As we turn the page on 2018, and look forward to the goals and expectations of a new year, many of us will establish resolutions to improve our fitness, diet, and overall personal health. This may include establishing a new exercise plan as well as scheduling preventive check-ups and implementing other wellness programs in our daily lives. We will make concerted efforts to more closely watch our weight, BMI, calorie intake, fitness activity, cholesterol, and the list goes on. This same strategy can be applied to your organization’s revenue cycle.
Below are five key performance indicators that you can monitor to ensure your revenue cycle is performing in accordance with your expectations.
A/R Aging > 90 days
Examine your third party payer A/R aged greater than 90 days from date of service. National benchmarks suggest this should be 15% or less. There could be some variability depending on your payer mix, but if this indicator is significantly greater than 15%, this may be indicative of a sluggish billing and collections process.
Staff performance and productivity
If there are personnel, staffing issues, or general performance concerns within any level of your revenue cycle, address it immediately. Often times, this type of personnel feedback is reviewed only annually, and in some cases, poor performance is tolerated for no good reason. Acknowledge that improvement plans, redesigned roles and responsibilities, or even personnel changes sometimes need to be made to improve results and morale. This extends into leadership roles and contracted vendors.
Cash to charge collections ratio
Review your collections a percentage of your billed charges. High charge months due to increased volumes should equate to increased cash collections in a subsequent period, but take a closer look to understand the collection percentage and not just the dollar amount. Additionally, examine the cash collections as percentage of the prior period’s billed charges to calculate a 30-day lag collection rate. Charge entry, coding, and billing backlogs, as well as staffing shortages can significantly impact your collections rate from month to month. Also, keep a close eye on changes in payer mix as this too, will affect the overall collection rate.
Some backlogs within the revenue cycle are inevitable, but they must be monitored and managed accordingly. Keeping these to a minimum and within reasonable ranges are critical to ensuring key performance indicators do not deteriorate. Backlogs related to charge entry, medical coding, claim submission, payment posting, and refunds are of great significance. Establish guard rails for these key tasks and monitor them closely.
Medical coding and documentation
The foundation of each encounter and claim submitted by your organization is the medical documentation and subsequent coding assignment. Changes in physician documentation habits, software upgrades, EHR templates, and coding personnel can impact your outcomes related to coding, and ultimately reimbursement and risk. Evaluate your processes and controls related to auditing medical documentation and coding assignment as well as ongoing provider and team member education to mitigate coding concerns and overall risk. Recurring chart audits can be a helpful tool to better manage potential errors.
Although there are many areas within a revenue cycle that need to be closely monitored, these are five indicators that can be included as part of a successful oversight program. Be committed to monitoring these and identifying potential improvement opportunities within your organization for a successful 2019.
To learn more or for more information, contact Adam Shewmaker, FHFMA, Director of Healthcare Consulting Services at Dean Dorton. firstname.lastname@example.org