Track denial percentages
Ideally, you want your denials to be less than 2 percent of the claims that go out the door. The higher your denial rate, the more resources it takes to follow up on the denials, which then puts stress on the staff. If your practice can’t follow up on denials, your revenue and profitability will suffer as a result. Advanced Urology Institute has found that the first pass resolution rate, in addition to denial percentages, is a valuable KPI for increasing revenue. When the first pass resolution rate is high, fewer resources are needed. That means staff have more time to focus on other tasks such as revenue-generating initiatives.
Your first pass resolution rate can go hand in hand with your denial rate and should be, ideally, 96 percent or higher. This means that 96 percent of the claims are getting paid on the first submission. If your first pass resolution rate is lower than that, the first thing you can do is analyze the denial reasons by provider and by payer.
Reduce days in accounts receivable
Essentially, days in AR indicates how long it takes you to get paid for your services. Ideally, it should be less than 30 days, depending on your payer mix. If it’s higher, this could indicate a number of things. It could mean you have a higher than normal denial rate, you have slow to pay payers, or your practice isn’t collecting patient payment at the time of service. This can happen when you have credentialing issues with a certain payer or a host of other issues indicating less than effective follow up.
Every additional day in AR means a lower likelihood of getting paid. The chances of collecting patient money once it hits 90 days is less than 30 percent. If more than 15 percent of your AR is more than 120 days old, then you need to review them at the payer level to determine why different payers are taking so long to pay. Overall, AR over 120 days is a good indicator of the effectiveness of your front-end and back-end processes.
At the end of the day, running a practice is a complex and ever-changing challenge, so identifying a handful of high-impact metrics to tackle can be a valuable first step. Verifying eligibility for every patient visit can pay dividends across many metrics. Understanding cancellation rates will lead to improve utilization of expensive resources. Reducing bill lag will improve your cash position, letting you invest in improvements throughout the practice. And proactively managing both denials and days in A/R ensures the financial health of the practice supports the core mission of any healthcare professional: to deliver outstanding patient care with the latest services and support.
Patti Peets is senior director of revenue cycle management for cloud-based software provider CareCloud. Richard Wooten is the chief executive officer of Advanced Urology Institute, where he has grown the Oxford, Florida-based specialty group to 102 providers across 40 locations around the state.