If you want to identify whether your revenue cycle management system is performing well, then you’re going to need to track the data that is available through the system. However, there is a ton of different data that you could be measuring and monitoring. The following are a number of medical billing metrics in particular that you should be measuring to determine how your revenue cycle management system is doing and whether it could use improvement.
The DRO (Days Revenue Outstanding) is the sum of the number of your outstanding receivables added to your total credit balances, which is then divided by your average daily charge. You can identify your average daily charge by adding your past three months worth of charges by 90. Your DRO should end up being between 40 and 45 days. If it isn’t, then you may have an issue with receiving timely payments that you need to iron out.
The net collection rate is the percentage of dollars that you collect in comparison to what you are allowed. Generally, your net collection ends up being a combination of money that is due from the patient, the patient’s insurance company or a third party. While you should aim for a 100 percent net collection rate, having a collection rate between 96 and 98 percent is considered normal.
This is the percent of collections that are completed on the day of service, including co-payments, deductibles, service fees and other payments that minimize payments that are past due. Your day of service collection rate should be around 90 percent.
If it’s substantially lower than that, then you need to consider implementing policies into your practice to encourage patients to meet their financial obligations on the day of their visit, such as by having your staff call patients a day before their scheduled visit to remind them that they are expected to make a payment when they come in.
Having outstanding receivables that are overdue by as many as 120 days is more common than you might think. Because of this, you should determine how many receivables you have that are 120 days overdue, which you can figure out by dividing the total amount of receivables by the total number of receivables overdue by 120 days.
You’ll want your percentage of receivables overdue by 120 days to be less than 12 to 14 percent. Any higher than that and you’ll need to figure out how you can lower that percentage by looking into your insurance collection workflows to assure accounts 60+ days are worked in order to get them paid as well as looking at your front desk workflows as it relates to insurance verifications & collecting patient’s financial responsibility at date of service. A high % in the 120+ days again bucket, is a symptom of billing & operations deficiencies that need immediate corrective actions.
These are some of the metrics that you should pay attention to regularly when tracking and measuring your revenue cycle management system. If your practice is bogged down in paperwork and billing, ProMD will turn things around. ProMD Practice Management is happy to help with your billing assessment needs so you can maximize profits and increase patient satisfaction. To learn more about how ProMD can make your practice run like a well-oiled machine, call 888-622-7498 or fill out our online form to request a billing assessment.