Revenue Cycle KPIs for Physician Practices and Medical Groups

Identifying the key KPIs to concentrate on, the steps to be done to optimise each of them individually, and ultimately the precise goals you intend to accomplish on each portion of the cycle is the first step towards efficient revenue cycle management (RCM). RCM is essentially a structured set of procedures that help ensure that healthcare practitioners are adequately rewarded for the services they render to patients. Healthcare organisations must use a consistent set of key performance indicators (KPIs) to evaluate the efficiency of the revenue cycle since they must accomplish more with fewer resources. These indicators can aid in data-driven decision-making and reveal information about the practice’s financial health. 

 

The front-end, mid-cycle, and back-end operations in a healthcare provider’s practice each have their own KPIs. The patient intake, scheduling, and registration KPIs at the front office measure the effectiveness of the information and the quality of the patient experience. The Mid-cycle KPIs show how well clinical documentation is done, how to lower denial rates, and how to increase first-pass resolution rates. The Back-Office KPIs measure revenue optimisation and show whether it is possible to make up whatever money the practise could have lost otherwise. To guarantee maximum effectiveness, each should be controlled cooperatively. 

Patients are scheduled, registered, and verified as having the financial means to pay for the services they will receive by the front office. In order to effectively provide care and have the practice reimbursed for the medical services, the front office employees must guarantee a great patient experience while collecting and capturing all the information required.

Claim denials may occur if patient personal data (such as name, date of birth, or insurance ID) is incomplete or incorrect. According to a Workgroup for Electronic Data Interchange (WEDI) research, mistakes in patient eligibility and demographic data may account for up to 26% of claim denials.

The following metrics can be used by front-office managers to evaluate the effectiveness of the front office:

1. No-Show Rate: A high no-show rate, or the proportion of clients who do not show up for an appointment as scheduled, denotes lost income. Automated follow-up calls, automated reminders, and other methods can all assist lower the no-show percentages.
2. Schedule Utilisation Rate: The percentage of the providers’ available time that is actively used for appointments and patient contacts is known as the schedule utilisation rate, which is a direct indicator of productivity. High schedule utilisation rates show effective use of the providers’ time by the practise. By identifying trends and adjusting provider availability, the front-office team can increase schedule utilisation rates.
3. Appointment Wait Time: The interval between a patient’s request for an appointment and receiving a confirmation is an indication of the calibre of the patient experience at a practice. Long wait times can harm patient satisfaction and cost the provider money in the short and long term. By carefully planning appointments and keeping an eye on physician schedules, front desk employees can cut down on appointment wait times.
4. Same-Day Appointment Availability Rate: As the name implies, this KPI measures the proportion of patients who can make an appointment the same day they call for one. The high prevalence of same-day visits increases patient satisfaction and boosts the productivity of the physician. It might also show whether the practice overall or for some particular speciality is overstaffed.
5. Appointment Lead Time: The time between making a request and making an appointment is known as the appointment lead time. Patient satisfaction can be lowered and a provider’s revenue can be lost as a result of excessively long appointment lead times and inconsistent/fluctuating lead times. Effective front office staff can keep track of the data, spot patterns in the appointments, and optimise these for the provider.
6. Provider Productivity: This KPI measures how many appointments a given provider attends during a given time frame (a day, a week, etc.). If billed and realised properly, a high provider productivity rate can boost the practice’s income while improving patient access to healthcare. Through effective appointment scheduling and training of the doctor and support personnel to expedite interactions without sacrificing the standard of care and clinical documentation, a medical group can increase provider productivity.
7. Patient Registration Accuracy Rate: By removing avoidable billing errors and ensuing denials, high patient registration accuracy leads to correct billing. It is a gauge of how well patient information is collected and stored on revenue cycle and EHR systems.
8. Insurance verification accuracy: Monitoring the accuracy of insurance data entered by front-office workers can assist in lowering claim rejections and enhancing revenue cycle management.
9. Patient Check-In/Check-Out Time reveals the calibre of the patient experience during a provider encounter. It is the amount of time between the check-in time (when you arrive) and the check-out time (when the appointment is over).

