As the healthcare industry continues to evolve, efficient revenue cycle management (RCM) is becoming increasingly critical. To ensure their continued profitability and financial stability, providers must track and monitor claims and cash flow with key performance indicators (KPIs). In doing so, providers can identify improvement opportunities, implement changes, and optimize their RCM processes.
What are RCM KPIs?
RCM KPIs are metrics used to measure the success and efficiency of a practice’s revenue cycle management processes. By evaluating KPIs on a monthly basis, the practice gains a clear understanding of how effective it is across a variety of operational tasks, such as the timeliness of rebilling rejected claims. This allows providers to recognize trends and patterns for optimizing processes and improving financial performance.
RCM KPIs also provide valuable insights into the health of a practice’s revenue cycle. By tracking KPIs — like denial rate, days in accounts receivable, or net collection rate — practice leaders can distinguish underperforming areas of the revenue cycle and take corrective action to address them.
5 RCM KPIs to monitor
There’s no shortage of revenue-related KPIs for practices to track and assess their financial health. Below are five KPIs to help determine the efficacy of a practice’s RCM strategies:
- Days in accounts receivable (AR): This KPI represents the average number of days it takes for a healthcare provider to receive payment after delivering services. It helps providers identify billing or collection issues slowing down their revenue cycle. By reducing days in AR, providers can improve cash flow and lower the risk of bad debt.
- Clean claims rate (CCR): This metric represents the percentage of claims processed without any errors or issues. It helps providers assess the quality control of their RCM process and is often used as a KPI in juxtaposition to the denial rate. By improving CCR, providers decrease the risk of lost revenue.
- Denial rate: The opposite of CCR is the denied claims rate. It gives providers insights into trends and patterns caused by billing or coding errors and issues with payer policies. Reducing denial rates improves the revenue cycle and can prevent additional costs associated with claim reprocessing.
- Net collection rate (NCR): This KPI is the percentage of billed charges collected vs. those becoming bad debt. It helps providers spot areas where they may be losing revenue and investigate the reasons for this lost revenue. A higher NCR correlates with better cash flows and financial stability.
- Patient responsibility collections: This metric represents the percentage of patient balances collected in a given month. It can show providers where patients may be struggling to pay their bills or where the organization’s direct-pay policies may need adjustment. The goal of tracking this KPI is to avoid bad debt and enhance patient relationships.
Accuracy is essential in medical claims billing, and it’s equally important in tracking the efficacy of your RCM process. Whether you’re using accounting software to validate your metrics month over month or outsourcing to an RCM partner, data integrity matters. It’s not enough to track these metrics; you must validate them.
Always track essential KPIs
Providers who monitor key metrics — such as days in accounts receivable, clean claims rate, denial rate, net collection rate, and patient responsibility collections — can identify areas for improvement and make necessary changes to optimize their RCM processes. By implementing data-driven best practices, providers can reduce their rate of rejected claims, improve cash flow, and increase patient satisfaction with the billing process. It all starts by benchmarking critical KPIs.
Learn more about RCM optimization at trubridge.com.
