It is essential for healthcare practices to keep on top of their billing and accounts receivable. Providers need to know the status of their cash flow, not only to meet their financial goals but also to ensure adequate patient care. Managing billing and collections can be a challenging task due to a number of reasons including increasing share of patient responsibility, changing regulations, and reimbursement models. Tracking billing key performance indicators (KPIs) can assist providers in prioritizing resources, ensure staff is performing efficiently, and can guide future operational decisions.
Let us look at the main billing KPIs that medical providers should be tracking:
Bad Debt
One of the most important KPIs is bad debt. This is calculated by dividing allowed charges by bad debt write-offs. It depends heavily on payers and patients not paying their bills on time. Expressed as a percentage, bad debt is important to consider in order to review all streams of revenue entering the practice.
Net Collection Rate
The ability to collect bills that are eligible to be paid for is the net collection rate. This is calculated by dividing payments received from patients by payments agreed-upon with payers (the charged prices subtracted by contractual payments). This KPI allows for comparisons to be made with other groups in the region. A net collection rate of at least 97% or higher ensures healthy stability within the practice. If the rate is lower, it is important to investigate whether the problem is due to a particular payer or a select group of payers.
Resolve Rate
The number of claims divided by the total claims paid is the resolve rate. This is the rate at which service requests are fulfilled and it indicates how well the flow of revenue is managed. If the resolve rate is lower than average, it may imply an underlying issue with how medical staff verifies patient eligibility or errors in coding.
Unbilled Claims Percentage
Unbilled claims can be caused by a range of errors and the result is that these claims are summarily rejected. Missing patient demographic information, incorrect doctor’s orders, and incorporating wrong DX codes are some of the mistakes that can cause a high percentage of unbilled claims.
Denial Rate
The average denial rate in the healthcare industry is between 5-10%. Anything higher than this could be unfavorable for practices. Calculated by the number of claims denied by the number of claims remitted, this KPI is crucial for healthcare practices. One-third of providers have yet to move to an electronic claims management system and are solely relying on manual processing. The lack of automated, electronic claims systems could lead to more manual errors, ultimately contributing to a higher denial rate.
Gross Collection Rate
Calculated by dividing money from payments by billed charges, the gross collection rate allows for comparisons to be made on cash flows. As staff study these comparisons, they gain a deeper understanding of what future collections will be like. The gross collection rate can fluctuate based on changes in insurance providers and patient population.
Tracking medical billing KPIs is essential for healthcare practices to remain viable and efficient. Providers are responsible for managing these KPIs and must be aware of which measurements to improve. It is important for staff to perform effectively while paying attention to billing details in order to avoid errors.
Healthtek provides end-to-end solutions for all your Billing and RCM woes. To know more about our services, custom software and products built using state-of-the-art AI/ML technologies, please contact us at [email protected]
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