Don’t wait too long to realize you need help with your Revenue Cycle. Too many providers ignore the warning signs of a poorly performing revenue cycle and are barely keeping their heads above water. Physicians and providers have a challenge as they rely heavily on others, typically to ensure that they are utilizing best practices and measuring key performance indicators to indicate healthy revenue cycle practices. Many don’t realize their reimbursements aren’t measuring up until it is too late. A good practice is to have an independent review/audit by an outside consultant at least annually and sometimes more frequently if you are experiencing poor financial performance. Consultants can not only identify gaps and lags in your revenue cycle but provide education to your current staff if needed. They can identify any revenue risk areas or areas of revenue loss.
It is a good practice to continually monitor several revenue Key Performance Indicators in your practice. Below are some suggestions of how to get started measuring your practice’s performance.
The important thing to remember is to walk before you run. Start with a small sampling of KPI’s until you get used to how the data looks, feels and how you can manage this new information. As you become better identifying what needs monitoring, you can increase the number of KPIs that you audit. Listed below are just a few examples of KPIs that your organization should consider.
A/R Days is the pulse of your revenue cycle. A/R days are a measure of how long it takes your practice to collect the outstanding bills from insurance providers and patients.
Cash Collection % of Net Patient Services Revenue
The purpose of this KPI for cash collection as a percentage of net patient services revenue is to evaluate an organization’s ability to transfer net patient services revenue to cash.
Monitor your denial rate and compare to previous years. Are you seeing this trending down or is it skyrocketing up? An upward trend is an indicator that you may have a big problem. This should be monitored monthly and by provider or provider types to identify any areas of opportunity and to lower your risk.
Monitor the number of claims denied and drill down to determine the root cause of the number of denials. Is it specific to one provider or a specialty? A diagnosis or CPT code? Your EMR should be able to identify this information through reporting.
Net Collection Ratio
This is the percentage of total reimbursement collected out of the total allowed amount. This metric represents the efficiency of the revenue cycle and, thus, is the ultimate indicator of collections success. Net collections represent what your practice realistically can expect to receive in reimbursement. It encompasses, denial rates, unreimbursed claims and other factors affecting your revenue.
Bad Debt Ratio
This is the percentage of uncollectible patient accounts to the total AR. This gives your organization a snapshot of how well they are performing at collecting patient balances and copays.
HCCS would love to be your RCM partner.