Key Performance Indicators to Watch in Revenue Cycle Management

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Key Performance Indicators to Watch in

Revenue Cycle Management

In the changing healthcare landscape, revenue cycle outsourcing will be a key strategy for practices to monitor key RCM metrics and enhance cash flow.

www.outsourcestrategies.com The process of revenue cycle management (RCM) in a healthcare practice covers keeping track of claims, collecting payments, and tackling denied claims. The aim is to improve cash flow. However, this is not easy in today’s dynamic environment of federal and state regulations, changing codes, electronic health records, Meaningful Use. That’s why most physician practices are choosing to outsource the RCM to experts. Experienced medical billing companies can ensure focused and committed action to improve RCM. These experts continuously monitor RCM metrics to help healthcare providers maximize reimbursement. Here are some of these key metrics or performance indicators (KPIs):  First pass recovery rate (FPRR): This rate tells you how successful you were in getting claims paid fully the first time they were sent out. The focus should be on clean claims and timely and appropriate payment for these claims. Another related metric, first pass denial rate (FPDR) is percentage of claims sent out that are not getting paid. This involves examining the number of denials versus the number of claims that been submitted, and tracking rebilling of claims. In a recent article in Becker’s Hospital Review, an expert recommends that organizations track these metrics on a monthly or quarterly basis, and strive to achieve a first pass recovery rate of 80 percent or greater.  Cost to collect ratio: Collecting payment for healthcare services provided involves certain costs. Physicians need to calculate what they are paying their internal team and their medical billing and coding company, as well as their facility and overhead costs. The goal should be to minimize these costs.

Cost-effective services will ensure more funds to invest in other areas like infrastructure and quality.  Days in sales outstanding (DSO): This is the average number of days to collect on a service provided. The aim should be to collect outstanding receivables as quickly as possible.

www.outsourcestrategies.com  Patient collections: The best way to improve self-pays collections is to perform health insurance verification before services are provided.

Educating patients on their coverage will help avoid surprise bills and increase the chances of patients paying for their care in a proper and timely manner.  Net collection rate: The net collection rate is an indicator of how effectively the healthcare facility collects reimbursement. A practice’s net collection rate is calculated by dividing payments (net of credits) by charges (net of approved contractual adjustments) for the time period that is being monitored. This KPI can show how much revenue loss occurs as a result of uncollectable debt, untimely filing, and other non-contractual adjustments.

The aim should be to avoid bad debt and not lose out on payments for service provided.

It’s obvious that physician practices can benefit immensely from the expert assistance that an experienced medical billing company can provide to monitor these and other key metrics. A reliable medical billing service provider will work as an extension of the practice to provide comprehensive RCM services using the latest technologies. As healthcare reimbursement transitions to a value-based landscape, revenue cycle outsourcing will be a key strategy to monitor RCM metrics and enhance cash flow.

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