The business of running a medical practice can seem overwhelming. Coding and billing changes present a challenge for many. By monitoring key performance indicators, you can ensure your practice is on track or make changes to optimize it.
Monitoring the critical revenue cycle metrics or key performance indicators (KPI) to determine trends can inform action plans to optimize processes and improve collections.
The main metrics that you need to monitor are:
It is also important to benchmark your medical practice and determine strategies to move forward based on data analysis. At Health Prime, we achieve benchmarks above industry standards. This allows our customers to focus what on matters most – patients.
To optimize revenue and improve the way you are managing your practice, here are some focus areas you need to work on:
Denial Rate
Industry Average: 5-10%
Goal: Under 5%
Denial rate is an indicator of the health of your revenue cycle processes. A denial rate above 5% will significantly slow down your practice’s cash flow.
If your denial rate is high, determine if you are having problems with authorizations denials, credentialing denials, coding denials or other reasons. One way is to review your CARC (Claim Adjustment Reason Codes). Every denial from a payer has an associated CARC. By monitoring these codes and trending them, you will be able to identify the main reasons behind your denials.
Achieving best practices on your denial rate is truly a case of slow and steady improvement that will win that race.
Don’t try to tackle every problem at once. It might be too much to manage and also will be less effective than working on each core reason at a time. Ultimately what you want is a long-term reduction in denials.
Some suggestions to eliminate the most common denials are:
- Read back information to the patient / Ask them to check it in person at check in.
- Use online appointment scheduling.
- Confirm eligibility prior to service.
- Conduct a real coding audit and training.
- Leverage technology to automate processes.
Days in AR
Industry Average: 45-60
Goal: under 50 days minimally, optimal is 30-40 days
Days in AR (DAR) means how many days it takes for your practice to be paid on a claim. The lower your Days in AR, the better.
Denials and DAR are critical to improve your revenue process results. If you reduce denials and improve denial handling, you will see an improvement of your aged AR. Any lag in working denials will lengthen DAR and be detrimental to cash flow.
Some best techniques to reduce your Days in AR are:
Percentage of AR over 120 days
Industry Average: 12-25%
Goal: Under 12%
This metric is a good indicator of your practice´s ability to collect timely payments. Some factors that can influence timely payment include your payer mix and/or your staff´s efficiency in addressing denied or aged claims.
When you look at your Accounts Receivable, the older it is, the less likely you are going to be able to get paid.
Payers put limits on how much time you have to work on a claim. If your AR is over 120 days, you risk having to write off some of that AR as uncollectible. This could happen if the payer said that you should have presented a clean claim by now and you haven´t been able to do it.
To improve the way you are collecting revenue and ensure you get paid for your work, you need to make sure that the amount of money you have over 120 days is low.
If it is high, make sure you set action plans and processes within your medical practice to improve. Monitoring this metric and understand the reasons behind it will help you set realistic goals to improve it gradually.
Monitor your metrics and identify trends
Determining how your medical practice is doing in key areas will allow you to identify trends and determine improvement strategies. Sometimes this task might seem daunting. Having a business intelligence platform that provides you valuable insights is key. It allows you to manage your medical practice more efficiently, reducing the administrative burden.
Health Prime´s Datalytics dashboard tool focuses on key insights that other medical billing business intelligence solutions neglect.
Monitor trends on your metrics, check how other medical practices are doing and determine strategies to optimize your business and get paid for your work. At Health Prime, we manage internal benchmarks above the industry ones so you can focus on best practices to run your business.
To learn more about how benchmarking can help your medical practice, read our blog Improve your medical practice and optimize revenue through benchmarking.
For more information on how you can improve the way you are managing your medical practice, contact our team of billing experts at Home – Health Prime (hpiinc.com) or email us at [email protected]. Our team will set up a meeting to discuss how Health Prime can maximize your revenue by cutting costs, saving you time, and collecting more!
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