Elements of the mid-revenue cycle are in charge of assessing the accuracy of claim submission, the dependability of medical coding, and the efficiency of denial management. Coding errors, which account for 15.5% of all claim denials, are one of the main causes of claim denials, according to recent research by the American Medical Association (AMA). The top coding-related reasons for claim denials, according to the research, were:

• Incorrect or inappropriate codes
• Coding for the diagnosis or procedure without enough specificity
• Erroneous coding order
• Inconsistent modifiers and codes
• The utilisation of dated codes

Optimal revenue realisation, lower expenses, and more effective operations are made possible by the mid-revenue cycle KPIs. The following KPIs can be used by HIM and Coding managers to evaluate the success of the mid-cycle:

1. Coding Accuracy Rate: This indicator assesses the general dependability and effectiveness of the practice’s medical coding function. A lower chance of denials is made possible by higher coding accuracy, which also permits quicker processing of claims and more accurate payouts.
2. Claim Rejection Rate: The claim rejection rate is the percentage of claims that are rejected by payers from providers. A reduced claim rejection rate indicates a quick and efficient billing process that produces legitimate claims.
3. Days to Bill: Following the provider-patient encounter, the typical number of days it takes to submit a claim is called “days to bill.” A shorter billing cycle can help the practice’s financial flow.
4. Charge lag: The elapsed time between receiving a healthcare service and entering a charge into the provider’s billing system is known as the charge lag. Charge lag reduction can hasten claim submission and boost revenue.
5. The rework rate for claims is the percentage of claims that must be amended or resubmitted as a result of mistakes. A high claim rework rate suggests a process or mid-cycle personnel issue that has to be fixed.
6. Clean Claims Rate: The percentage of all submitted claims that the payer processes without any mistakes or denials is known as the “clean claims rate.” An effective billing team and process are indicated by a greater clean claims rate.
7. First Pass Claim Rate (FPCR): The FPCR is the proportion of claims that are processed and paid after the initial submission without any explanations or revisions. It falls within the category of clean claims rate.

The accounts receivable, collections, and financial reporting procedures for a medical group or practice are managed by the back office of a healthcare provider. Back-office RCM KPIs could consist of:

• Time spent on collections measured
• The effectiveness of processing accounts receivables (AR)
• Gross receipts
• Reject rates
• Eliminating bad debt

 

In the end, these KPIs result in higher sales, lower expenses, and more effective business practices.

The Healthcare Financial Management Association performed a survey in 2020, and the results showed that providers who used technology to enhance back-office RCM tasks had better financial results and lower denial rates than those who did not. According to the survey, leveraging analytics and automation in RCM operations led to faster collections and better rates of valid claims.

 

Healthcare providers can focus their time and resources on providing better care and improving patient outcomes by establishing effective billing and collections systems.

1. Accounts Receivable Turnover Ratio: This indicator shows how frequently a supplier collects on accounts receivable over the course of a specific time period, indicating how effectively cash flow is realised. The ability of the practice to collect its accounts receivable and realise revenue from them is indicated by a higher turnover ratio.
2. Days in Accounts Receivable (DAR): The length of time it takes for payment to be collected following the submission of a claim reveals how effectively the back-end cycle operates. Lower days in collections attest to the effectiveness and calibre of the entire revenue cycle. The practice can gauge its performance by comparing it to the MAGMA’s recommended benchmarks for DAR.
3. Net Collection Rate: The provider’s or practice’s performance in collecting revenue is gauged by the net collection rate as a proportion of the total amount of claims. A higher Net Collection Rate, which enables the practise to realise a larger percentage of their income, indicates an efficient income Cycle Management (RCM) procedure and good financial health.
4. Denial Rate: This indicator of the efficiency of the revenue cycle in general and the calibre of medical coding in particular is calculated as a proportion of the number of claims refused by payers versus the number of claims submitted. Lower denial rates indicate that the RCM process is dependable and efficient, increasing the chances that services will be successfully paid for.
5. Denial rate by reason code: The revenue cycle team can spot patterns, pinpoint common mistakes, and put plans in place to lower denials by categorising claims according to the particular reason given by the payer and represented by the preset code.
6. Patient Balances Outstanding: This measure refers to the unpaid balances that patients owe for medical services that they have received. Lower patient balances indicate stronger financial health for the provider/practice and a more efficient collection method.
7. Average Reimbursement per Encounter: This indicator assesses the typical compensation a practise or service provider receives for each patient encounter. A greater average reimbursement per encounter denotes a practice’s better financial standing and more effective billing system.

Medical groups and physician practices can make data-driven decisions to increase income and profitability while preserving high-quality patient care by recording and analysing key performance indicators (KPIs). By successfully managing the front, middle, and back-office RCM processes, medical groups and physician practices may optimise revenue generation and expense management, leading to higher profitability and more effective operations.