Revenue Cycle Management Metrics That Matter

It’s an understatement to say that revenue cycle management (RCM) has a significant impact on healthcare providers. It touches on everything from financial stability, cash flow, patient experience, compliance, and more, embodying numerous aspects of healthcare.

Because RCM is critical to business operations, it’s especially a challenge to monitor all the metrics that come with it. There are only so many KPIs providers can focus on to make the organization healthy and profitable, but there are a few that make a big difference.

Why RCM Metrics Matter

RCM metrics provide an overview of your business’ vitality, highlighting operational efficiencies as well as issues. Keeping track of these KPIs can pinpoint areas of improvement, boost communication and collaboration between departments, and improve efficiency and optimization within the revenue cycle.

The more valuable the metrics, the better.

Key RCM Metrics

Based on our work and our findings, these are the top revenue cycle metrics to consider, which include the most searched RCM metrics (noted with a *) in Google in 2024.

  • Bad Debt Rate*: Bad Debt Rate represents the proportion of accounts receivable that remain unpaid and are written off as bad debts. Providers should aim for a low bad debt rate (two to three percent), which indicates effective collection efforts and financial counseling, improving the financial health of your organization.
  • Billing Lag Days: Billing Lag Days is the amount of time between when a patient receives medical services and when the claim is submitted. Ideally, this should be done within 24 hours, especially if insurance must review the submission, to reduce the amount of time payment is received, improve cash flow, and increase efficiency.
  • Clean Claim Rate*: Clean Claim Rate tracks the percentage of claims submitted without errors. A high clean claim rate means fewer rejections and faster reimbursements, leading to efficient billing processes​.
  • Claim Denial Rate*: Clean Denial Rate shows the percentage of claims denied by payers. Providers want to avoid a high denial rate, which stems from issues with claim submissions, coding, or insurance verification. These issues require corrective actions to improve reimbursement rates​, resulting in additional operational costs.
  • Days in Accounts Receivable*: Days in Accounts Receivable (DAR) measures how long it takes to collect payments for services rendered. A low DAR (30-40 days) indicates a more efficient collection process, improving cash flow and financial stability​.
  • First-Pass Denial Rate: First-Pass Denial Rate (FPDR) measures the percentage of initial claims denied. These claims need to be reworked or resubmitted, so a high FPDR signals an issue in the claim submission process, increasing administration costs and delaying payments.
  • Net Collection Rate*: Net Collection Rate calculates the effectiveness of collecting allowed amounts after adjustments, providing a realistic view of the actual revenue collected compared to what is expected. This rate illustrates the efficiency of your revenue cycle management​.
  • Payments per Unit: Payments per Unit measures revenue collected per visit or service provided based on the specialty. This can include WRVUs (Medicare physician services), Encounters (patient visits), and CPTs (medical services and procedures) and helps providers determine the profits of these services.
  • Percent of Accounts Receivable over 90 Days: Percent of Accounts Receivable (A/R) over 90 Days represents the number of outstanding A/R more than 90 days old. Providers should aim for a rate as close to 0% as possible to avoid bad debt and improve organizational finances.

Moving Forward with Benchmarks

As a provider, you should review these key metrics and compare them to industry benchmarks, which can differ based on specialty. A good start is looking at your data, identifying areas for improvement based on industry benchmarks, and developing a plan to address these metrics.

Your plan should include how often you keep track of these KPIs so that you can make it a habit to regularly review them. Many are based on 90-day cycles, but others can be daily or monthly. When you improve one metric, it can help improve others, so a regular check-in helps identify what’s working and what isn’t. A revenue cycle services provider can help you determine what’s right for you.

These key RCM metrics make the biggest difference for providers to improve the financial well-being and structure of their organization, creating a smooth path to business stability.

Interested in how our RCM capabilities can improve your KPIs? Contact us.

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