Six Fundamental Revenue Cycle Metrics Management

Revenue cycle metrics management is important because it lets you keep track of claims processing, payment and revenue generation. If you do not want to lose revenue, it is essential to track revenue cycle metrics management metrics, as every dollar lost can cause more adverse impact than you expect.

1. Gross Collection Percentage:

This is the difference between the total income earned during a specific period, the net discounts, and the aggregate charges. Since every service is different, the figures of gross collection percentage of one service cannot be compared to another or even with another physician within the same practice as yours. Gross collection payment lets you monitor if your relative collections are improving over time.  Formula: [Total Payments – Refunds] / Total Charges

2. Net Collection Percentage:

The net collection percentage tells us the reimbursement collected as compared to the allowed amount based on a practice’s contractual obligations. This revenue metric is very useful as it tells how effectively a practice collects a legitimate reimbursement. You can calculate net collection percentage by deducting total receipts by refunds and dividing the answer by total charges deducted from Contractual Adjustments. Formula: [Total Receipts – Refunds] / [Total Charges – Contractual Adjustments]

3. Days in Receivables (Days in Accounts Receivable (A/R)):

This is one of the very important revenue cycle metrics that calculates the number of days money owned is unpaid. This is not difficult to calculate. You can do it by dividing the total accounts receivable by average daily charges. (Average daily charges= charges of 3 months/90 Days)

4. Percentage of A/R over 90 Days Old:

Claims should be collected as soon as possible because as they become old, it gets more difficult to collect them. Claims that have not been collected for over 90 days can cause problems with account management, which is the reason why it is better to go for 20 percent less of total A/R in the 90-day or older category. This can be calculated by dividing total receivables (less than 90 days) by the total A/R.

5. Work Relative Value Units (RVUs):

This tells us the relative amount of physician resources, work and expertise needed to provide services to patients.

6. Credit Balances:

Credit balances are often not calculated and reviewed by a number of practices. However, managers should review credit balances every now and then to avoid any complications or misunderstandings later.