912-274-7789
Contact Us
Client Folder

Key Revenue Cycle Metrics for Physician Practices

After some great feedback from a previous blog regarding Revenue Cycle Management, we thought best to follow up with some general helpful KPI’s. You must keep in mind that an efficient RCM ensures that providers are reimbursed accurately and promptly for services rendered. Therefore, it’s vital to measure success and identify opportunities for improvement by tracking several key performance indicators (KPIs) throughout the revenue cycle. Below is an overview of the most important revenue cycle metrics that physician practices should implement as regularly observed data points. As you get more comfortable and familiar with your metrics and processes, use these as a springboard to more specific and customized KPI’s for your group.

 

  1. Days in Accounts Receivable (A/R)

This metric measures the average number of days it takes to collect payment after a service has been rendered. Lower days in A/R suggest faster collections and efficient billing processes.

  • Benchmark: Ideally, less than 40 days for most practices.
  • Importance: High A/R days may indicate issues with claim denials, delays in claim submission, or ineffective patient collection efforts.

 

  1. A/R Aging by Payer and Age Category

A/R aging reports categorize outstanding balances based on the length of time they have been unpaid (e.g., 0–30, 31–60, 61–90, 91+ days).

  • Key Focus: High percentages in the 90+ day category are a red flag.
  • Why it Matters: Helps pinpoint specific payer delays or internal bottlenecks in claim processing.

 

  1. Net Collection Rate

This measures how effectively a practice collects allowable reimbursement after contractual adjustments.

  • Formula: Payments / (Charges – Contractual Adjustments)
  • Use: Highlights whether the practice is collecting what it is entitled to, accounting for payer agreements.

 

  1. Gross Collection Rate

This indicates the percentage of total charges that are collected, without adjusting for contractual allowances.

  • Formula: Total Payments / Total Charges
  • Benchmark: Varies, but often around 60–70%.
  • Limitations: While easier to calculate, it’s less insightful than the net collection rate because it doesn’t reflect contractual obligations.

 

  1. Denial Rate

This reflects the percentage of claims denied by payers.

  • Formula: Total Denied Claims / Total Submitted Claims
  • Benchmark: Less than 5% is ideal.
  • Use: A high denial rate indicates issues with coding, documentation, or payer policy knowledge and can lead to cash flow interruptions.

 

  1. First Pass Resolution Rate (FPRR)

Also known as clean claim rate, this tracks the percentage of claims paid upon first submission.

  • Benchmark: 90% or higher.
  • Benefits: High FPRR reduces administrative costs and accelerates reimbursement.
  • Implication: Low rates indicate potential problems in data entry, coding, or insurance verification.

 

  1. Charge Lag Days

This measures the time between the date of service and the date the charge is entered into the billing system.

  • Benchmark: 1–2 days for electronic systems.
  • Use: Long charge lag times delay reimbursement and can disrupt cash flow.
  • Strategy: Prompt charge entry is critical for timely claims submission.

 

  1. Payment Lag Days

This is the time from claim submission to payment posting.

  • Use: Measures the efficiency of payers and internal payment posting processes.
  • Warning Sign: Extended payment lag may point to inefficiencies with specific payers or claim follow-up processes.

 

  1. Bad Debt Rate

This is the percentage of receivables written off as uncollectible.

  • Benchmark: Typically under 5%.
  • Importance: A high rate may point to insufficient patient collections or poor financial counseling.

 

  1. Percentage of Revenue from Top Payers

Understanding payer mix helps manage risk and negotiate contracts.

  • Use: Overreliance on a single payer could expose the practice to financial vulnerability if reimbursement rates change.

Conclusion

Tracking and optimizing key revenue cycle metrics is essential for physician practices aiming for financial stability and operational efficiency. Metrics such as net collection rate, denial rate, days in A/R, and clean claim rate offer actionable insights into billing performance and payer relationships. Regular monitoring, benchmarking against industry standards, and continuous improvement efforts help practices reduce revenue leakage, accelerate cash flow, and support long-term success. Robust RCM analytics paired with staff training and technological tools can significantly enhance the financial outcomes of any practice.

Back To Top
Search