Top Key Performance Indicators for Medical Billing

The main aim of your private profession is to provide your young people with the best quality treatment. You can't afford to let the practice's company activity hand slide, though, or you'll quickly be out of the company. Although giving the customer the opportunity for treatment should be the priority, keeping an eye on how well your practice is doing economically is also essential.

How well do you run the practice? Looking weekly, quarterly, and annually at crucial performance measures (KPIs) will help you identify patterns in how well the approach achieves various market and financial targets.

Ensuring the financial health of your medical practice involves monitoring KPI metrics for medical billing. KPIs such as revenue cycle efficiency, claims acceptance rate, and days in accounts receivable provide insights into the financial stability of the practice. Striking a balance between superior healthcare services and effective financial management ensures the sustainability and success of your medical practice.

This blog discusses the various medical billing key performance indicators that are crucial for ensuring financial stability in your medical practice.

Top KPI Metrics for Medical Billing

The following are some of the top KPI metrics for medical billing to measure for improved performance:

Days In Receivables Outstanding (DRO)

Without question, DRO must be regularly calculated as the highest overall predictor of billing efficiency in order to be relevant. Calculate the DRO by combining the existing remaining gross receivables to the amount of the credit balances. (Credit adjustment is critical, as credits cover receivables, thereby masking performance.) Divide that amount by your average daily fee.

You will measure your current mean charge by considering charges that cost the preceding three months and dividing by 90. While the average everyday price can be calculated based on 365 days, using 90 days accounts for seasonal variation, growth and other market variations.

Strategies for managing and improving days in receivables outstanding include:

• Efficient Billing Processes: Streamline billing processes to expedite claims submission and reduce the time between service provision and billing.
• Timely Claims Submission: Ensure that claims are submitted promptly after providing services to minimize delays in payment.
• Prompt Follow-up on Unpaid Claims: Implement effective follow-up procedures to address unpaid or underpaid claims promptly.
• Patient Education and Communication: Clearly communicate with patients about their financial responsibilities, insurance coverage, and available payment options to accelerate patient payments.
• Automation and Technology Utilization: Leverage technology to automate billing processes, track accounts receivable, and identify and address issues efficiently.
• Regular Performance Monitoring: Monitor DRO regularly and analyze trends to identify areas for improvement and implement targeted strategies.

Gross Collection Ratio

Gross Collection Ratio (GCR) is one of the crucial KPI metrics for medical billing that measures the effectiveness of a healthcare facility in collecting revenue for the services provided. Understanding and optimizing the Gross Collection Ratio is essential for maintaining the practice's financial health.

Similar to the concept of cost per encounter, the Gross Collection Ratio focuses on the revenue side of the equation. It is calculated by dividing the total payments collected by the total charges billed. The formula for the Gross Collection Ratio is:

Possible strategies for improving the Gross Collection Ratio include:

• Enhancing Billing Processes: Streamline and optimize the billing procedures to reduce delays and errors in claims submission.
• Ensuring Accurate Coding: Properly coding medical services is crucial for accurate billing. Regularly train staff involved in coding to improve accuracy.
• Prompt Follow-up on Unpaid Claims: Implement effective follow-up procedures to address unpaid or underpaid claims promptly.
• Negotiating Payer Contracts: Evaluate and renegotiate contracts with payers to ensure favorable reimbursement rates.

Net Collection Ratio

The Net Collection Ratio (NCR) is another important metric among KPI metrics for medical billing, offering a nuanced perspective on a healthcare facility's financial performance. This key performance indicator (KPI) evaluates the efficiency of practice in collecting revenue after factoring in adjustments, contractual allowances, and other deductions. Understanding and optimizing the Net Collection Ratio is vital for maintaining a sustainable revenue cycle.

The Net Collection Ratio is calculated by dividing the total payments collected, excluding contractual adjustments and other deductions, by the total charges allowed. The formula for Net Collection Ratio is:

Strategies for improving the Net Collection Ratio include:

• Effective Contract Management: Ensure that contractual agreements with payers are well-negotiated and favorable to the practice.
• Accurate Billing and Coding: Ensure precise and compliant coding to minimize billing errors and reduce the risk of claim denials.
• Timely Follow-up on Denied Claims: Establish robust processes for identifying and addressing denied claims promptly to maximize reimbursement.
• Regular Audits and Compliance Checks: Conduct periodic audits to assess billing compliance, identify areas for improvement, and implement corrective measures.
• Streamlining Revenue Cycle Processes: Evaluate and optimize the entire revenue cycle, from patient registration to final payment, to minimize inefficiencies and delays.

Denial Rate

The Denial Rate is a critical metric among KPI metrics for medical billing that measures the percentage of claims denied by payers out of the total number of claims submitted. Monitoring the Denial Rate is essential for healthcare providers to identify and address issues in the billing and claims submission processes, ensuring optimal revenue cycle management.

