Creating a revenue cycle scorecard is more than just a good idea — it’s a necessity. In a world where reimbursement landscapes are constantly shifting, having a monthly scorecard helps keep your practice financially healthy and ready to tackle any issues head-on. But what metrics should you track? The answer may vary slightly based on practice specialties and size, but some key metrics apply universally. Let’s dig into those.
Days in Accounts Receivable
The gold standard of revenue cycle metrics — days in accounts receivable (A/R) — captures the average time it takes for your practice to get paid after services are provided. A low A/R days figure typically suggests efficient billing processes and effective follow-up. But what’s considered “low”? For most practices, staying under 40 days can be a good benchmark, though some specialties might aim tighter. Tracking this monthly helps spotlight trends that might indicate deeper issues, like payer slowdowns or internal billing delays.
Clean Claim Rate
A high clean claim rate indicates claims are being accepted by payers on the first submission. A robust target is 90-95%. If you’re consistently falling short, it’s time to audit your billing processes for errors — incorrect patient info, coding issues, or even mismatches with payer requirements. Remember, every denied claim adds days to your A/R and piles up additional work for your billing team.
Denial Rate
Denial rates provide insights into how often claims are being rejected. A denial rate under 5% is optimal. Are denial reasons recurring? Common codes like CO 97 (patient eligibility) or CO 29 (timely filing) can point to systemic problems that need fixing, such as outdated insurance details or sluggish filing practices. Monthly tracking enables swift identification and resolution of these bottlenecks.
Net Collection Rate
This metric reflects the percentage of potential reimbursement your practice collects, after write-offs. A net collection rate above 95% is ideal. Dropping below this suggests revenue is slipping through the cracks — be it due to uncollected patient balances or write-offs taken too liberally. Keep in mind, understanding the root cause is key before making any procedural changes.
Average Reimbursement per Encounter
By tracking the average reimbursement received per patient encounter, you can evaluate the financial health of your services. Being aware of which services yield the highest returns can guide strategic decisions — like adjusting your service mix or negotiating better payer contracts. Consistent declines might hint at the need for a coding audit or renegotiation with payers.
Claim Submission Lag
The time taken from the date of service to the date of claim submission is your submission lag. Ideally, this should be less than five days. Longer lags can signal inefficiencies in the charge entry process, leading to delays in payment. If submission lags are creeping up, it's time to streamline workflows or invest in training for your team.
Patient Payment Plans
Look at the percentage of patients on payment plans and the success rate of these plans. High balances on payment plans might be a sign that your fees are outpacing patient ability to pay, or that your collections processes need tightening. Could automated reminders or updated payment options improve collections?
Payer Performance
Analyze key payers in terms of payment speed and denial patterns. Are some payers consistently slower? Are there more denials from a particular insurer? Tracking these aspects can inform contract negotiations and highlight which payers might need more attention and resources from your billing team.
Cost to Collect
This often-overlooked metric considers how much it’s costing your practice to collect the revenue it earns. It includes labor, technology, and any outsourced services. Keeping this cost below 3% of your total collections is a good goal. Rising costs might indicate the need for automation or process refinement.
Takeaway
A monthly scorecard is your practice’s financial health check-up. Keeping a watchful eye on these key metrics allows you to intervene early when issues arise, rather than reactively trying to mend financial wounds after the fact. By tracking these indicators, your practice can make informed decisions that ensure long-term financial sustainability. Remember — in the revenue cycle, vigilance is not a choice; it's a strategy.
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