Collection Benchmarks

November 1, 2004

What is the benchmark for collections of gross charges?

Question: What is the benchmark for collections of gross charges?

Answer: Your gross collection percentage depends entirely on where you set your fees, as well as the reimbursement rates in the market in which you practice. If they're at 100 percent of Medicare, then your rate should be 95 percent or better if you're in a market with payers offering average or above average levels of reimbursement. However, if they're at 200 percent of Medicare, then your rate may be more like 40 percent or 50 percent, particularly if you're in a competitive market where payers are reimbursing physicians at lower-than-average rates.

No matter where you set your fees or the market in which you practice, the key is how much you collect out of what you are entitled to according to your contracts. This requires you to monitor closely contractual and noncontractual write-offs.

To accomplish this, some physicians review all their explanations of payments (or a representative sample of them) each week, but it's better to use your billing system to automate the tracking, if possible. If nothing else, ask your billing staff to record all write-offs over a certain dollar amount in a log so that you can go back and look up the accounts to make sure nothing was written off inappropriately.