The Denial Rate is calculated by dividing the number of denied claims by the total number of claims submitted and multiplying the result by 100 to express it as a percentage. The formula for the Denial Rate is:

Strategies for managing and minimizing denial rates include:

• Accurate and Detailed Documentation: Ensure that all medical documentation is accurate, complete, and meets payer requirements to reduce the likelihood of denials.
• Comprehensive Staff Training: Provide ongoing training for billing and coding staff to stay updated on coding changes, payer policies, and industry regulations.
• Pre-claim Scrubbing: Conduct thorough reviews of claims before submission to identify and address potential issues that could lead to denials.
• Regular Payer Communication: Establish open lines of communication with payers to understand their specific requirements and address any concerns proactively.
• Denial Analysis and Resolution: Analyze denied claims to identify patterns and root causes, implement corrective actions, and appeal denials when appropriate.
• Technology Utilization: Leverage technology and advanced billing systems to automate processes, reduce errors, and enhance efficiency in claims submission.

The Cost Per Encounter

Every time a person visits your office, it requires extra cost for the work. It can get you more money, though, than it does. If it costs you more to treat people than you get in, so this is a significant question. Therefore it is essential to understand the estimated price per meeting and the average fees per visit (calculate the cost per appointment by dividing your total running prices for a month by the number of office appointments).  

Suppose you notice that the costs are on the low side. In that case, supervisors, doctors and administrative assistants may want to work together to re-evaluate the charging structure for the clinic. You will also need to look at expenses relevant to practice to figure out if you can make cuts which will reduce the cost per experience.

Some of the strategies to reduce the cost per encounter in medical practices are:

• Streamline Administrative Processes: Optimize scheduling, billing, and administrative tasks to reduce the time and cost associated with each patient encounter.
• Evaluate Service Mix: Analyze the profitability of different services offered and focus on those with higher margins to improve overall revenue.
• Negotiate Supplier Contracts: Negotiate with suppliers to secure better deals on medical supplies and equipment, lowering the overall cost per patient encounter.
• Implement Technology Solutions: Utilize technology to automate routine tasks, enhance efficiency, and minimize the need for excessive administrative support, thereby cutting costs.
• Staff Training for Efficiency: Train staff members to work more efficiently, ensuring that resources are utilized effectively and reducing the time spent on each patient encounter.
• Regular Financial Assessments: Conduct regular financial assessments to identify areas for improvement, allowing for adjustments in pricing and expenses to maintain a sustainable cost per patient encounter.

Receivables More Than 120 Days Pending

Track the older accounts receivable in your old balance sheet to assess if your investments are paid off. You would certainly like to see that 100 percent of the receivables are shorter than 120 days, but it is impractical. Fire for 120 days for much less than 12 per cent. (As noted above, when calculating the sum of accounts receivable over 120 days, make careful to exclude credits.) The same variables listed above for DRO will have a positive – or negative – effect on the ability to reach or fall below the 12 percent mark.

Even though it is advised to concentrate on the group 'for 120 days,' you can assess your performance by measuring the percentage above (or) below either of the ageing groups. The code is to pick a kind – and adhere to that.

Strategies for managing and improving the percentage of Receivables More Than 120 Days Pending include:

• Regular Aging Reports: Generate and analyze aging reports to identify accounts that are overdue, allowing for timely follow-up and resolution.
• Efficient Follow-up Processes: Implement effective and consistent follow-up procedures to address overdue accounts promptly, including contacting payers and patients for resolution.
• Denial Analysis: Investigate the root causes of denials and address them to prevent delayed payments.
• Optimizing Billing Processes: Streamline billing processes to reduce errors and minimize delays in claims submission.
• Staff Training: Provide ongoing training to billing and collection staff to stay informed about changes in payer policies and industry regulations.

New Patient Numbers

How to recruit new customers is one of the problems faced by private practice operators. For Instance, their children "phase out" of their career in a pediatric hospital after they turn 18. Which implies your practice needs a constant influx of new patients visiting your clinic to offset the patients you are missing. Preferably, you're going to want to work on taking in more baby patients so you'll have them for 18 years to come.

Ignore the number of new people that you are getting in. Is it equal to or higher than the amount of hospitals it loses? If not, you'll need to take steps to improve patient retention and ensure the practice's long-term sustainability.

Key considerations and strategies related to monitoring and optimizing New Patient Numbers include:

• Marketing Effectiveness: Assess the success of marketing campaigns and initiatives in attracting new patients to the practice.
• Patient Acquisition Cost: Calculate the cost incurred to acquire each new patient, which involves factoring in marketing and promotional expenses.
• Patient Satisfaction: Understand the correlation between patient satisfaction and the likelihood of attracting new patients through positive word-of-mouth and referrals.
• Appointment Scheduling and Access: Ensure that the practice has efficient appointment scheduling processes to accommodate new patients promptly.
• Provider Availability: Assess the availability of healthcare providers to meet the demand for new patient appointments.
• Community Engagement: Participate with the local community through outreach programs, events, and partnerships to enhance visibility and attract new patients.
• Online Presence: Optimize the practice's online presence, including the website and various social media platforms, to attract and inform potential new patients.

Turnaround Time For A Refund

A rebate frequency compared to the cents per dollar earned for a petition from a hospital company as opposed to the amount paid for the facility. If your service files accurate reports, the processing period for a refund should be reasonably short. On the other hand, businesses without efficient management of the sales cycle could suffer substantial delays in paying people.

