Your medical practice’s ability to provide exceptional medical care depends on its financial performance. If patients and insurance companies aren’t paying you, you cannot continue to operate. Keeping track of finances requires monitoring specific medical billing benchmarks, like denials in medical billing. These key performance indicators help ensure your practice gets paid and identifies areas for improvement.
1. Days in Accounts Receivable
The days in accounts receivable (Days in A/R) rate shows how long it takes to get paid. This rate equals your total A/R divided by your average daily charges over 90 days. Reviewing this rate every month helps you budget for operating expenses and identify collection bottlenecks.
2. Accounts Receivable Older Than 60 Days
When insurance companies or patients are slow to pay, it affects your practice’s financial performance. If a significant amount of money has been due for 60 days or longer, it may indicate issues with your billing processes, including errors, collections, and claim denials. To calculate this medical billing benchmark, divide the whole balance of A/R older than 60 days by the total A/R ratio for all ages.
3. First Pass Resolution Rate (FPRR) and Denial Rates
Ideally, insurance companies pay claims on the first submission. When most claims pass on the first try (first pass resolution rate or FPRR), your practice has good revenue cycle management. If you have a low FPRR, it could mean issues with medical billing, coding, or insurance verification.
An excessively high denial rate is another sign of issues within your insurance verification and billing processes. To calculate FPRR, divide the number of claims paid on the first pass by the total number of claims. Another medical billing benchmark to monitor is the claim denial rate, which should be about 5-10% of total claims.
4. Gross and Net Collection Rates
Gross and net collection rates show how well your practice collects money.
The gross collection rate indicates how close your practice’s fees are to the rates the insurance company pays for specific services. It helps you calculate cash flow and identify fluctuations so you can budget. To find the rate, divide the monthly payments by the charges multiplied by 100.
The net collection rate (NCR) reveals how much money your practice collects. It equals the total payments divided by allowed charges and should be between 90 and 100%. A lower NCR is a sign you need to review and improve billing practices.
5. Collections Per Visit
Knowing how much money you make per patient visit helps you identify the most profitable services and make more appointments for them. Dividing the total reimbursements for the service by the total number of visits shows you how much you earn. To evaluate your practice, you can compare this number to other local practices and industry standards.
Calculating and reviewing these medical billing benchmarks shows you how well your practice is doing financially — and where it can improve. Working with an experienced medical billing and coding company like PracticeForces can help prevent medical claim denials and improve billing practices to maximize revenue. Call us for a consultation at (727) 499-0351 to learn more today.