The healthcare industry is undergoing fast transformation, and healthcare organizations are under constant pressure to function at their highest possible efficiency while preserving the integrity of their revenue cycle. Therefore, it is essential to understand industry norms and compare your RCM performance to them. It is vital because it improves revenue cycle efficiency, identifies industry trends, and reveals how to adjust course if things go awry. The HFMA explains 29 MAP Keys or KPIs, which are industry-standard measurements. The three categories of key performance indicators are precision, productivity, and reconciliation. KPIs can assist reduce compliance risk and assure billing accuracy. Here are our top 10 KPIs, although these will change based on the objectives and requirements of each facility.
- Cash Collections from Point-of-Sale Services (POS)
- Rate of Clean Claim
- Days Completely Discharged Never Billed
- Bad Debt
- Accounts Receivable Days
- Late Fee as a Share of All Costs
- Collection Cost
- Rate of Resolve
- Cash Receipts as a Share of Gross Patient Service Revenue
- Collections Net Percentage
OUR TOP 10 KPIS ARE EXPLAINED AS FOLLOWS:
1). CASH COLLECTIONS
This KPI can help you determine how effective your POS systems are. It also tracks POS collection and refers to payments received before services are performed and up to seven days following. Divide the POS payments by the collected self-pay cash to get the KPI’s value.
This KPI is also crucial because it can assist in identifying issues with POS operations that affect RCM. For example, a Near-term specialist claims that “Increased collections and revenue loss may result from inefficient up-front payments. Organizations that require long-term payment alternatives (more than seven days on average) may not profit as much from this metric.”
2). Claim submission
This KPI demonstrates inefficiencies and issues with claim submission and processing. Rejected claims take a long time to remedy and may result in charges. The longer it takes to determine eligibility and receive payments, the longer it takes to submit claims and resolve disputes. Though other KPIs are related to claims processing efficiency, the clean claim rate displays the average number of perfect daily claims that pass rather than the total number of claims approved.
3. Delayed claims
The DNFB KPI measures revenue cycle performance by focusing on the claims-generation process. This statistic will highlight the impact of claims inputting on cash flow, including concerns linked to delayed claims. To calculate the measure, divide the total amount in DNFB by the average daily gross patient service revenue. Again, the income statement and unbilled accounts receivable can help you figure it out.
4). BAD DEBT
Collecting patient payments on time is a complex problem in RCM medical billing, and provider offices frequently fail to do so, resulting in bad debts. Unfortunately, in every healthcare business, bad debts are reasonably joint. To calculate how much you lose, divide the allowable charges by the bad debt write-offs. An increasing bad debt percentage will indicate whether you need to change your communication methods with patients or provide them with better financial assistance options.
5). ACCOUNTS RECEIVABLE DAYS (A/R)
The number of days spent in A/R reveals the average time it takes to get compensated for services. This rating measures how effective the practice is at receiving money for services and how well it manages Account Receivables. To calculate this KPI, take the balance sheet and income statement data and divide total A/R by average daily net patient service revenue. Then, divide total annual revenues by 365 to get the average daily net patient service revenue.
6). Late Fee as a Share of All Costs
Late charges are a percentage of total charges used to assess revenue collection efficiency and identify revenue capture possibilities. You must eliminate wasteful costs, increase compliance, and accelerate cash flow to find revenue capture possibilities.
7). Collection Cost
“Cost to collect is a performance indicator that assesses efficiency and productivity in a trending manner.” Total Revenue Cycle Cost / Total Cash Collected is the HFMA definition of the cost to collect. This definition can include IT costs with or without them.
8). Rate of Resolve
This KPI illustrates how effective your RCM process is overall, from eligibility to billing and coding. Divide the total number of claims paid for a specific period by the total number of claims for a specific time to get this KPI. The higher the proportion, the better. If your rate is greater, your staff and process are both adequate. Consider credentialing eligibility verification, authorizations, and codes if your rate is low. A flat charge impacts staffing costs and cash flow because providers invest 10 to 30 minutes and $50 on average for each rework claim.
9). Cash Receipts
According to the HFMA, organizations could create the KPI by dividing the total patient service cash collected, which can be found on the balance sheet, by the typical monthly net patient service revenue, which can be found on the income statement. Provider organizations should withhold a portion of the total revenue collected for patient services, including patient-related settlements and payments like Medicare pass-through, Medicaid DSH, Direct Graduate Medical Education, and safety-net payments.
10). Collections Net Percentage
By collecting “collectible” money, the net collection percentage gauges success. To ascertain this value:
- From the total receipts, subtract the refunds.
- Subtract the contractual modifications from the total fees.
- After that, divide the first and second values. Orders, payments, and adjustments are the three variables that might cause changes in the net collection %.
The net collection percentage will be higher if adjustments rise relative to payments and charges. Therefore, verifying that changes are being posted appropriately by the personnel and that accounts are not being written off rather than collected or appealed is critical.
Modern technology, an excellent back-office staff, and strict attention to revenue and reimbursement rates are necessary to operate a profitable hospital or clinic. By working with RCM specialists like DoctorPapers, we can help you enhance your revenue collections by bringing data-driven processes, experienced revenue cycle professionals, and hi-tech. This will put you on the road to financial success. Speak with us to learn how we can support you with a more robust RCM system.