Healthcare is changing rapidly and Healthcare Solution Provider. providers have to run at their highest efficiency and maintain the integrity of their revenue cycle. Examining key revenue cycle performance indicators is an excellent method to assess the overall RCM performance and pinpoint the strengths as well as weaknesses.
KPIs can be useful in determining gaps, but also can reduce the risk of compliance and assure the accuracy of the charges. Although revenue cycle KPIs may differ depending on the facility’s needs and goals These are the five most important performance indicators that can help gauge the effectiveness of revenue cycle management effectiveness:
- Point-of-Service (POS) Cash Collections
- Clean Claim Rate
- Bad Debt
- Days in Accounts Receivable
- Adjusted Collection Rate
Point-of-Service (POS) Cash Collections
POS cash collection can be used to determine the efficiency the effectiveness of POS systems. This KPI is also a measure of POS collection and is correlated to payments received prior to services rendered as well as up to 7 days following. To calculate the significance of this KPI you must consider the POS payments and then divide the amount by the total cash self-pay received.
This KPI will also assist in finding out the causes of problems at the operations at the point of service that affects RCM. With the cost of out-of-pocket expenses rising and increasing, more organizations are focusing on point of service operations to enhance payment and prevent the need to write off.
Clean Claim Rate
A clean claim rate can reveal any issues or inefficiencies that could arise from claims submission and processing. The rejected claims can take a lot of time to rectify and could result in additional costs. If it is longer to file and settle claims, more time will take to get payment.
While there are other KPIs related to the efficiency of processing claims Clean claim rate is the average perfect daily claim that passes in comparison to the total amount of claims that are accepted.
Bad Debt
The Bad Debt test demonstrates the efficiency of the collection efforts. It also reveals the efficacy of pre-service financial counseling or similar programs. It is crucial to remember that this doesn’t include the loss of debts. A higher level of Bad Debt indicates inefficiency in the previous parts of the cycle of revenue which includes POS collections as well as financial counseling. Discover the value by dividing the Bad Debt in the Income Statement using gross revenues from patient services during the course of a specified time.
Days in Accounts Receivable (A/R)
Days in A/R provides information on the time it takes to receive payment for services on average. This can be useful for measuring the effectiveness of getting payments for services and how effectively AR is handled.
To calculate this KPI Divide the total A/R by average daily net revenue from patient services using the information in both the income and balance sheets. To calculate your average net daily revenue from patient services it is also possible to divide the total annual sales by the number of years.
Adjusted Collection Rate
Adjusted collection rate (also known as the net calculated the percentage of collection (also called”net” collection rates) is a measurement of the practice’s efficiency in obtaining all legitimate reimbursement. The percentage of reimbursement is realized from the reimbursement that is allowed, based on the contract obligations of the practice. This number shows the amount of revenue lost due to circumstances such as uncollectible bad debt, late filing, and other non-contractual adjustments.
To divide the number of payments (net of credit) through charges (net of any approved contractual adjustments) for a particular time period. The ideal calculation would focus on matching payments with the charges that led to them so that there are no variations in results. When the management software for the practices cannot connect payments to their original costs, then the practices will need to make the calculation using old data usually from six months back, in order to make sure that the majority of claims used in the calculation have been given enough time to be paid.
A net collection rate of 95-99% or higher is an average performance. If your net collection percentage is lower than 95%, it could be an indication of poor performance.
