Healthcare with best-in-class treatment and practice can strategically perform and maintain a good relationship with patients, but how about finances and revenue? As a healthcare provider or hospital owner, if you don’t know what is happening in your healthcare at the back office in terms of billing and account receivable, how can you expect to determine and ensure the financial status of your organization?
While speaking about medical billing, it’s not just billing and coding anymore. The current age billing software can provide performance analytics that allows organizations to stay on top of healthcare billing, productivity and performance. So, leveraging the power of key performance indicators for the healthcare revenue cycle to look at each stage of your financial side to sort out where you need the most assistance.
Why are Key Performance Indicators (KPIs) Required in Healthcare Revenue Cycle?
Using key performance indicators in medical billing will put cold to hard numbers on your healthcare facility’s billing and revenue performance. Medical billing KPIs help you break down each billing component into a quantifiable element. Based on accurate performance reports, your healthcare can gauge how well your practice is pursuing your goals and the pitfall areas you need to focus on. When your KPIs are on a positive trend, it means your healthcare is on the path to effective revenue cycle management.
Evaluating key factors like medical billing KPIs in the administrative arena will determine whether your practice is on the right track to effective revenue cycle management and getting paid promptly for the service you provide.
Top Medical Billing KPIs that Your Healthcare Should Focus on
Data Collection by Front End
Most key information in medical billing is about patient information (demographic entry), insurance details, and collecting accurate Copay in the right place.
Focus More on Bad Debts Rate
In healthcare, not all of your patients could able to pay their bills on time. In that case, you have taken this into account as you reviewed all incoming revenue for your healthcare. However, bad debts are considered as one of the essential medical billings KPIs you want to be tracking. You can calculate this percentage by dividing allowed charges by bad debt.
Account Receivable Days (A/R Days)
This KPI in medical billing measures the average time it takes to submit the claim to be paid. While the days of A/R get increased, the cash flow and opportunities to invest and earn interest will decrease. Healthcare practices should aim for the industry benchmark duration of 33 days in account receivable. Moreover, keeping these metrics under 45 days will ensure the patient’s financial health. Also, it’s important to remember that insurance carriers’ timely limit to filing is often 90 days from the date of service. It could be difficult for the providers to receive payments once these deadlines are passed.
KPI: The 0-60 percentage
Here is another medical billing KPI, 0-60 per cent represents the projected inflow of cash as a percentage of A/R ageing into two buckets. The 0-30 days and 31-60 days. Payment dues of healthcare are sorted into the category that represents how many days ago the service provided was billed. To calculate the 0-60 percentage, divide the 0-30 bucket and 31-60 by your total account receivable.
Gross Collection Rate
Another important metric in medical billing KPI is calculating the gross collection rate by dividing total money from payments by billed charges. The gross collection rate gives you another perspective on your collections.
Net Collection Rate
Net Collection Rate (NCR) is an overall indicator of your healthcare total billing performance. NCR is a way to look at how much your practice is supposed to collect reimbursement or payments from insurance companies and patients and compare that against actual receipt. Moreover, this metric shows the efficiency of your billing system as well as the revenue cycle. With the collection success indication and net collection rate, you can review the denial rates, unreimbursed visits and other factors that impact the practice’s revenue and growth.
With the increasing regulatory oversight, there are some limitations on how to bill patients and submit a claim for reimbursements. In accordance with the No Surprise Act and healthcare Price Transparency, healthcare facilities must present transparently patients’ responsibility and let them know the amount for the practice before the treatment.
To maintain a stable balance, healthcare should implement a payment policy that clears the way for collections, along with contacting patients with balances promptly.
Clean Claim Ratio (CCR)
The Clean Claim Ratio of the first-pass ratio is the per cent of claims (without errors) or claims paid at the first submission. The clean claim never gets rejected, does not have any preventable denials, does not get filed more than once and most importantly, contains zero errors. Since clean claims mean you are getting reimbursements faster, you will want to determine your CCR, additional time spent reworking on denial claims and the core reasons for claim denial. According to the reports, most practices’ CCR ranges from 70% to 85%. Having a CCR of 90% to 95% reflects the successful revenue cycle strategy.
There is no denying that a high denial rate would be a disaster for your healthcare. While healthcare aims for a high per cent of CCR, then they should strive for low claim denial rates. The denial rate is calculated by the number of claims denied by the number of claims remitted. The normal denial rate for healthcare in the United States should tend to range from 5 to 10 per cent. However, for many healthcare organizations, manual collections are the bottleneck to achieving the percentage.
Unbilled Claims Percentage
A wide range of errors can lead to your healthcare seeing an unbilled claims percentage. Concentrating on this key performance indicator is imperative to avoid claim denials. You can calculate the KPI by a number of claims divided by unclaimed ones because the missing information and details such as doctors’ orders, failing to include codes or wrong ones, and mistakes in demographic information can lead to unbilled claims percentage.
The Possible Solutions – Bottom Line
Streamlining the medical billing process with the above KPIs is imperative to ensure your healthcare’s cash flow and patient experience.With our medical billing & coding services, you have complete control and advantage of your facilities to see your key performance indicators for healthcare revenue cycle on a single screen.
Work with MHRCM to ensure quality medical KPI tracking with front-end to back-end revenue cycle management process that provides all features and analytics to maintain complete healthcare administrative and clinical processes.