Not all radiologists are experts in radiology billing services. At the same time, it’s even more
essential to notice the huge impact that billing staff has on revenue profits, which can’t be
ignored. This article states the basic formulas and benchmarks radiologists need to gauge the
performance of their billing operation. It’s not a very comprehensive study of the various facets of
medical billing, and moreover not intended to replace expert guidance.
The concept here will enable radiology professionals in any practice environment to quickly
understand key billing measurements and apply them in their proper context.
Practices also vary widely depending on their approach towards radiology billing services. Some
groups have outsourced their radiology billing services to third parties while the others have a
billing manager to take care of radiology billing.
We will look at few issues that relates specifically to billing staff who are practice employees and
those who work for radiology billing services in a billing company.
What are the key financial indicators of radiology billing services?
The Radiology Business Management Association publishes a survey every year related to the key
financial indicators of radiology billing.
These indicators are discussed according to their definitions. The key indicators are:
Gross Collection Percentage
Net Collection Percentage (or Adjusted Collection Percentage)
Average Days in Accounts Receivable
Bad Debt Recovered as a Percentage of Collection Write-Offs
What is Gross Collection Percentage?
The Gross Collection Percentage (GCP) is the gross payments divided by gross charges before refunds
and other payments. In other words, it is the amount of money the radiology practice receives in
payments compared to what it charges. Gross Charges = Gross Collection Percentage
Gross collection percentage isn’t a valuable measurement as few of the others, unless bench marked
internally.
For example, if a radiology practice is doing about $10 million in gross charges with gross payments
of $3.5 million, their Gross Collection Percentage is 35%.
When the GCP is effective, it also measures staff effectiveness, if no changes occur in the fee
schedule. When the fee schedule is steady, the GCP neutralizes the effects of contracts and
write-offs on radiology billing effectiveness.
The GCP also helps to determine the amount of money that can be collected from radiology
professional’s accounts receivable.
What is Net Collection Percentage?
Net Collection Percentage refers to the adjusted collection percentage that is calculated by first
taking gross charges and subtracting contractual adjustments.
Contractual adjustment is the amount the practice has agreed to accept from the insurance companies.
For instance, the practice charges $100 for a certain procedure, but Medicare allows only $40. The
contractual adjustment then is $60. The remainder is net charges.
Gross charges – contractual adjustments = net charges
Gross payments – (refunds + returned checks) = net payments
Net payments / Net charges = net collection percentage
Net chargers are the best indicators of the billing staff performance, because the dollar amount
reflects the possibility of the collections. Therefore, they are considered as the standards of
their job performance.
There are some problems that arise with the NCP calculation as an indicator when it’s reviewed month
to month.
Because of the payments that lag a few months behind the charges, the NCP can be inflated or
deflated depending on the rising and falling charges.
What are the Days charges in account receivable?
The Days Charges in Accounts Receivable actually indicates how well the accounts receivables are
being managed.
Moreover, it’s also calculated by taking the current accounts receivable balance and dividing it by
the average daily gross charges.
Then the result is multiplied by number of days for the given period of time. Total receivables /
average daily gross charges = days charges in AR.
In the U.S., the average number of days in accounts receivable is around 40.6 for professional
component billing. Simultaneously, the lower the number of days in AR, the better off the practice
will be because they are getting their revenue payments
What is Cost to bill?
One of the main questions radiology professionals is- what is a reasonable billing expense?
According to the RBMA, professional component billing clusters between 7.5% and 11.2%. Global
billing clusters around 3.2% to 5.9%.
The key factor here is value- one percentage point in fee equals and one percentage point in net
collections percentage.
Radiology professionals must be alert to not sacrifice any quality collections for a low fee. If you
save half a percent on fee, but lose several points in net collections, you are actually losing
revenue.
However, a higher fee does not always mean better collections. It is not unusual for practices to
both lower their cost of collections and improve their NCP.
What are the factors affecting collections in radiology billing services?
How can the radiology professional determine the average of the practice? The averages can also be
deceiving. There are several factors that affect collections outside of what the billing staff does,
but none more than patient mix.
If a practice has a lot of self-pay patients, then this will have a lot of influence on According to
the US Census Bureau, the percentage of Americans without health insurance was 15.4%, a decade ago.
One of the significant things that has been changing in the marketplace is the rise of high
deductible health plans, which is essentially turning “insured” patients into self-pay patients.
When a practice depends on a lot of commercial insurance, it could obviously affect the number of
days in AR. The other things that can affect collections are:
The quality of data being received from the hospital:
Poor data takes time and human effort to correct. When a hospital provides the billing staff with
accurate data in timely limits, collections improve significantly. If the hospital provides the
information electronically, it eliminates errors that occur from repetitions, and helps reduce
processing errors.
Effectiveness of billing system:
If the healthcare billing software system is used to do most things automatically, it frees people
to spend time collecting the difficult money, such as self-pay. In many situations, the billing
staff spends an inordinate amount of time doing mundane and low-impact jobs simply because the
billing software is poorly designed.
Electronic filing:
Filing claims electronically can reduce the amount of time it takes to process a claim and receive
payment from the insurance companies. In doing so, it lowers the AR days.
Hope you got enough information on radiology billing services. For further updates on healthcare,
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