Table of Contents
“Good Enough” Medical Billing is Not Good Enough
As a practice leader, you care for patients, invest in cutting-edge learning and tools, and support your staff. Most practice leaders love those parts, but neglect the toughest part of being a practice leader: actually getting paid.
Is your practice optimizing revenue collection? Or are you leaving money on the table? You likely delegate your revenue cycle management, as you should. But there is a distinction between delegating billing versus delegating oversight.
The difference between “good enough” medical billing and best-in-class is noticeable in the bottom line — tens or hundreds of thousands in revenue each year.
To keep your practice financially healthy, you can’t assume your billing team is great. You should know that they are because you know how other practices are performing.
But how can you tell if your team is doing a good job? And how do you hold them accountable?
This guide is here to help. We’ll cover:
- The top two indicators of your practice’s revenue health
- Key performance indicators (KPIs) for day-to-day and long-term success
- How to lead your billing team for financial success
“Physicians are trained to think critically and learn new things. You’re capable of evolving as a physician — medicine is not stagnant! The idea that you can’t learn the business of medicine is a joke. You just have to want to. You’re absolutely capable.”
Sandra Weitz, The Practice Building MD
The Importance of Looking at the
Right Medical Billing Metrics
Sometimes, in the world of health, it is not taken into account that measuring is managing. Taking this fact into consideration is essential for proper clinical management.
The rapid evolution that the world of health has undergone and is undergoing in all its fields becomes truly amazing and relevant, especially in terms of measurement.
It is important to remember that, to manage a clinic properly, it is essential to optimize income and expenses to obtain good profitability.
Using a good software to manage your practice, is the necessary complement for success.
Your Two Most Important Metrics
To gauge the health of your practice, start with two key metrics: your net collections rate and high-risk account receivable.
Net Collections Rate
This rate is what you were actually paid divided by what you expected to receive. The gap should be small! For expected revenue, use the allowable rate in your contracts with payers, NOT the amount you actually billed. They are likely different.
Aim for a 95% net collections rate or higher.
High-Risk Accounts Receivable
The longer claims go without being paid, the less likely they are to ever come through. We define “high risk” accounts receivable (AR) as anything that is outstanding after 90 days.
Aim for no more than 8% AR outstanding after 90 days
Aim for no more than 5% after 120 days
If your practice is hitting these targets, congratulations! Keep an eye on them and look for ways to optimize even further. Not quite there? Then you need KPIs that can help you dig deeper and spot ways to improve.
Tip
Need help to crunch the numbers? Use our Lost Revenue Calculator to calculate your Net Collections Rate and High-Risk AR.
Good Enough, or Best-in-Class? Evaluate Your Billing Support with These KPIs
Tracking key performance indicators (KPIs) for your billing team helps you understand the financial health of your practice. It’s the foundation for your revenue cycle improvements.
KPIs also serve as your early warning system: when something looks off, you can solve problems with confidence. Use KPIs to:
- Get everyone on the same page
- Work with team members to find solutions
- Evaluate your team’s performance
- Hold staff and billing partners accountable
- Evaluate if potential partners meet your standards
Here are the go-to KPIs for each stage in the revenue cycle.
KPI's for Creating Claims
Charge Lag
How many days after the date of service are claims submitted?
Aim for 48 hours.
In-Office Payment
What % of patients were charged for some or all of their visits upfront?
A good benchmark is 90% Set a target for your practice
Eligibility
What % of patients had their eligibility confirmed before their visit?
100% of patients should have their eligibility confirmed before visiting
KPI's for Managing Claims
Denial Rate
What % of claims were accepted by the payer but denied for a cause?
Aim for 5%
Unexplained Denials
Unexpected denials can often be clues to new payer changes or trends.
Look for patterns and insights. Aim for 0 denials uninvestigated.
Missed Filing Deadlines
If staff is missing due dates, why? Are you understaffed? Is something else going on?
