Gross Versus Net Collections

January 1, 2008

I am new to my practice, and have noticed that its gross collection percentage is down. I’m trying to figure out why. What do you suggest?

Question: I am new to my practice, and have noticed that its gross collection percentage is down. I’m trying to figure out why. What do you suggest?

Answer: I’d basically ignore gross collection percentage. All it does is say what percent you collected of what you charged. What matters is what you collected of what you are owed.

Here is what likely happened:

Last year, you charged, say, $100 for a 99212. Insurance paid $80. That equals an 80 percent gross collection rate. This year, you charged $120 and still got paid $80 (or perhaps $84, since you negotiated better rates). That equals a 70 percent gross collection rate. It sounds worse, but, really, you are collecting about the same amount.

Conversely, it’s easy to make your gross collection rate look great by dropping charges, but it’s actually meaningless. Instead, ask for reports on adjusted collections. Are you collecting most of what you are contractually supposed to collect?

When it comes to collections, history may be less important than in other areas. More is always better, and everyone should push for more no matter what happened in the past.