What exactly are key performance indicators? In simple terms, KPIs provide a way to measure performance and evaluate success. With any business initiative, performance should be measured and monitored to determine whether goals have been met—and if there’s a return on investment. For a busy medical practice, incorporating KPIs can help drive financial improvement.
Running a practice in today’s unpredictable healthcare environment comes with some complex challenges. One way to achieve some clarity is by honing in on key KPIs to help identify front- and back-end issues that might be undermining efficiency and adversely impacting revenue. The five KPIs below can be useful in uncovering issues in your workflow and processes that might be negatively impacting your revenue.
1. Eligibility verification and prior authorizations. Eligibility should be verified for every patient on every visit. Without it, your practice is leaving revenue on the table. If authorization is required and isn’t obtained, claims are denied—and money goes uncollected. Your staff should also confirm how much (if any) of the deductible is still owed, so they know exactly what’s due. Technology has made it easier to collect prior balances, take prepayments, set up installment plans and identify patient eligibility information upfront.
TIP: Review denial codes to see what percentage of denials is due to lack of authorization. Find them, fix them, and make sure it doesn’t happen again.
2. Appointment cancellation rate. What’s your cancellation percentage? Why are appointments being canceled? Is there a patient satisfaction issue, or did the provider cancel the appointment? These are a few of the questions that need to be answered when reviewing the reasons for every cancellation. Taking time to understand cancellation rates—and taking appropriate action—will increase practice revenue. You want to stay on top of trends that are stifling productivity and cutting into revenue.
TIP: Have a high cancellation rate? Make sure your practice is utilizing some sort of wait-list functionality. Consider providing the ability for patients to reschedule appointments electronically, and not have to worry about calling during business hours.
3. Bill lag. How much time has passed between the date of service and when the claim was submitted? You should strive to bill all services within one to two days from the date of service. Best practices for faster reimbursements require daily processing of insurance claims.
TIP: Check for appointments that have no charges entered. Determine your charge lag by running a report to compare the date of service to the date charges were entered. Ideally, the lag should be zero.
4. Claim denials. The denial rate at a successful practice should be less than 2 percent, and clean claims are paramount to financial success. Following up on denials drains resources, puts added stress on your staff and ultimately hinders profitability. According to MGMA, the average cost to rework a single claim is $25.20. The key KPI here is the clean claim rate. When it’s high, fewer resources are needed and your staff has more time to focus on other tasks.
TIP: Your clean claim rate should be 96 percent or higher—running hand-in-hand with a 2 percent denial rate. If your first-pass rate is lower, start by analyzing the reasons for the denials.
5. Days in A/R. Ideally, you should be getting paid for your services in less than 30 days, though it does depend on your payer mix. Seventy percent of a practice’s receivables should fall into the 30-day bucket. If that portion of open A/R is smaller, it could indicate poor collection practices, a higher-than-normal denial rate, slow payers, or the fact that your practice isn’t collecting payment at the time of service.
TIP: Once a patient balance is 90 days past due, you’re chances of collecting that balance are less than 30 percent. A thorough review is certainly warranted if over 15 percent of your A/R exceeds 120 days.
The best way to track and monitor KPIs and practice metrics is by utilizing a dashboard that provides a real-time reporting tool. This ensures that KPIs are front of mind and relevant to your users. Dashboards can connect multiple data sources and make easy-to-interpret information easily visible.
If you’re looking for the right solution for your practice, please contact AssuranceMD to schedule a consultation.