Medicare organizations and hospices strictly adhere to Revenue cycle management (RCM) to ensure a steady stream of revenue in form of reimbursement for the care they provide to patients. Increasing collections, managing denials, and re-submitting and scrubbing claims are a few requisite revenue cycle activities for practices to accomplish.
However, to elevate the revenue cycle and ensure the profitability of your practice you need to be cognizant of the KPIs. Moreover, your Revenue recovery strategy must track the key billing metrics and follow guidelines and practices that lead to a steady stream of revenue.
Key Performance Indicators your practice should understand
Key Performance indicators help practices in analyzing financial performance and fluctuation in their cash flows and revenue recovery streams. Here are six substantial Key performance indicators that your firm need to track for evaluating revenue improvement while outsourcing medical billing.
Days in accounts receivable (A/R)
This metric represents the average period of time it takes for the payments of claims. It is to be noted that while practices wait longer for the claim to be paid, their cash flow decreases which in turn slackens their opportunities to invest and earn interest.
At Dominion Revenue collection we aim for the benchmark of 33 days for healthcare revenue recovery. We evaluate the number of days that an invoice for medical billing will remain outstanding and after that due date we diligently collect your revenue.
Clean Claim Ratio
The clean claim ratio is also termed as the first-pass ratio, it depicts the fractions of claims that pass audits without any manual interventions. A clean claim denotes a claim that has no filling errors, has never been rejected, and does not have preventable denials.
The expertise of our Revenue recovery professional in healthcare recovery management ensures a higher percentage of CCR which means you will be paid faster. We identify your CCR, gauge time spent on reworking claims and zero in on the reason for claims denials. The average clean claim rate ranges from 75% to 85% while we aim for 90% to 95% which illustrates a successful revenue cycle management strategy.
Denial rates for any practice portray the average percentage at which the claims are denied. Practices need to aim for a higher CCR, which states that they should strive to maintain a low claim denial rate.
You can calculate your claim denial rate by dividing the number of denied claims by numbers billed. By outsourcing medical billing, you can meticulously regulate your revenue recovery process that includes accurate billing and filling, so, you can dampen this percentage.
Bad Debt Ratio
To understand the extent of written payments, analyze your Medicare organization’s bad debt rate. The ratio is calculated by dividing the written-off monetary amount by allowed charges. Some common examples of bad debt include accounts delayed for more than 180 days and sent to collection agencies, death, bankruptcy, etc.
Net collections ratio
This is the percentage of total reimbursed payment collected out of total billed amount. This KPI is the ultimate indicator of healthcare revenue recovery success as it represents the overall efficiency of the revenue cycle.
It is the realistic estimate of revenue recovery your practice can collect in the form of reimbursement. Moreover, it reflects how unreimbursed visits, denials rates, and other factors affect the revenue recovery process.
Gross Collection rate
This metric analyzes your practice’s gross collection rate by calculating the total reimbursement paid by the charged amount. The ratio is not as effective as the net collection ratio as it does not include the additional costs related to administrations, selling activities, taxes, etc. It is a less effective KPI than net collection, eliminating refunds, write-offs, non-contractual and contractual amounts provide you a better insight into your actual income.
Healthcare Reimbursement Simplified
Improved Cashflow - Maximized Revenue
610 Uptown Blvd Suite 2000
Cedar Hill, Texas 75104