Measuring Collection Success

May 1, 2009

I have a new practice. We have been open for three months now, and I am finally starting to see insurance payments come in. What benchmark should I use to see if we are in line with other offices?

Question: I have a new practice. We have been open for three months now, and I am finally starting to see insurance payments come in. What benchmark should I use to see if we are in line with other offices?

Answer: I would look at these measures:

Adjusted collection ratio - how much you are collecting of the amount you are actually owed (not of what you charge). Adjusted collection rate = cash in/allowable.

In most internal medicine practices this runs 99.39 percent according to Medical Group Management Association data.

Days in A/R - how long is it taking you to collect? (This will change fast now that you have things rolling.) Most people break this down into 30 day periods; what percent do they collect in each 30 day section. Faster is better. Here’s the benchmark from MGMA for family practice.

Days in A/R:

  • 0-30 days: 67.35%

  • 31-60 days: 13.33%

  • 61-90 days: 6.22%

  • 91-120 days: 3.08%

  • 120+ days: 8.23%

You also can break this down by payer. Assuming you are billing Medicare electronically, you should get payment from it in 15 days or less.