Aim for 0. There is never a good reason for this to happen.
KPI's for Collections
Allowable Rates
Is your contracted rate lower than a payer’s current rates? Consider renegotiating.
Set a target for your practice.
Net Collections Rate
Actual revenue divided by expected revenue.
Aim for > 95%
Risky AR
Older claims may never be paid. 30-60 days is ideal.
Aim for < 8% over 90 days Aim for < 5% over 120 days
This dashboard is just a starting point. Evaluate your team’s needs and resources before identifying the KPIs that work best for your practice. Benchmark against industry norms for your specialty and against past performance. Once you have your KPIs established, you need to use them to troubleshoot.
Digging Deeper: Using KPIs To Spot Red Flags and Opportunities.
Whether your revenue cycle is completely in-house or partly outsourced, shared KPIs can help you and your team get on the same page and can help you hold the whole team accountable and evaluate performance.
Not hitting a KPI for a brief period of time is not the end of the world. It’s an opportunity to learn. The WHY behind the number is much more valuable information than the number itself for growing practices. But, if you’re consistently missing a benchmark, or multiple benchmarks, that is indicative of a system issue and your practice is likely leaving money on the table.
By closely tracking KPIs over time, your team gets on the same page about opportunities for growth. Here are a few scenarios.
Scenario 1
Your charge lag is consistently slower than you’d like it to be. Initially, you’re concerned that you’re understaffed. So, you sit down with the revenue cycle manager.
You find out that the real problem is different: authorizations for common procedures are getting delayed. Together, you identify ways for clinicians and the billing team to streamline the authorization process.
Scenario 1
Your revenue cycle manager has been tracking back-end edits from the clearinghouse. They noticed that your rejection rate is up. After some digging, they found that one procedure is consistently getting flagged for documentation.
The revenue cycle manager explains the issue at a weekly check-in. You decide to document medical necessity more thoroughly and submit the extra documentation upfront with the claim. (For the record, this is our go-to approach!)
The take-away? Closely tracking your KPIs over time is essential, so is acting on them.Your goal should be to hire — or contract with — a billing partner who is proactively searching for ways to improve. Next up: how to find those people.
Evaluating and Empowering Excellent Billing Talent
Tracking against KPIs gives your team a clear, shared set of expectations. It helps you measure the success of your practice objectively. Your standards for performance measurement also help you find the right talent.
- Excellent revenue cycle managers already track these numbers and use them proactively. We recommend asking: What KPIs do you look at? How frequently? And where do you get your benchmarks?
- Billing partners should put the data you need at your fingertips. Advocate for what you need and find a partner that can deliver.
- With the health of your practice at stake, KPIs can help you question your biases and make clear-headed decisions about talent management.
Once you’ve confirmed that a potential billing team member has a track record of success and is comfortable managing against clear performance goals, look for the qualities that separate good from great.
Finding the Best Talent for Your Practice
Tracking and hitting metrics is just the first step — look for team members who can be thought partners. Excellent billing partners help you with big-picture business questions facing your practice. They analyze how payer policies will impact return on investment for new products, for example. Hire revenue cycle leaders with a strategic business mindset to maximize your reimbursem*nts and ensure a healthy revenue process.
“Physicians are trained to think critically and learn new things. You’re capable of evolving as a physician — medicine is not stagnant! The idea that you can’t learn the business of medicine is a joke. You just have to want to. You’re absolutely capable.”
Sandra Weitz, The Practice Building MD
Whether you’re hiring in-house or working with a billing partner, look for deep experience and certifications in your specialty and a passion for your practice. Which functions to keep in-house or outsource will depend on your practice. Either way, make your talent decisions based on talent.
While outsourcing may have a higher sticker price, there are plenty of hidden costs that come with building an in-house team. When you factor in benefits, training, and turnover, the true cost of hiring and retaining employees, the true cost of in-house and external staffing may be more similar than you think.
