The major problem area in outsourcing billing to a third party RCM services provider is accountability of all the charges and payments. Since most of these medical billing outsourcing companies work remotely and there occurs a huge communication gap between the practice administration and the billers. Transfer of clinical data and compliance is another thing, but giving complete data of charges billed and payments received must be flawless in order for the practice to continue the business with their particular RCM services company.
This is not the case with RCM companies which have a good reputation of maintaining their clients’ charge and payments information according to industry benchmarks and transparency by using automation systems and additional tools. We have encountered hospitals and clinics approaching us for this exact reason of not being transparent with the charges and payments, after all it is the practice money and the more collections received the more beneficial for both parties.
What to expect from RCM outsourcing companies in terms of charges and payments?
Each month when the payments are being consolidated and then the invoices have been raised, these companies usually provide only the payment information and skip the other 0 balances and unpaid/denied charges. They charge a percentage or flat fee based upon your agreement and move on to the next month’s billing. They do not focus on the existing pending receivables and the recovery of its payments, they wait for the timely filing to be over and eventually adjust it as non collectable. The data which is important to measure the overall financial performance of the practice lies on the collectables of all claims even when the claims are denied. Information such as comparing gross collection vs net collections is not usually provided by most of the RCM services companies.
The most financial oriented KPI reports to be provided by any successful RCM or medical billing services company are:
Bad Debt Rate:
Not all of your patients are fast in paying bills and would have to remind them to pay it on time and of course the practice would have taken this into account as reviewing all revenue coming into the practice is a good approach for financial stability. But bad debt rate, expressed as a percentage, is one of the essential medical billing KPIs the practice needs to be tracking. This percentage can be calculated by dividing allowed charges by bad debt write-offs.
Gross Collection Rate:
Another important KPI, is to calculate the gross collection rate by dividing reimbursement from payments by the billed charges. This is a useful method to make comparisons of your practice’s revenue flow. By studying the fluctuations, your practice can get a better idea of what future collections will be like. Changes in patient population, fees, and insurance providers will always affect the gross collection rate.
Net Collection Rate:
To identify how much revenue the practice is collecting from both insurance and patient sidd is out of all bills which are eligible to be paid for, this will work out the net collection rate. It is determined by dividing payments by all allowed charges. With the net collection rate, this allows your practice to compare different groups in your practice, observing demographic changes affecting the percentages your RCM company collects.
Average (and Median) Price Per Accession:
What exactly are the average charges for each accession or test you conduct? Knowing this information will help your practice predict future costs, which is instrumental in foreseeing commissions, profits, and costs of running your practice. This may track this figure according to test classifications per each accession.
Asking your RCM service company how effective your practice’s resolve rate is will show you how disciplined your medical billing vendor is in managing the flow of revenue. It can be calculated by dividing the number of claims in a given period by the total claims paid in that same span. Larger percentages indicate a better rate. If your medical billing company comes up with a lower rate than you prefer, it might be time to consult with a qualified and. Kuch experienced RCM services company to see if there are issues with how your current billing company verifies patient eligibility or if they are making errors in coding.
A high denial rate is a disaster for your practice. Dividing the number of claims denied by the number of claims remitted will give you this rate, which tends to range from about 5 to 10 percent in the healthcare industry in the U.S. For many organizations, manual collections are the bottleneck, with a solution being to automate your collections processes.
Days in Account Receivable:
For many practices, one of the most important medical billing KPIs have to do with how many days the bills have been spent in accounts receivable. After dividing ending accounts receivable by average daily charge, check your current RCM company if it has this KPI to examine and improve.
Unbilled Claims Percentage:
A large area of errors can lead to the practice seeing a higher unfiled claims percentage. See if your current medical billing company can handle this key performance indicator by calculating the number of claims divided by unclaimed ones rejected because of faulty or missing info. Information such as incorrect doctor’s charts, failing to include DX codes and mistakes in patient demographic information can all lead to a higher KPI for unbilled claims.
In Order to get a better understanding of where profits are coming from, your current medical. Billing companies should use month-over-month revenue to track reimbursement according to insurance, tests, and clients. The lab is stressful to work efficiently. Yoru medical billing company may want to compare which are the most profitable clients. This KPI also helps you determine which tests are causing the most problems in getting reimbursed, such as disputes over their medical necessity.
Obtaining a better understanding of your practice medical billing scenario is much easier when your current billing company makes a habit of tracking key performance indicators. Once you begin systematically collecting details on what you’re being paid and when, and who is not paying ,and how these trends develop, you can develop solutions to improve these statistics.