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Denials to Dollars: The Top Revenue Cycle Management Metrics to Master

Authored by: Phallynn Espinoza

Recently, I encountered a medical practice facing an expensive problem. They had roughly 14,500 claim denials that added up to a cumulative price tag of $709,000. 

It was expensive and frustrating for sure, but what was causing it?  

We used revenue cycle key performance indicators to dig deeper and find the source of the problem. Turns out, eligibility and benefits issues made up more than half of their lost revenue.  

If you’re just starting to track revenue cycle management metrics, you might wonder: What KPIs should we be watching?  

You could track many KPIs, but I’ll cover a couple of big ones and give you tips for finding outliers unique to your practice. Using this information, you can work toward solving your biggest revenue challenges.  

Revenue cycle management metrics: Days in accounts receivable  

Days in accounts receivable is one of the most straightforward KPIs to start with when tracking revenue cycle management metrics 

You want the bulk of your AR in the zero-to-30- or 31-to-60-day buckets. And you want to see those buckets decline significantly as you get further out. For example, maybe you have 60% of your AR in the zero-to-60-day bucket, then you want the next bucket to be 30% and the following one to be 15% (each category at least half of the prior).  

Of course, this is just an example, and it varies by specialty. A family health practice might have different acceptable AR ranges than an OB-GYN practice. The point is to set “normal” ranges for your practice and use that data to identify problem areas. 

Revenue cycle management metrics: Clean claims rate  

A clean claims rate describes the percentage of claims processed and paid by an insurance company without errors or issues.  

Why is this important? 

The clean claims rate can signal a potential issue impacting your revenue cycle because there’s always a reason a claim gets kicked back. If you have a low clean claims rate, it’s time to dig deeper to uncover the underlying problems, such as coding errors.  

And here’s a pro tip. It’s counterintuitive, but you can have an excellent claims rate and still have a revenue problem.  

For example, maybe you’re charging $75 for a visit when you’re contractually allowed to charge $100. Some practices do this to proactively avoid risk for payor audits. This can also happen if a practice has not updated the fee schedule in their EHR based on their current contracts. As a result, a high percentage of claims get paid on the first pass, but you’re leaving a decent amount of money on the table.  

Revenue cycle management metrics: Finding the outliers  

A clean claims rate metric might signal a problem, but you’ll need to watch other KPIs to find the source.  

I worked with a practice that struggled with high denial rates. We looked deeper; the reason was timely filing issues. We couldn’t understand why this happened until we ran a report to understand better how long providers took to sign off on charts.  

And the data told a story.  

It showed that sign-offs took up to a month in some cases. The practice then created a plan to speed up timely filing and reduce denials using this data.  

In another scenario, a practice had over 4,800 claim denials, adding up to $99,000 in lost revenue. Pulling reports, we uncovered the source was coding issues.  

Speaking of coding issues, watch for denial notation issues. It’s important to ensure the data in your system is accurate and clean. 

I’ve noticed many practices just enter a random code for the denial and not the code given by the payer. This inaccurate data makes finding denial patterns difficult. For example, when you run the report and find the same two codes used throughout all denials there’s a good chance those codes don’t indicate the actual reason for the denial. As such, they aren’t helpful in determining the real source of denials. Is it documentation? Is it coding? Is it timely filing? Bad data won’t help you identify the cause. 

Revenue cycle management metrics: Leveraging technology to spot problem areas  

Revenue cycle trouble areas often vary by practice. If you’re just getting started, days in AR is a great place to start. Then, move on to your clean claims rate before setting other revenue cycle KPIs specific to your practice.  

I worked with a customer who discovered a payment posting problem, so they now run a daily payment posting report to ensure things match up. That’s their revenue cycle KPI to watch. Maybe everyone doesn’t need to focus on this area, but based on their trouble spots, they do.  

And of course, technologies and tools are the backbone of helping you dig into the areas that require more knowledge, helping you fix the revenue leaks in your practice.  

Interested in staying current on revenue cycle trends? Follow us on LinkedIn and never miss a blog. 

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