Costs are only half of the equation though. You should also factor in the potential to grow your revenue by hiring great talent. By increasing your revenue over time, finding truly best-in-class support—even at a slight premium—can be a worthwhile investment. At the end of the day, you shouldn’t be making decisions about your billing team based on projected cost — it should always be based on projected net income.
Tip
Evaluating billing partners? Find tips for doing your due diligence here: Choosing a Billing Partner? Do your Due Diligence.
Looking for Support?
Gentem Can Help
Wherever you are on your revenue journey, Gentem can help. Get in touch for revenue cycle staffing, reporting at your fingertips, and a best-in-class team. We have the specialty-specific knowledge and strategic mindset to bring your business to the next level.
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I am an expert in medical billing and revenue cycle management, possessing a deep understanding of the intricacies involved in optimizing revenue collection for medical practices. My expertise extends from the fundamental concepts of medical billing to the implementation of key performance indicators (KPIs) and strategic management approaches to ensure financial success for healthcare providers.
In the provided article, the focus is on the critical importance of effective medical billing and revenue cycle management for the financial health of a medical practice. The author emphasizes the distinction between "good enough" medical billing and best-in-class practices, which can make a substantial difference in the bottom line of a healthcare organization.
Here are key concepts and insights covered in the article:
-
Net Collections Rate:
- Definition: The actual amount received divided by the expected revenue.
- Target: Aim for a net collections rate of 95% or higher.
- Significance: A higher net collections rate indicates efficient revenue collection.
-
High-Risk Accounts Receivable:
- Definition: Accounts receivable outstanding after 90 days.
- Target: Aim for no more than 8% outstanding after 90 days and no more than 5% after 120 days.
- Significance: Aging receivables can impact cash flow; keeping them within targets is crucial.
-
Key Performance Indicators (KPIs):
- Importance: KPIs are essential for understanding the financial health of a practice and serve as an early warning system for potential issues.
- Use Cases: KPIs are used to align the team, find solutions, evaluate performance, and hold staff accountable.
-
KPIs for Creating Claims:
- Charge Lag: Time taken to submit claims after the date of service. Aim for 48 hours.
- In-Office Payment: Percentage of patients charged upfront for visits. Benchmark is 90%.
- Eligibility: Percentage of patients with confirmed eligibility before their visit. Aim for 100%.
-
KPIs for Managing Claims:
- Denial Rate: Percentage of claims accepted but denied for a cause. Aim for 5%.
- Unexplained Denials: Investigate and aim for 0 uninvestigated denials.
- Missed Filing Deadlines: Aim for 0 missed deadlines.
-
KPIs for Collections:
- Allowable Rates: Ensure contracted rates are not lower than payer's current rates.
- Net Collections Rate: Aim for over 95%.
- Risky AR: Monitor accounts receivable aging over 90 and 120 days.
-
Using KPIs to Spot Red Flags and Opportunities:
- Importance: Tracking KPIs over time helps identify system issues and opportunities for improvement.
- Scenario Analysis: Examples of scenarios where KPI tracking led to improvements in processes.
-
Evaluating and Empowering Excellent Billing Talent:
- KPI Tracking: Gives a shared set of expectations, helps measure success objectively, and aids in talent evaluation.
- Finding Talent: Look for team members who can be thought partners and contribute strategically to the business.
-
Cost Considerations and Outsourcing:
- True Cost: Highlighted that the true cost of in-house and external staffing may be more similar than perceived.
- Revenue Growth: Emphasized the potential to grow revenue by investing in great talent.
-
Conclusion and Gentem Services:
- Gentem is positioned as a solution provider for revenue cycle staffing, reporting, and a best-in-class team.
This comprehensive guide aims to empower practice leaders in understanding and optimizing their medical billing processes for sustained financial success. It underscores the importance of continuous monitoring, strategic decision-making, and the value of hiring or partnering with talent that aligns with the practice's goals.
