If it can be Measured, it can be Managed

What Does an Efficient Revenue Cycle Look Like?

With hospital margins tighter than ever, intelligent revenue cycle management and efficient billing processes are critical. Benchmarking can show areas of underperformance and focus on opportunities for operational improvement.

The benchmarks below are industry standard and provide a guide to optimal performance within several areas of Revenue Cycle operations. Measured against these thresholds your organization can begin to see operational management and improvement opportunities revealed, allowing for identification and correction of root causes.

1. Best Practice for Patient Access

  • Pre-Registration - (Excludes unscheduled visits such as emergency/urgent care cases)

    • Accurate completion of all patient data fields required for registration. --- 98%

  • Insurance Verification – (Includes non-scheduled encounters verified within one day of service or date of admission)

    • Scheduled encounters that have been verified prior to, or at time of service. --- 98%

  • Patient Collections - Collecting patient responsibility dollars for services rendered

    • Inpatient patient-pay balances prior to discharge --- > 65%

    • Outpatient patient-pay balances prior to service --- > 75%

    • ER patient-pay balances prior to departure --- > 50%

  • Financial Counseling - Payment arrangements made for individuals prior to rendering service

    • Screening of uninsured IPs & high balance OPs for financial aid --- 98%

    • Payment arrangements for non-charity eligible IPs and high balance OPs --- 98%

    • Prompt-payment discount percentages --- 5% - 20%
       

​2. Best Practice for Claim submission

Billing is one of the most crucial components in the healthcare business equation, requiring timely submission, corrections and consistent follow-up in order to receive timely payment for services rendered.

  • HIPAA-compliant electronic claim submission rate --- 100%

  • Discharged/Not Final-Billed (DNFB) backlog --- < 1 A/R Day

  • Medicare Secondaries and supplements billed following adjudication --- < 2 Business Days

  • Commercial COB billing following Primary payment --- < 2 Business Days

  • Medicare RTP (Return to Provider) rate --- < 3%

 

3. Best Practice for Error Reduction
An estimated $262 billion (9%) of the roughly $3 trillion in claims submitted by hospitals last year were initially denied. Opportunity for error in the billing process is astronomical. Many people are involved in a single patient's bill; some sources estimate up to 55% of all patient bills contain errors which may result in denials and up to 1 in 4 claims are denied, according to research from the Government Accountability Office (GAO).

  • Missing HCPCS or CPT-4 code --- 0 tolerance

  • Missing or Invalid CPT/HCPCS codes --- 0 tolerance

  • Missing/Invalid/Incorrect modifier --- 0 tolerance

  • Incorrect Item pricing --- 0 tolerance

  • Item description is “Miscellaneous” --- 0 tolerance

​4. Best Practice for Denials Management
A vast majority of denied claims are recoverable (63%). However it still costs providers approximately $118 per claim on appeals, or as much as $8.6 billion in administrative costs nationwide. A typical health system can potentially lose as much as 3.3% of net patient revenue through denials.
Registration and Eligibility are cited as the leading causes of denials (23.9%) followed by Missing or Invalid Claim Data (14.6%). This combined 38.5% of denials are “Soft” denials, which can typically be paid upon correction. “Hard” denials (Non-Covered, Un-Timely Filing, etc.) must be written off.

  • Overall initial denials rate (% of gross revenue) --- < 4%

  • Clinical initial denials (i.e., Medical Necessity) rate (% of gross revenue) --- < 5%

  • Technical denials (fulfillment of requests by payer) rate (% of gross revenue) --- < 3%

  • Appealed denials overturned rate --- 40% to 60%

  • Underpayments additional collection rate --- < 75%
     

5. Best Practice for Accounts Receivable
Cash is the lifeblood of any business and healthcare services are no different.

Maintaining a healthy accounts receivable (A/R) balance is essential to strong financial performance.

  • Insurance A/R > 90 days from service or discharge (percent of total Ins A/R) --- < 15% to 20%

  • Insurance A/R > 180 days from service or discharge (percent of total Ins A/R) --- < 5%

  • Insurance A/R > 365 days from service or discharge (percent of total Ins A/R) --- < 2%

  • Bad debt write offs (as a percentage of gross revenue) --- < 3%

  • Charity write offs (as a percentage of gross revenue) --- < 3%

  • Net A/R Days --- < 50

  • Cost-to-Collect (as a percent of net patient revenue) --- < 3%
     

System reporting and analytics employed properly and consistently, are powerful tools in providing a comprehensive view of a hospital’s financial operations.

Contact Medical Recovery Services for a complete complementary list of Revenue Cycle Key Performance Indicators.

For more information, contact Medical Recovery Services

(816) 229-4887

Medical Recovery Services is a full-service revenue cycle company assisting

hospitals and surgical centers in achieving their full earning potential since 2004.

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