26 Aug What are Key Performance Indicators (KPI) and Why Do They Matter?
At Radiation Business Solutions, we relieve financial anxiety for patients and physicians so that they can focus on improving health. RBS specializes in radiation oncology billing and management solutions, new cancer center development, and improving the cancer patient experience. We offer a wide range of consulting services, including revenue cycle audits, for oncology practices of all sizes. Elaine Kloos, RN, CNE-BC, MBA, is the Senior Director of Consulting for RBS; she specializes in helping practices to run more efficiently.
Aside from seamless, high-quality patient care, an essential aspect for any medical practice is excellent processes for Revenue Cycle Management (RCM).
Key Performance Indicators are essential measurements in the RCM to quantify the financial health of a practice. Monitoring these KPIs monthly allows fluctuations to be investigated before a more severe ongoing problem occurs. With monthly monitoring, a practice can keep denials at a very low rate while increasing collections, which is the key to success in RCM. Submitting claims only once allows your cash flow to be optimized.
In this series, I’ll be sharing some of the most valuable KPI’s that every practice should track and monitor to assure financial success. In the first article, we’ll be covering two of the most important indicators of your revenue cycle’s health: Days in Accounts Receivable (A/R) and Clean Claims Ratio (CCR).
- Days in Accounts Receivable (A/R)
The days in A/R represent the average length of time it takes for a claim to be paid. It sounds pretty simple, but this KPI can be disturbingly high for many practices. For some billing companies, measuring the days in A/R starts when the first claim is submitted. If a claim is submitted incorrectly the first time, it is difficult to meet this KPI. At RBS, and considered best practice, we measure claims from the date of service and, on average, RBS’ clients have been paid by the payer within 35 days
The formula for this KPI is Accounts Receivable/Average Daily Charges. Days in A/R is the best measure to monitor cash flow. Most billing systems identify days in A/R in 30-day buckets: 0-30 days, 31-60 days, 61-90 days, etc. Days over 60 typically become more time-consuming for staff, which leads to lower productivity and increased re-work.
The Benchmark Metric for this KPI is 35 days.
- Clean Claims Ratio (CCR)
In my opinion, the CCR KPI is crucial for financial success. CCR can also be called the First Pass Ratio. Both of these terms are acceptable, and this KPI measures the number of claims paid upon the first submission. This means no line items are rejected, the claim is only filed once, and the claim contains no errors. A high CCR means the practice is getting paid quicker, staff are not performing redundant tasks, and this leads to higher productivity.
The formula for this KPI is # of claims paid on the first submission/total # of claims submitted.
The Benchmark Metric for CCR is greater than or equal to 95%.
How does your practice measure up? If you’re not hitting these benchmarks, you might consider bringing in an outside expert to audit your process and identify areas for improvement. We can help! Contact us to learn more about our consulting services and see how we can help you to improve the efficiency and effectiveness of your practice. You can email me directly at Elaine@RadiationBusiness.com. I’d love to help your practice thrive!