auth number is the reason why claims are on hold. Or perhaps no one is returning the payers' calls.

Your oldest claims (more than 120 days)

Although averages are useful, they are not always correct. Although a practice has to have flawless find days in accounts receivable, there may be a large number of claims that are awaiting payment.

Pulling your ageing report and keeping it at 12 buckets is thus a smart idea. Generally speaking, it should not exceed 10 to 15 percent of overall A/R. Additionally, you may transfer that point to the rapidly declining collecting odds. It is possible that a timely window may shortly end and claims will not result in refunds.

Rate of Denial

Calculating this one is easy. Divide the total number of claims you filed by the number of claims that were rejected.

Many practices fall between 5 and 10 percent. The well-managed ones do not exceed five.

To be honest, the percentage is the least fascinating aspect. Why claims are rejected is what counts. It's seldom random, in our experience. Usually, the same few problems keep coming up:

• Eligibility that was not verified prior to the visit
• Previous writers who were absent or had passed away
• Incorrect modifiers or code mistakes
• Repeated submissions
• Claims submitted beyond the due date

Rate of Net Collection

This figure indicates the portion of the money you are really due that you are earning.

Payments collected divided by your charges less contractual adjustments is how you compute it. You may get a reasonable picture of what was really collectable by subtracting those adjustments, which are the amounts you agreed to write off in your payer contracts.

At least 95% is what you desire. 97 to 99 are excellent practices. Money disappears if you're below 95, whether it's due to patient balances that were never pursued, services that were never invoiced, rejections that no one contested, or underpayments that were overlooked.

Rate of Clean Claims

How many of your claims get accepted the first time around, without any adjustments or rejections? At least 95% should be your goal. High achievers score more than 98.

 

In actuality, this measure is about your front end. When it's low, the reason is often upstream, such as a failed eligibility check, an outdated insurance card on file, or an error in the patient's birthdate. If you take care of it, your Days in A/R will decrease along with your rejections.

Patient Collections

For many practices, high-deductible plans altered the calculations. Compared to collecting from insurance, patients now owe a much larger portion of the cost, and collecting it is more difficult.

Examine the difference between what patients really owed and what they paid. Examine how you are managing it at the front desk if that figure is low. Before the appointment, are patients informed of what they would owe? At check-in, are copays collected? Are statements sufficiently understandable? Here, little adjustments can have a surprisingly significant impact.

The price of collecting

The last one. Divide the entire amount spent on billing (people, software, clearinghouse fees, outside assistance) by the total amount collected.

Depending on size and speciality, the majority of practices fall between two and four percent. If you are well over that, there is most likely an excessive amount of manual rework taking place.

How to Monitor and Enhance These Measures

It's one thing to know these figures. It's another to really evaluate them each month and take action.

Internal teams often get trapped in this situation. The analysis is put off until "later," which never happens since they are too busy just processing claims. An outsourced billing staff that manages the reports, works the aging A/R on a schedule, investigates rejection patterns, and verifies eligibility before patients even arrive is one way that some clinics address the issue.

Final Thoughts

What you cannot see cannot be fixed. The key indicators of your revenue cycle are days in A/R, rejection rate, and net collection rate. The gaps are filled by the others (ageing, clean claims, patient collections, and cost to collect).

Your past ninety days are a fantastic place to start. See where you stand by pulling the figures and comparing them to the aforementioned standards. You may be missing actual money if even one or two of them are out of range. Additionally, seasoned medical billing services may handle the monitoring and follow-up so you can concentrate on patients if your staff has the capacity to do it.