Using Key Metrics in Your Revenue Cycle

There are industry-standard key metrics relating to your revenue cycle. From Denials to older accounts receivable, there are trends every practice should be aware of and be able to calculate.

Days in Accounts Receivable (A/R)

Days in A/R or days sales outstanding (DSO) is a calculation your practice can use to determine the average rate at which your practice is being paid. The lower your Days in A/R, the better. This means you are being paid timely on your claims, most likely have a low rejections and denials rate and a high clean claims rate.

Percentage of AR > 120 Days

Most EHRs come with a basic canned aging summary that breaks down your AR by various buckets (0-30, 31-60, 61-90, etc.). If it’s not included on this report, you should always calculate the percentage of total A/R in each bucket compared to the total A/R on the report. You should especially focus on your AR over 120 days – these are claims quickly falling into the risk of being denied for timely filing and should be worked as a priority.

Adjusted Collection Rate

The adjusted collection rate monitors a practice’s effectiveness in collecting reimbursement. The higher your adjusted collection rate, the better. This means your practice is collecting on your net charges or net production.

Denials Rate

Your denials rate is key in identifying where trouble may be looming in your practice. The lower the denials rate compared to gross charges, the better. This again means you have cleaner claims going out the door and are quickly and efficiently working your rejections.

Each of these categories has a specific calculation involved to reach your total based on various practice totals like aging, denials, net charges, net payments, etc. There are also specific benchmarks to determine how your practice is performing in each area.

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