Every healthcare practice is a business at the end of the day, and they need to generate revenue. Keeping track of your revenue cycle is a complex process that needs undivided attention. Medical billing KPIs are the pointers that can help you in managing and enhancing your practice's revenue.
Key Performance Indicators (KPIs) have the power to improve your efficiency, accuracy, and financial stability. They provide great insights into the areas where the performance of your practice might be lagging. It helps you identify the areas of improvement so that you can optimize your revenue cycle in healthcare. Keeping track of these KPIs in medical billing leads your practice towards a better and enhanced revenue cycle management.
Robust medical billing KPIs improve the accounts receivable, claim approval rate and net collection rate. Your EHR and EPM system has all the data you need to develop an efficient KPIs that will keep your revenue cycle on track.
Areas of Improvement
Every healthcare organization’s revenue cycle starts with appointment scheduling. Frequent cancellations and no-shows disturb your financial performance, dragging down your revenue.
By continuously tracking the number of appointments cancelled or missed you can determine and adjust your appointment procedures to decrease last-minute gaps in your schedule.
Claim Lag Time
The average number of days between a patient visit or procedure and the submission of claim to the payer is called Claim Lag Time. Integrated practice management and EHR systems decreases the lag by simplifying billing, however, some practices still struggle to bill claims timely.
If your claim lag time is long, it slows down your revenue and increases the risk of missing claims filing deadlines. Average claim lag time KPI serves as an early warning system for issues or discrepancies in medical billing workflows.
Clean Claims Rate
A clean claim ratio is the number of claims accepted and paid during the first submission. Low clean claim ratio means that your claims are frequently denied. This signifies that your process is not efficient enough. You will have problems with your coding, documentation, or claims submission.
Denial Rate
Just like clean claims ratio, denial rate is the number of all the submitted claims that were denied. High denial rate means that you must investigate further to identify the source of incorrect claims.
You can use various tactics to find the reason for denial that can help your practice identify common errors.
Gross Collection Ratio
Gross collection ratio is your total payments divided by the total charges. A high gross collection ratio signifies that your practice collects most of its billed charges. This is a great symbol for your medical billing procedures. This means that you have a healthy revenue cycle.
Net Collection Ratio
Net Collection Ratio is your total payments divided by the total allowed charges. This ratio is a more refined metric than your gross collection ratio because it focuses majorly on allowed charges instead of total charges.
This metric gives a realistic picture of what number of available reimbursements your practice was able to collect. A low net collection ratio signifies difficulties with accurate and timely claim filing.
Accounts Receivable Aging
Accounts receivable are the charges billed that have not been paid yet. This includes both insurance and patient bills. Average accounts receivable days is an estimate of how long it takes for your practice to collect payments.
You must keep track of the number of accounts receivable outstanding for more than 30, 60, and 120 days. If you want to have a healthy revenue cycle, you must clear your accounts receivable in less than 50 days.
Bad Debt Rate
Bad debt are the payments that go uncollected. This could be due to incorrect coding or patients not being able to pay their balance. It is true that patients sometimes struggle to pay the medical payments because of their high costs.
Because of this, your practice will always have some bad debts. However, the goal must be to bring the bad debt ratio down by collecting patient co-pays before providing the services. You must also double check the insurance eligibility and provide online payment options to the patients.
First Pass Resolution Rate
First Pass Resolution Rate is the percentage of claims approved on the first submission. These claims are approved in the first go and do not need any sort of additional follow-up of efforts for resubmission.
A high First Pass Rate indicates a smooth and well-functioning billing process. To achieve and maintain a high FPR, one must make sure that the claims are submitted accurately with proper coding and verification. Even the tiniest error will lead to denial or rejection so make sure that your patient information is verified before submitting the claims.
Charge Capture Accuracy
Charge Capture Accuracy is the share of accurate charges entered into the billing system for the services rendered. Inaccurate charge capture will take your practice towards lost revenue and compliance issues.
Continuous auditing and extensive training of your billing staff can improve your charge capture accuracy, which ensures that all the services are accurately documented and billed.
Patient Payment Collections Rate
Patient collection rate refers to how well your practice collects payments directly from the patient. You can improve this KPI by openly communicating with staff and patients about the financial responsibilities. Make sure your patient understands their out-of-pocket costs.
If possible, you can also offer different payment options with enhanced upfront collection practices and detailed billing statements mailed to patients.
Bottomline
Keeping track of the performance key indicators in medical billing helps you optimize your revenue cycle for the financial health of your practice. Tracking the trends include days in accounts receivable, clean claim rates, denial rates, first pass resolution rates, charge capture accuracy, net collection rate, and patient payment collection rate.
An effective KPI tracking helps you improve the cash flow and all the factors leading to operational efficiency and patient satisfaction. However, it is totally understandable that not all healthcare practitioners can manage the KPIs on their own. This is where Unify Healthcare Services can help you manage and maintain your revenue cycle.
Unify Healthcare Services is a well-established name in the world of medical billing. With trained professionals and immense expertise, we can handle all the aspects of medical billing so you can have time to improve patient care. We can manage all your documentation requirements, so you don’t have to face any hassle in your practice.