By monitoring these results, hospitals and medical care providers may take action to rectify shortfalls while strengthening contact methods with usually slow-paying insurance firms.

Key considerations and strategies related to managing and optimizing Turnaround Time for a Refund include:

• Refund Request Processing: Streamline the internal processes for handling refund requests promptly and accurately.
• Clear Refund Policies: Clearly communicate refund policies to patients and payers to minimize disputes and ensure adherence to established guidelines.
• Automated Systems: Implement automated systems and technology to expedite refund processing, reduce errors, and enhance efficiency.
• Documentation and Tracking: Maintain accurate records and documentation throughout the refund process, including the reason for the refund and any associated communications.
• Communication with Patients: Keep patients informed about the status of their refund requests and any potential delays in processing.
• Compliance with Regulations: Ensure that refund processes comply with relevant healthcare regulations and billing guidelines.
• Root Cause Analysis: Conduct root cause analyses for common refund issues to identify and address underlying problems in the billing or claims process.

No-show And Missing Appointment Patterns

Only four no-shows or cancellations per day could cost the practice as much as $150,000 a year, which is a massive hit to the income from the practice. This means that you can devote more time in your private career checking at the no-show and missing consultation patterns, so you prevent these vast losses. To calculate the No-show rate, split the number of disappeared visits by the number of method validation. Any proposed medical monitoring might also provide you with this info.

One of the easiest ways of reducing no-shows is automatic alerts. The day before an appointment and a text reminding us a few hours until an examination can help. Patient participation in the planning phase can also help. An automatic notification device with a strong patient notification script will dramatically lower your no-show rate, making the cost decision.

Key considerations and strategies related to managing and addressing no-show and missing appointment patterns include:

• Data Analysis: Regularly analyze and review data on missed appointments to identify patterns and trends.
• Appointment Reminder Systems: Implement automated reminder systems, like text messages, emails, or phone calls, to notify patients of upcoming appointments.
• Patient Education: Educate patients on the significance of keeping appointments, the impact of no-shows on healthcare operations, and the potential consequences for their health.
• Flexible Scheduling: Offer flexible scheduling options, including online booking, to accommodate patients' preferences and reduce barriers to attendance.
• Overbooking Strategies: Implement overbooking strategies to account for a certain percentage of anticipated no-shows and optimize appointment availability.
• Follow-up Communication: Establish post-appointment communication to gather feedback from patients who missed appointments and understand any underlying issues.
• Appointment Policies: Clearly communicate appointment policies, including cancellation procedures and potential fees for missed appointments.
• Community Outreach: Engage in community outreach and education to address specific cultural or logistical factors that may contribute to no-show patterns.

Cash

The final, but not least, primary output metric is a frequent, if not daily, assessment of collections. Even if cash can't be tested, you should make sure the flow is the same as – or greater than – the exact season. Also, you'll want to note that cash will vary week to week (or daily life). It may improve if new doctors and facilities are added or reduced if patients cancel treatments, take time off or retire from doctors, or other activities that may cut off cash.

Key considerations and strategies related to managing and optimizing cash in a healthcare organization include:

• Cash Flow Analysis: Regularly analyze cash flow statements to understand the available sources and uses of cash within the organization.
• Working Capital Management: Efficiently manage working capital to ensure that the organization has enough cash to cover day-to-day operational expenses.
• Budgeting and Forecasting: Create accurate and realistic budgets and financial forecasts to anticipate cash needs and plan for any potential shortfalls.
• Accounts Receivable Management: Implement effective accounts receivable management to expedite payment collection and enhance cash inflows.
• Vendor Negotiations: Negotiate favorable terms with vendors and suppliers to optimize payment terms and improve cash preservation.
• Investment Strategies: Strategically invest excess cash to generate returns and enhance overall financial performance.
• Cash Reserves: Maintain an appropriate level of cash reserves to cover unforeseen expenses, emergencies, or fluctuations in revenue.

Conclusion

A world-class medical practice can be run. Even a small use of KPIs for monitoring and measuring will deliver real results. Recall:

• At the front desk, the customer experience begins-satisfaction and successful collections depend on implementation here.
• To control the task, pick various main success metrics-track them regularly.
• Excellent separate reviews and use them daily/weekly/monthly to monitor the job-it 's better to mix online and print.
• Enable smartphone/remote practice control.
• Functions should be streamlined whenever feasible and cost-efficient
• Non-core contracting activities where appropriate and cost-effective
• Spend the time and resources required to educate patients and advertise the practice
• Using benchmarking to monitor illness consumption

To ensure that your medical billing processes are effective, you should collaborate with us at Invensis Technologies.

‍Invensis, a seasoned medical billing company, boasts over two decades of expertise in healthcare revenue cycle management. We streamline billing processes and monitor medical billing KPIs to enhance financial performance and enable healthcare organizations to focus on patient care. Our medical billing services ensure healthcare providers maximize revenue while maintaining compliance with evolving industry standards. Reach out today for expert medical billing solutions and optimize your revenue cycle!