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5 KPIs to help measure Revenue Cycle Management success

Revenue cycle management helps you keep track of claims processing, payment and revenue generation. Tracking revenue cycle metrics is an important part of measuring the financial health of your healthcare facilities.

These metrics or KPIs are vital to understanding the financial performance of your healthcare facilities, recognizing problem areas, and identifying fluctuations in revenue.

Here are 5 RCM Key Performance Indicators that all healthcare facilities should track to measure their success.

First Pass Resolution Rate

The first pass resolution rate (FPRR) measures the number of claims that are resolved the first time they are submitted. It’s a good metric to track to measure the success of your revenue cycle management processes, starting with when a patient schedules an appointment to after visit tasks like coding and billing.

Formula: Total Number of Claims resolved ÷ Total Number of Claims resolved during the same period

The case of American Family Clinic – Urgent Care Center

Consider the case of American Family Clinic (AFC) Urgent Care Center in Memphis, TN. At the height of the COVID-19 pandemic in the spring of 2020, patient volumes had dropped by 75%. The clinic was in danger of shutting its doors permanently.

Common UCC Revenue Integrity Challenges

  • Insufficient revenue and unpredictable cash flows
  • Manual medical coding and billing errors/issues
  • Communication disconnects across the revenue cycle
  • Increasing cost of non-compliance
  • Inadequate resources to keep up with changing payor requirements

Net Collection Rate

The net collection rate (NCR) measures the effectiveness of collecting reimbursements. It’s the percentage of reimbursements collected out of the total amount of reimbursements allowed by the payer contracts. Calculating NCR is useful in finding out how much revenue was collected out of the total amount of revenue that’s expected to be collected and finally the amount of revenue left to collect for the given period.

Formula: (Total Receipts – Refunds) ÷ (Total Charges – Contractual Adjustments)

Denial Rate

For a given period, the denial rate is the percentage of claims denied by payers. A low denial rate means a healthy cash flow. A high denial rate may indicate cash flow issues.

Formula: Total Amount of Claims Denied ÷ Total Amount of Claims Submitted

Days in Accounts Receivable

The A/R metric or Days in accounts receivable is the average number of days it takes to collect payment. The lower the A/R, the faster payments are being realized. Measuring Days in accounts receivable or A/R days helps forecast the income and aids in evaluating the efficiency of the revenue cycle.

Formula: Gross Charges in Last 90 Days ÷ 90 = Daily Charges; then Total A/R for 90 Days ÷ Average Daily Charge = Days in A/R

Average Reimbursement Rate

The amount collected from the total amount of claims submitted is known as the Average Reimbursement Rate (ARR).

Formula: Sum of Total Payments Received ÷ Sum of Total Fees Billed

It’s necessary to understand where your healthcare facilities’ RCM stands. Tracking and analyzing these KPIs and data points is a first step to optimizing both – the revenue cycle and revenues.

RCM Metrics, Analytics and Revenue Cycle Management

Exdion Health Analytics empowers you to identify relationships that influence Revenue Cycle Management (RCM) outcomes to develop insight-driven actionable management responses. Our BI and Analytics solutions help healthcare providers monitor KPIs including AR value, AR aging, Denials and Contracts.

Get in touch with us to learn how you can drive positive financial results, enhance productivity and optimize the bottom line by gaining unprecedented visibility into your Revenue Cycle Management (RCM) with cutting-edge analytics – now!

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