Awareness of the financial health of your practice is the key to reducing leakage and accelerating revenue to make strategic decisions and implement effective changes. Here are quantifiable KPIs that you can utilize to assess the health of your revenue cycle metrics.
Make sure to measure and observe them at intervals since improvements in each of these areas can have a significant impact on your bottom line.
1. First Pass Resolution Rate
First Pass Resolution Rate (FPRR) is a measure of the number of claims that get resolved the first time they are submitted. A high FPRR rate is an indication of the overall success of your Revenue Cycle Management process. Submitting clean claims is an effective use of your staff’s time and leads to quicker settlement of claims, thus helping your bottom line.
Calculate the First Pass Resolution Rate by taking the total number of claims resolved on the initial submission and dividing it by the total number of claims resolved during the same period with revenue cycle metrics. An ideal benchmark that you should aim for is 90 percent or higher.
2. Net Collection Rate
Net Collection Rate is an important metric to study in order to understand the effectiveness of your practice in terms of reimbursement collection. It is the percentage of reimbursements collected out of the total reimbursements allowed based on payor contracts for revenue cycle metrics. This number helps you understand how much revenue you have collected out of the total amount of revenue you expect to collect.
3. Denial Rate
The percentage of claims denied by a payor during a specific time period is the denial rate. A low denial rate is a sign of healthy cash flow while a high denial rate points towards delays in reimbursement and problems within the revenue cycle.
Add the total dollar amount of claims denied within a time period and divide it by the total fiscal number of claims submitted within that same period.
Ideally, the industry standard is somewhere between five to ten percent, but a practice should try to stay below that.
4. Days in Accounts Receivable
Days in accounts receivable refers to the average number of days it takes a practice to collect a payment. Lower numbers mean that payments are being collected swiftly and this figure can be used to predict future revenue for planning.
To calculate days in A/R, calculate your practice’s daily charges for a set amount of time. For example, if you evaluate days in A/R every quarter first, add your practice’s total amount of daily charges over three-months. Then divide the total charges by the number of days, before dividing your total receivables by your average daily charges to get the days in A/R.
Days in A/R should not stretch beyond 50 days, but for many practices this is easier said than done. Clients of EMPClaims enjoy fewer days in A/R which then has a positive impact on their fiscal goals to measure revenue cycle metrics.
5. Cost of Collection for Revenue Cycle Metrics
While it is important to collect reimbursement, it comes at a certain cost. Cost to collect is the total revenue cycle cost divided by the total cash collected. By finding an RCM partner] for revenue cycle metrics you can significantly reduce such administrative expenses.
6. Patient Wait Time
Patient wait time is the average amount of time a patient has to wait between checking in and seeing a provider. This can help you with staffing and scheduling and provide important insight into patient experience.
7. Admission Rate
Periodically calculating the admission rate will allow you to understand how many patients are coming in during a given period of time for revenue cycle metrics. Fluctuations in the admission rate is directly proportional to the revenue generated by your organization and studying this trend can help you make crucial decisions regarding hiring and staffing.
8. Average Insurance Claim Processing Time and Cost
This metric reveals the amount of time and money an organization spends processing insurance claims. A lower number indicates that is facility swiftly receives payments. Keep an eye on this KPI to control unnecessary expenses and bring down by effective planning for revenue cycle metrics.
9. Percentage of Patients without Medical Insurance
As an organization you must be aware about the extent of coverage for your patients. This metric will help you understand the percentage of patients that are uninsured and allow you to formulate payment plans accordingly to safeguard your revenue.
10. Patient Confidentiality
This KPI measures the number of times there has been a breach in patient confidentiality. Knowing this will help you to put measures in place to combat such occurrences.
The larger picture:
In the notoriously volatile healthcare industry, where policies are constantly being upgraded, let quantifiable metrics help you plan your every move. There may be different approaches to improving your revenue cycle management, but there is no getting away from these key indicators and the inevitable improvement across them is a testament to finding a strong partner.
Rely upon these figures and join hands with a trusted RCM Partner who can help you achieve improved efficiency and revenue cycle metrics.