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Keep Your Practice Healthy by Using Performance Metrics

Submitted Tuesday, February 25th 2014 1:08 pm by Paul
in  pratice    healthy    metrics  

"Mufasa."

"Ooo, do it again."

"Mufasa, Mufasa, MUFASA!"

"Ooo, it tingles!"

In recent years the term, "metrics" has become so ubiquitous, so en vogue, yet so mysterious in our industry that we could almost substitute "metrics" for "Mufasa" in the above quote from Disney's The Lion King. Revenue cycle and practice management companies are always looking for attention getting new terms that communicate how forward thinking they are. (Remember when revenue cycle management was called "medical billing?") At the risk of shattering the avant coolness attached to the word, I'm going to define "metrics" as "things we measure that are important for success."

So, what are some key metrics physicians should analyze every month?

Gross Charges: Unless you make frequent changes to your fee schedule, gross charges help answer the question, "Are we working as hard as we think we are?"  I often hear from physicians who want to know why collections are down, but are oblivious to the fact that their production is off by 30% in the previous two billing months. Note: Gross charges are not a good barometer for accurately determining collections as they have little to do with calculating payments and allowed amounts. Because payor contracts determine the actual allowed amount per CPT, a much more valuable metric is the Net Collection Percentage.

Net Collection Percentage: Defined as the percentage collected of allowable charges, this number is a great indicator of how proficient your billing office is in working claims. Good billing offices should be collecting above 95% of allowable (contractually collectible) charges.As financial responsibility shifts to patients, there will be downward pressure on this number as clinics attempt to collect co-pays up front and avoid aging of patient responsible balances.

Date of Service Versus Date of Claim-filing: This metric tells you how long it takes to file a claim once the service has been performed. In a high-performing office this should not be greater than two days. To take this metric a step and identify bottlenecks, track date of service, to date of billing office intake, to claim filing date. The problem may not be with your billing office.

Aging by Payor Class and Specific Insurance: Use this metric to identify systemic problems with payor class or specific payors and gain direction in follow up efforts. If this report shows the number of claims represented in each aging bucket, so much the better as it indicates the average balance of unpaid claims. If possible, run this report by both original and current insurance, as some systems will reset aging with subsequent payors.

Days In Accounts Receivable: Days in Accounts Receivable (A/R) represents the average number of days it takes a practice to get paid.  Your benchmark is a function of your specialty and payor mix, but typically you want to see numbers in the 30-45 day range.

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