Healthcare RCM – Account Resolution KPIs

Categorized as Operations Tagged

Accounts are patient accounts. As a services company (which you are), you have accounts that you service and get paid on.

One of the first things that most finance leaders look at after taking over an account’s billing (we do the same as well) is to look at the A/R.

What’s A/R? Simple – how many patient accounts have you billed for (submitted claims for) and are waiting to get paid on. 

If you have not posted charges (claim) for a patent account, you will not make that a part of the A/R. 

Why?

Because you cannot get paid for something that you have not billed for.. Yet. That remains in the bucket of “Discharged Not Billed”.

Aged A/R as a percentage of total billed A/R

Here, you are trying to measure your effectiveness in collecting A/R.

Your practice management system will typically show you aging buckets of 0-30, 31-60, 61-90, 91-120, > 120 days.

You will look at each bucket. But for this metric, you are looking at the total A/R as well (sum of all those buckets).

As an example, let’s say that the total A/R you are due to be paid is $10,000.

Out of ths $10,000, the breakdown might be:

  • A/R for 0-30 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for 31-60 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for 61-90 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for 91-120 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for  > 120 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • Sum of all %s = 100%.

Points of Clarification:

Make sure you are adding ALL the aging buckets (0-30, 31-60, 61-90, 91-120, > 120 days) from the date of service or discharge.

Make sure that your aging buckets sum up to 100% (of course).

You are only including “active billed accounts” and not the ones where you have credit balance accounts. 

Do include recurring accounts that are open.

Make sure you include collectibles that are not classified as bad debt accounts yet (you might have outsourced these to a third party as well).

If you have “not final” accounts, do not include them – this includes anything your medical billing team has not yet billed to the payer or patient because these are NOT part of billed accounts receivables.

Make sure that you are adding up ALL A/R across ALL payers.

Trend analysis graph

Numbers are great but visuals help a LOT. E.g. see below

See the > 120 days bucket?

That’s a red flag.

Aged A/R as a percentage of billed A/R by Payer group

This is very similar to the above, but this shows you the trend analysis of the above data by payer in any reporting month.

This truly helps you to identify issues with specific payers. Some payers are good at reimbursements and some are not. You can identify the problematic payers and group them separately. You might want to assign a separate person or team to that specific payer. This team will start learning the tips and tricks of working with that payer and will guide the frontend revenue cycle management team (and you) better.

As an example, let’s say that your total A/R is $20,000.

Out of this, let’s say that Healthfirst and BCBS owe you $10K each. Does this give you enough actionable intelligence? Nope!

Let’s say that the total A/R you are due to be paid by Healthfirst is $10,000.

Out of ths $10,000, the breakdown might be:

  • A/R for 0-30 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for 31-60 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for 61-90 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for 91-120 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for  > 120 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • Sum of all %s = 100%.

Let’s say the next payer is BCBS (Blue cross blue shield). They owe you $10,000 as well. However, their breakdown might be:

  • A/R for 0-30 days – $1,000. I.e. 10% of total A/R ($1,000/$10,000 = 10%)
  • A/R for 31-60 days – $2,000. I.e. 20% of total A/R ($2,000/$10,000 = 20%)
  • A/R for 61-90 days – $3,000. I.e. 20% of total A/R ($3,000/$10,000 = 30%)
  • A/R for 91-120 days – $1,000. I.e. 20% of total A/R ($1,000/$10,000 = 10%)
  • A/R for  > 120 days – $4,000. I.e. 20% of total A/R ($4,000/$10,000 = 40%)
  • Sum of all %s = 100%.

This kind of analysis tells you that there’s a problem in the >120 days aged bucket for BCBS that needs to be addressed asap because this is already very old and the chances of recovering the same are less.

Trend analysis graph

Numbers are great but visuals help a LOT. 

You should also view things by first vs last billed date. E.g.

Remittance denial rate

You NEED to know the % of claims being denied by your payers. This will surface MANY cracks in your medical practice’s compliance with payer requirements.

For any given month you are simply trying to find the rate of denial.

As an example, if your team submitted $10,000 in claims and got denied for $2,000 of those. Your denial rate for that month would be 20%.

Why do you want to plot it month over month? 

To see the trend. If it is trending down, your team is getting better at revenue cycle management. If your team swears that they have been fixing all preventable denials and the trend line is still going up, you realize that there is an issue on the payer’s side.

As an FYI, payers are not always correct. Their staff makes mistakes as well. 

Do keep that in mind.

To calculate this metric, follow this formula:

Total number of claims denied – this should be in your “Accounts Receivable”

Total number of claims remitted – this is really a sum of your 835 Files and/or Paper Remittance

Points of Clarification for this calculation:

Look at total claims adjudicated monthly at claim level. 

Make sure that you are defining “actionable denials”.

Why? Because your in-house or outsourced medical billing team can actually do something about it 🙂 That might end up in reimbursements!

Make sure you are only using those payments that have a denial code on the remittance advice.

Like we mentioned above – first and last submission dates. Take note of that and make sure you are including BOTH initial claim denials and subsequent appeal denial submissions.

You will notice many Zero payment accounts – include those.

You will also find claims that are partially paid. These accounts will typically contain a denial indicator. Include these as well.

Do NOT include denials where plans are denying due to non-covered services. There’s nothing “actionable” about it without fudging your claim.

Do not include Discharged Not Final Billed (DNFB) accounts.. I.e. where your medical billing department has not finalized the claim yet.

Do NOT include denials where the patient has the responsibility to pay.

Recovery Audit Contractor (RAC) recoupments should not be included either. BTW, Do you know how to review your Medicare remittance advice ?

Duplicate claims should not be included either.

“Shadow claims”, or “no pay” or “information only” claims that your billing department might have done/submitted.

For the total Number of Claims Remitted – your EPM will give you this. You can also look at all the 835 data submitted (or paper). Keep in mind that you are NOT including line items. Each claim has several line items. You need to include claims as a line item for this metric calculation.