7 Most Essential KPIs For Streamlined Medical Billing
As a healthcare practice, boosting your revenue is as crucial as providing quality patient care. The first thing you must do in this regard is streamline your medical billing process. This involves accelerating collections and effectively managing denied claims. And to achieve this result, it is imperative to track some important medical billing KPIs.
Medical billing KPIs are quantifiable metrics that healthcare practices use for assessing the billing process efficiency. The top KPIs include A/R days, net collection rate, and clean claim rate. Other KPIs like patient payment collection rate, patient schedule occupied rate, and POS collection rate also track the practice’s efficiency in different aspects. Not only do these KPIs help monitor financial progress, but they also help identify problem areas of your RCM.
Below, we are going to discuss important KPIs for RCM. So, let’s get started.
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KPI # 1: Days in Accounts Receivable (A/R)
This metric represents the time a claim takes to get paid after its submission. The longer this duration, the more adverse effects it has on your practice growth. This is because if you wait long for most of your reimbursements, you will not have enough money in hand to invest when there is an opportunity. Or even worse, you may not be able to keep up with your basic expenditures.
For reference, the ideal AR age for medical claims is 33 days. Most practices want to keep the number lower than 45 days. Anything higher than that can affect your practice’s financial health. It is also worth mentioning here that insurance companies often set a deadline of 90 days for filing a claim after the date of service. Delaying the filing process past this deadline can make it difficult to get any payment.
KPI # 2: The 0-60 Percentage
This medical billing metric represents the projected inflow of cash as an insurance AR aging percentage. And it is usually stated in two buckets: 0-30 and 31-60. Practices sort payments in these buckets based on the time lapse after the billing of the service. To calculate this percentage, you must divide the combined AR in both buckets by the total AR.
KPI # 3: The Gross Collection Rate
This simple KPI helps you look into your overall collections. It is simple to calculate. All you need to do is divide the total received reimbursement by the total amount charged. You won’t be able to determine payer discounts or contractual adjustments through this metric. But you will surely be able to get a bird's-eye view of your collection patterns. This may also help you identify any inefficiencies in your billing process.
KPI # 4: Net Collection Ratio
This one is a more specific reimbursement-measuring metric. It allows you to calculate the amount you have been able to collect out of the total amount allowed. The allowed amounts are the charges you are eligible for after contractual adjustments. Net collection ratio helps you measure the success of your collection process in a more calculable manner. It allows you to keep an eye on reimbursements you can actually get. It also helps you measure the impact of denial rates, write-offs, and unreimbursed visits.
KPI # 5: Clean Claim Ratio (CCR)
This is one of the most important metrics for determining the success of your billing process. It involves calculating the percentage of claims paid in the first pass. In other words, it helps you look into your error-free claims that have brought reimbursements without rejections, denials, and re-attempts.
The reason you want to calculate your clean claims is that they bring quick reimbursements. The higher their ratio, the more streamlined and error-free your billing operation. In general, a CCR of 80%-85% represents good financial health of your practice. Some practices even achieve a CCR higher than 90%.
KPI # 6: Claim Denial Rate
Besides measuring your CCR, you also want to keep an eye on your denial rate. And of course, you want to keep it as low as possible. The easy way to calculate your claim denial rate is to divide the number of claims denied by the number of claims billed. Another way is to divide the total charges of denied claims by the charges you have billed.
KPI # 7: Bad Debt Rate
This medical billing KPI measures the percentage of gross charges that you have written off as uncollectible. Hence, a higher bad debt rate is a red flag you cannot overlook. To calculate it, divide the written-off amount by the charges allowed. Ideally, your bad debt rate should not be higher than 3%.
How To Use KPI Metrics For Medical Billing To Enhance Revenue
Using the above KPIs can help you monitor your practice’s financial performance and spot anomalies. But how to use them can be a hard question to answer. We will cover the most effective ways to use medical billing metrics for RCM improvement.
- Provide value-based services to your patients. This involves delivering reimbursable services that improve the patient-provider relationship. Examples of these services include telehealth, physician assistance, nurse practitioners, and certified midwives. The KPIs that you can use to streamline these services are KPI # 1 to KPI # 4.
- Create denial rate reduction strategies based on payer requirements. This is all about studying and applying each payer’s specific reimbursement policies. You must also be aware of appropriate procedure codes and modifiers when submitting claims. Additionally, be sure to keep an eye on changes in diagnosis codes.
- Fix and resubmit denied claims on time. This is because not working on denials within a set duration can disrupt your cash flow. In some cases, leaving denied claims alone for some time makes them non-reimbursable. Therefore, it is important to create a strategy to rework those claims and be sure you never have them piled up. The metrics that you can use in this regard are KPI # 5 to KPI # 7.
Improve Your Medical Billing KPIs with AltuMED
Your RCM performance gets better when you hand it over to experts. And it peaks when you let AltuMED work for you. We have top-rated professionals in billing, coding, and revenue management. They provide 360-degree support to your practice, which ultimately improves your performance. On top of that, we give you access to interactive reporting platforms where you can measure all your KPIs in real time.
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