It’s no secret that optimized billing is critical to the health of your ophthalmology practice. Cash flow can slow down to a trickle when insurers are sluggish in paying or patients don’t compensate you. Successful practices have an efficient and effective collection system in place. How can you tell if your billing process is helping you operate at your best?
Check these billing vital signs:
Net Collection Ratio
The net collection ratio, also known as the adjusted collection ratio, indicates effectiveness in collecting the money you are allowed to collect.
How to measure: Total Payments for a Period ➗Total Charges for Same Period − Write-offs (contractual allowances less refunds / over payments). For example, if you received $600,000 in total payments on charges of $1,000,000 and had $300,000 in write-offs, your net collection ratio is 86%.
How often: Monthly
Healthy range: 95% – 99%
Rejected Claims and Denials
Rejected claims contain one or more errors found before a claim is processed. Denied claims are claims that were received and processed but deemed unpayable by the payor. Rejected and denied claims can cost your practice both time and money!
Rejected Claims
Claims are rejected for input errors such as wrong patient demographics, ID number, etc.
How to measure: Check claims as you receive them from your clearinghouse.
How often: Daily
Healthy range: 0 (rejected claims are almost always avoidable!)
Denied Claims
Denials happen for a number of reasons including coverage lapses, non-covered service, insurance requesting medical records or information from the patient.
How to measure: Total Dollar Amount of Denied Claims for a Period ➗Total Dollar Amount of Claims Submitted for Same Period.
How often: Check daily to see if claims are being denied; monthly checks using the formula above can indicate billing health.
Healthy range: <7% of your total submitted claims
Days in A/R
You already know that cash flow management is essential for your practice’s health. Improperly managed A/R is one of the most common causes of cash flow shortages.
How to measure: Divide the monthly gross charges by days in the month (30) = daily gross charge. Then take your month end A/R and divide by daily gross charge = days in A/R. This requires manual calculation. Your practice management software likely has dashboard analytics showing this calculation.
How often: Monthly
Healthy range: 35-50 days
Optimal range: 25-35 days
Patient Balances
According to Medical Economics, 33% of a practice’s revenue comes directly from patients. It’s important to pay attention to patient balances in order to stay financially healthy! This is now more important than ever due to higher copays and deductibles.
How to measure: Your practice management software will have these reports.
How often: Monthly
Healthy range: 15% or less are in >90 days; most receivables current and balances for succeeding classifications fall significantly/increasingly the older they are.
Payment Posting Dates
Timely posting is critical to quickly identifying claims that aren’t paid correctly (e.g. denials or claims paid at less than the contracted rate).
How to measure: These reports are available in your practice management software.
How often: Monthly
Healthy range: Within 2 business days after receipt of the remittance advice.
Do your billing vital signs show good billing health?
If they’re less than optimal, we can help. Learn more about our results and contact us to discuss how we can help maximize your revenue by improving your billing health.
