6 Revenue Cycle Management KPIs to Track
Revenue cycle management is the bridge between the clinical & business sides of the healthcare industry. It refers to the entire chain of processes from scheduling a patient appointment to getting reimbursements from the insurance companies.
KPIs in RCM plays a pivotal role, as they help drive data-driven decision-making and creating business transformation projects. RCM KPIs enable benchmarking of your revenue cycle’s performance with industry peers on the responsiveness of your patient access team, quality of your clinical documentation, the effectiveness of your cash flow cycle, and compliance with guidelines. While there are 100s of available industry-standard metrics, the HFMA defines 29 standard metrics, and we have chosen 6 of the key indicators to highlight in this article.
Whether you are running a physician practice or a hospital, adhering to the 6 KPIs listed below enables you to keep your revenue cycle in control. By Measuring and monitoring these KPIs, you will be able to extract the most out of your revenue cycle and find the much-needed cash to invest in technology and patient care.
POS (Place of Service) cash Collections
HFMA defines POS cash collections as all cash collected from the patient before or at the time of service or up to seven days post-discharge. POS Collections also include self-pays and co-pays. To arrive at a value for this KPI, divide the POS payments by the collected self-pay cash.
Measuring POS cash collections enables you to track the efficiency of your POS systems or your staff accounting the POS. It may also help identify and troubleshoot core POS problems affecting your overall RCM process.
Clean Claim Rate
Clean claim rate is the percentage of insurance claims submitted and successfully reimbursed the first time upon submission. A high clean claim rate implies that the time spent in AR and the time taken for the provider to get compensated is significantly reduced. When claims are not resolved on the initial submission, it creates significant rework & cost for both provider & payer.
Measuring the clean claim rate allows healthcare organizations to track the efficiency of the claim submission process while calculating the average duration & cost it takes for a claim to be reprocessed.
Discharges Not fully Billed (DNFB)
Discharged Not Finally Billed is a metric that is used to compare multiple hospitals in a particular region. DNFB can be calculated by dividing the unbilled amount for charges to discharged patients by the average daily revenue.
DNFB applies to any condition where the patient has been discharged, and the claim was submitted without billing for all medical services provided. It is critical to maintaining the DNFB within industry standards to ensure that the services rendered can be converted to cash. DNFB is a significant cause of revenue leakage, especially in fast-paced Emergency Department settings.
Days in AR
The MGMA provides a benchmark of fewer than 40 days for days in AR. This KPI helps you identify the average time it takes for your team or your system to collect payment for the services offered. Average days in AR can be calculated by :
Calculate the average daily charges – Add the daily charges for the past several months and divide the sum amount by the total number of days in the chosen period
Divide the total accounts receivable by the computed daily average charges.
Claim Denial Rate
To calculate the claim denial rate, divide the total dollar amount of claims denied by payers by the total amount submitted within the given period. A denial rate of 5% to 10% is acceptable, whereas a claim denial rate below 5% indicates a healthy revenue cycle management process and financial flow. If you claim the denial rate is above 10%, analyze your eligibility verification, coding, and credentialing functions.
Revenue per Encounter
Revenue per encounter can be defined and computed by dividing net collections by the number of patient visits in a given month. This metric can provide a quick view of the health of your revenue cycle.
Running a financially successful hospital or practice requires a great back-office team, state-of-the-art technology, and diligent focus on the revenue and reimbursement rates. Partnering with RCM experts like Medical Billing Wholesalers puts you on the path to financial success as we help bring data-driven processes, seasoned revenue cycle professionals, and top-notch technology to improve your revenue collections. Talk to us to understand how we can help you with a stronger RCM system.
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