In the world of healthcare, managing the revenue cycle effectively is crucial for the smooth functioning of any physician practice. In this article, we break down the top 5 key performance indicators (KPIs) that can help in maintaining good Revenue Cycle Management (RCM) practices.

CHARGE LAG

Charge lag, or Days to Bill (DTB), is a key Revenue Cycle Management (RCM) metric denoting the time from patient service to charge entry. Common causes of charge lag include staffing issues, inefficient processes, coding errors, lack of training, delayed documentation, high patient volume, and lack of automation. 

Goal: Best practices aim for a charge lag of 72 hours or less, though some practices may experience a lag of 7 days or more.

Strategies to keep charge lag low include daily charge entry systems, regular audits, staff training, and leveraging RCM technology. Solmed’s charge entry services improve productivity by focusing on this metric, identifying delays, and implementing corrective measures.

 

FIRST-PASS RESOLUTION RATE (FPRR) 

FPRR is a critical metric in the healthcare Revenue Cycle Management (RCM) field. It signifies the percentage of claims that are paid upon their initial submission, without any need for corrections or amendments. 

Goal: A high FPRR can be an indicator of effective and efficient billing processes, with industry best practices suggesting an ideal range above 95%. A high FPRR reduces the time and resources spent on claim rework, leading to a more productive and profitable operation.

Solmd maintains the FPRR above target by consistently tracking denial reasons and taking corrective actions. We address common issues like coding errors, patient eligibility, timely filing, and documentation quality. We also provide ongoing training on billing regulations and coding standards. AI-based automation is implemented to reduce error and speed up claim processing.

 

NET DAYS IN ACCOUNTS RECEIVABLE (A/R)

This KPI is a measure of the efficiency of your revenue cycle. It reveals the average number of days it takes for a provider to collect payments. It’s calculated by dividing the net A/R by the average daily net patient service revenue.

Goal: Aim for under 50 days. The lower the number, the faster you’re collecting payments. A high number could indicate issues with your billing practices or payer delays.

Our team works meticulously to minimize the average time it takes to collect payments, thereby reducing the net days in A/R. We achieve this by streamlining billing processes, promptly following up on claims, and ensuring accurate and timely claim submissions.

 

COST-TO-COLLECT

This KPI helps assess the efficiency and productivity of your revenue cycle processes. It measures how much it costs you to collect payments from patients. You can calculate it by dividing the total revenue cycle cost by the total patient service cash collected.

Goal: Strive for a cost to collect a percentage under 10%. Keeping this number low means you’re operating efficiently and spending less to bring in revenue.

Solmed strives to maximize efficiency and productivity in our revenue cycle processes to keep the cost to collect as low as possible. This is accomplished through automation, efficient workflow management, and continuous training of our staff to avoid errors that may lead to resubmissions and delays.

 

CLEAN CLAIM RATE 

This KPI is an indicator of data quality. It reflects the percentage of claims that pass through without requiring any manual intervention. To calculate it, divide the number of claims accepted into the claims processing tool for billing by the total number of claims.

Goal: Target for above 95%. This means that 95% or more of your claims are accepted on the first submission without any need for corrections or additions.

Our expert coders ensure that the data entered into claims is accurate and complete, which significantly increases the clean claim rate. We use advanced software tools to check for errors or omissions before claims are submitted, reducing the need for manual intervention.

 

BAD DEBT PERCENTAGE

This KPI helps identify potential sources of revenue leakage and measures your ability to collect accounts. It’s calculated by dividing bad debt by gross patient service revenue.

Goal: Ideally, bad debt should be less than 5% of your gross patient service revenue. Higher percentages might suggest that you need to improve your collection practices or patient communication about financial responsibilities.

We have robust strategies in place to minimize bad debt. This includes thorough verification of insurance eligibility before services are rendered, clear communication with patients about their financial responsibilities, and a diligent follow-up process for overdue payments.

 

CASH COLLECTION AS A PERCENTAGE OF NET PATIENT SERVICES REVENUE

This KPI indicates fiscal integrity and your ability to convert revenue to cash. Calculate it by dividing the total patient service cash collected by the average monthly net patient service revenue.

Goal: Aim for over 95%. This shows that you’re effectively converting your net patient services revenue into cash.

We focus on effective cash flow management, ensuring that revenue is quickly converted to cash. Our team negotiates timely payment with insurance companies and provides convenient payment options to patients, which helps improve cash collections.

Overall, your RCM provider plays a critical role in ensuring that the practice achieve an optimal recovery process, aiming for as close to 100% as possible. The key is to establish a continuous improvement process that includes regular monitoring, analysis, training, and technology upgrades. 

 

By systematically tracking these KPIs and implementing effective strategies to optimize them, we ensure high-performance billing services that can significantly enhance the financial health of physician practices. 

 

At Solmed Consulting, we believe that our role goes beyond just processing claims – we are partners in your practice’s success.

 

Embark on a journey towards financial success with Solmed.