Every healthcare organization has specific financial goals set for the year. The RCM medical billing needs to have a structured plan for collections and revenue retrieval from patients and insurance companies. However, RCM medical billing can be challenging at times. To ensure that you are reaching your goals, you need to have specific tangible objectives that you can measure. It is why it is exceptionally crucial to track your Key Performance Indicators (KPI).

KPIs give you detailed insights into the areas of improvement in your billing practice. Data analysis is currently the best way to measure the success of a healthcare organization. Not only does it help you to see where you could improve, but it also lets you know what the predicted trends in the next few years could look like if you follow a similar workflow.

Here are the top 10 KPIs that RCM medical billing leaders tend to follow:

1. Rate of Net Collection:

The net collection rate could say a lot about your collection strategies and how you could change them with changing patient demographics. You can measure the net collection rate by dividing the total payments received against the bills sent out by the total allowed charges. The fundamental value will give you a clear insight into your organizational performance concerning insurance billing and patient collections. You can also find the metric for different patient demographics and see where you could improve your collection rate.

2. Bad Debt Rate:

Collecting due payments from patients on time is a tough challenge in RCM medical billing, and often provider offices fail to do so, leading to bad debts. Bad debts are relatively common in every healthcare organization. Divide the allowed charges by the bad debt write-offs to know how much you are losing. An increasing bad debt percentage will tell you if you need to change your communication practices with the patients or offer them better financial assistance options.

3. Accounts Receivables Days:

Accounts Receivables are an essential metric in a healthcare organization. It highlights how long after a service you are getting your reimbursements, thus shedding light on your regularity of revenue flow. Measure your A/R days by dividing the total accounts receivables by the 90-day average of daily charges. Though below 30 days is an excellent bracket to put your AR days, most hospitals report that their AR days vary from 30 to 70 days. In most cases, AR that goes above 50 days could be difficult to retrieve.

4. Rate of Clean Claims:

The clean claims rate is different from measuring the number of claims that the insurance company accepts. It shows the number of clean claims that pass through without a denial daily in the healthcare organization. If your clean claim rate drops, it might be a good time to evaluate your organization’s current RCM medical billing workflow.

5. Denial Rate:

Denied claims can occur for several reasons, but you will be shocked to learn that it is entirely due to unavoidable reasons 60% of the time. While rejected claims are ones that the insurance company does not evaluate due to incorrect data, denied claims can lead to underpaid claims or no payments, though they can be corrected and sent over. However, repeated appeals for denials can incur charges and affect the efficiency of the revenue flow. Hence it would be best if you worked on keeping the denial rate at a lower level.

6. Aged AR Rate:

Accounts receivables crossing 60 days can be challenging to retrieve. It is advisable to keep the AR days below 50 days. To calculate this metric, divide the total balance aged over 60 days by the total AR balance for all ages. Any increase in this rate would be directly reflected in your RCM medical billing and collections. It could indicate recurring issues with a lag period in charge entry, increased denial rates, and bad debt write-offs.

7. Cost to Collect:

The HFMA defines cost to collect as total revenue cycle cost divided by the total cash collected. The cost can include or exclude the IT costs associated with it. Though not a traditional KPI, in the last few years, it has gained significance in RCM medical billing industry. It is an excellent indicator of your team’s productivity and efficiency.

8. DNFB Rate: 

The DNFB rate, or Days in Total Discharged Not Final Billed speaks a lot about the lag time affecting the efficiency of your RCM medical billing system. You can calculate this metric by dividing the total amount in DNFB by the average daily gross revenue. A high DNFB rate corresponds to a lack of efficiency in the billing team or maybe gaps of knowledge due to changes in workflow management. You can contact professional RCM medical billing companies to get a shorter turn-around time.

9. POS Collection Rate:

Point of service collections are incredibly crucial for the revenue integrity of healthcare organizations. Divide the point of service collections by the total self-pay cash collected to get the POS collection rate. Collections during or before the service up to seven days after the service are crucial for the revenue flow. Decreased POS collection rates could suggest decreased efficiency of front-end staff, leading to bad debt.

10. First Pass Rate:

The first pass rate or the first pass ratio will tell you how many claims got accepted in the first attempt versus the number of claims you submitted over a period of time to the clearinghouse. The greater the first pass rate, the better are your RCM medical billing parameters. Proven success models of revenue cycle management are bound to improve the first pass ratio, thereby improving the organization’s revenue integrity.

We hope this article helped you understand which KPIs you should track in your RCM medical billing workflow to improve your performance. Please connect with us in the comment section below in case of any queries. Subscribe to our blog for regular articles on the medical billing industry. Follow us on Facebook, Instagram, Twitter, and LinkedIn for more.