If you don’t track it, you can’t measure it.
It’s critical to regularly measure the financial health of your practice. Tracking medical billing Key Performance Indicators (KPIs), daily, weekly, monthly, quarterly, and yearly is essential to get better control of your practice’s revenue cycle performance.
Here are five KPIs that you must consider monitoring in 2021:
Days in Account Receivable (A/R)
Why monitor? Helps you identify potential revenue cycle issues and the efficiency of your billing team
The metric indicates the average number of days it takes you to get paid for your services. High A/R are red flags and can negatively impact your bottom line. Regular follow-up of pending claims and fast-track claim reimbursement helps improve your medical AR days.
How to calculate: Total Account Receivable/ (12 months of gross charges/365)
Target Benchmarks: The industry standard is 35 days. While an A/R in the range of 60 – 90 days should raise a red flag.
Percentage of A/R Older than 60 Days/90 Days/120 days
Why monitor? Most practices and billing companies usually choose not to pursue collections for outstanding A/R cases greater than 60/ 90 days. The reason being the huge amount of labor-intensive work involved in achieving its successful collection. However, it leaves potential cash on the table which otherwise could have been captured.
This is a great indicator to know whether or not your patients and insurers are paying you on time. This represents account receivables older than 60 days/ 90 days/ 120 days.
How to calculate: Total A/R > 60 days/ 90 days/ 120 days
Target Benchmark – You must strive to keep it well below 25%, anything higher is a sure sign of an inefficient patient payment process.
First Pass Resolution Rate (FPRR)/ Clean Claim Rate (CCR)
Why monitor? It reveals problems and inefficiencies in claim submission and processing. Thus, revealing the effectiveness of your claims processing and medical billing team.
A key medical billing performance indicator, CRR is the percentage claims that are paid the first time it is submitted to the insurance company for review and payment. Improving FPRR means lower A/R and quicker payments. Errors, oversights, and inefficient billing processes are common culprits of lower FPRR. So in case of a low rate of FPRR, you should immediately focus on insurance verification, billing, and coding for a more efficient Revenue Cycle Management (RCM)
How to calculate: # of claims paid on first pass/ Total # of claims submitted in a time frame
Target Benchmark – The industry standard is 98%. For an efficient, well-run physician practice should be more than 90%.
Net Collection Rate (NCR)
Why monitor? The KPI is a good indicator of how well your practice is doing overall.
The metric measures how much you are supposed to collect from both patients and their insurance companies. A high NCR reflects timely billing, adjudicated claims and patient balances are all collected.
How to calculate – (Payments/ (Charges- Contractual Adjustments)* 100%
Target Benchmark – An NCR lower than 95 – 100% after write-offs is an indication of poor performance.
Why monitor? It measures the effectiveness of your revenue cycle management processes.
It is the percentage of claims denied by payers. A low denial rate indicates healthy cash flow and provides insights into how efficiently your claims are processed. If the denial rate is not addressed in time, it will negatively affect other KPIs.
Target Benchmark – 5% – 10% denial rate is the industry average.
How to calculate: Total # of claims denied/ Total # of claims submitted (for a specific period)
Calculating and monitoring these medical billing KPIs takes time and effort. Medical billing is a complex process and in times of continued regulatory changes, increased compliance, thinning margins can be a challenge.
At Analytix, we offer a range of customizable solutions to improve billing efficiency, accuracy, decision making, and profitability. Our end-to-end medical billing services with daily, weekly, and monthly reporting helps you stay on top of the game.