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Medical Billing Metrics You Should be Tracking

Understanding these medical billing metrics will help optimize your revenue cycle.


Monitoring your practice’s performance while providing exceptional patient care is vital to your medical group’s success. As a healthcare provider, there are several medical billing metrics that determine your practice’s billing effectiveness and efficiency. The following medical billing metrics will provide a brief description and also give you the necessary formula for reference. Taking a proactive approach with the following medical billing metrics will help keep your business profitable while giving you more time to focus on patient care.

1. Percentage of A/R older than 60 days

This metric highlights the effectiveness and efficiency of your billing operations in getting you paid as quickly as possible. A significant sum of money over 60 days can signify charge lag issues, increase in rejections from the claim scrubber and first pass denials from the payer, bad write-offs/adjustment protocols or poor collections processes in general.

  • Percentage of AR Over 60 Days = Total Balance Aged Greater Than 60 Days / Total AR Balance for All Ages (use same calculation for percentage over 90, 120 etc.)

2. Days in A/R 

Accounts receivable (A/R) measures how long it takes for a service to be paid. Knowing your days in A/R is vital for understanding your budget and determining when you have the funds to pay for operating expenses. This metric should be reviewed every month to make sure you aren’t experiencing blockage in money being paid.

  • Days in AR = Total AR / Average Daily Charges (90-day average)

3. Collections per visit 

Knowing the amount you collect on an average visit is a good way to measure your practice against the industry standard and other same-specialty practices in your area. You will be able to determine which appointments are most profitable, allowing you to accept more of these appointment types.

  • Collections Per Visit = Total Reimbursements / Total Visits (for a specific time period)

4. First pass resolution rate (FPRR)

Your first pass resolution rate (FPRR) is the percentage of claims that are paid after being submitted a single time. This metric tells you how effective your revenue cycle management (RCM) process is. If your practice struggles with a low FPRR, focus on insurance verification, billing, and coding to create a more effective RCM. You may also want to consider outsourcing to a more efficient third party billing service.

  • FPRR = # of Claims Paid on First Pass / Total # of Claims Submitted (for a specific time period)

5. Gross collection rate (GCR)

A high gross collection rate (GCR) indicates your fees are close to the payer’s rates, and how well your practice is doing at collections. However, a higher rate does not necessarily mean your practice makes more money. Every practice will have a different GCR because each sets a unique fee schedule, therefore this metric is best monitored internally rather than compared with industry benchmarks or other practices.

  • GCR = Total Payments / Charges *100% (for a specific time period)

6. Net collection rate (NCR)

This easy-to-calculate metric reflects how effective your practice is in collecting the reimbursement you are allowed. Practices calculate their NCR to see how much revenue is lost due to factors such as uncollectible debt, or other non-contractual adjustments. This metric can be used to compare with practices with similar: specialty, location, and clinical personnel. If your NCR is lower than 90-100% after write-offs, you should consider an audit of billing practices.

  • NCR = (Payments / (Charges – Contractual Adjustments)) * 100%

7. Contractual Variance

Contractual Variance is the amount you are receiving below the amount you contracted with your payers. This can be affected by how your biller submits the claim among other reasons. Improper submission of a claim can still be paid, but there is a chance that it will be underpaid. Your practice should have analytics that shows you where your expected payment amount per the fee schedule is less than what was received from the insurance company.

  • Contractual Variance = Contracted Rate (based on your fee schedule) Minus the ERA Allowed Amount

Medusind improves the financial health of medical practices, groups, and hospitals with industry-leading medical billing expertise and technology.
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posted by OBarros
posted in Healthcare Management,Medical Billing,Medical Coding
posted date Jan 2018