Metrics That Matter, Period or Question Mark
With more data capability comes more questions in revenue cycle operations and the interest in revenue cycle data continues to explode, taking exciting new turns into conversations many of us are fairly new in navigating. Over the last several years, data capability and stake holder interest has left revenue cycle leaders questioning their tried and true measures of performance as clinicians, operations and finance counterparts take a much needed place in making sense of them all. Along the way, and I have witnessed this many times over now, revenue cycle KPIs have somehow morphed from performance indicators, early warnings of problems and even what defined good quality into new territory of a cut to the chase cash story. Oh, if revenue cycle operations were only that simple!
Cash is King
Claim payment is the ultimate goal of any revenue cycle operation. Conversely, being able to explain why payment wasn't made is equally important. My career has long practiced by the mantra that a revenue cycle leaders role is to get paid quickly, get paid accurately and, when payment wasn't made, what can be done to avoid it in the future. No billing operation is going to retain 100% of revenue but there is always a lesson to be learned and tracking what matters gives us the leads we need.
What Does Matter
Production Standards Matter - Even Starbucks needs to gauge how many cars they can get through the drive through in an hour and you need to know the production ability and expectation of every step of your claim journey. Where RCM leaders make mistakes in production measures is to use them for performance reasons. However, simply put, you need to know the most efficient way to progress a claim in its journey, how many claims have to move through that step and assign it a turn around time to meet your claim demand. Teams feel overworked and make errors when they cannot keep up with the demand of the work or systems and processes have overcomplicated a step in the claim journey. The truth is told in regular work observations and setting realistic throughput measures. You will never know what you need if you don't know how much you have.
Where You Have Delays Matter - DNFB, charge lag, unbilled, unsigned notes, unfinalized and even late charges - any place a claim is in holding for the next step must be quantified in volume and dollars. This is especially important if your billing system ages your A/R on date of service and not date billed.
Where You Collect Cash Matters - Time of service collections, payments from statements or over the phone and collection agency payments tell the story of when you collect patient cash to drive better patient A/R processes and minimize bad debt write off and costly statement expenses.
Claim Accuracy Matters - Clean claim rate and payer rejection rate are your first warning of revenue leakage and your claim edits deserve a second look when you see the same reasons repeatedly. It is usually the first indicator of credentialing issues as well. It is always better to catch issues before they get into the vicious denial cycle.
How Long To Pay Matters - Days in A/R, aging by financial class and dollars / percentage > 90 days is always going to matter. I could even make an argument in present day that A/R > 60 days aging deserves far more attention and should be the new standard. With tightening timely filing windows and a Medicare population now > 50% enrolled in an MA plan, day 90 is just too late.
Informational Denials Matter - Payers will keep requesting records and revenue cycle operations will keep feeling helpless until they start tracking them. Carve them out but do not suppress them from your denial data. Unreasonable informational denial rates are great ammunition in contracting conversations.
Fatal Denials & Net Collections Ratio Matters - Don't chase a clearinghouse denial rate, track down what happens in your billing system that led to a write off. Tracking a net collections rate is a great indicator of preventable denials and non contractual write offs that can drive true change and RCM improvements.
Emerging Metrics That Matter
Cost to Collect - Every revenue cycle leader should set as a personal goal not only to know their cost to collect but use it as a guide to improve it every year. We can't be narrow minded in solutions when healthcare administration costs continue to increase and we must be mindful that healthcare dollars are best spent in patient care functions.
Claim Line Item Denials - A claim was partially paid, great. What about the rest of it? Claim line item denials are not underpayments and they are much harder to find. Devising a system that routinely reviews adjustments for non covered charges is critical to minimizing revenue leakage.
Payer Adherence to Contracted Rates - Fee schedule mishaps don't just happen when rates are updated. It is estimated up to 7% of all revenue is lost each year to underpayments in healthcare (MGMA 01/2024). Investing in a system to identify these is typically a very easy business case to make.
Patient Access Metrics - Insurance verification, financial clearance, authorization rates - measures typically associated as operations metrics - are more important than ever to revenue cycle leaders. If you have heard the phrase "how you start something is how you will end it", well, dirty data in usually means no cash out.
Conclusion
Revenue cycle management has become a complex claim journey that passes through many hands and places long before payment can even be determined let alone made. It is deserving of tracking and visibility in a straight forward manner that every stakeholder can understand. A revenue cycle leaders most important position with data is to tell the claim journey story. It is to visualize the data and speak confidently to every step and why it matters in the collection cycle. Doing so successfully builds trust in our leadership and the teams we are proud to call our own.
Revenue Cycle Expert, Global Delivery, Revenue Optimization, Purpose Driven Leader, Community Volunteer. Author of The Revenue Cycle Run, a blog dedicated to the profession of revenue cycle leaders