5 Things To Know About Revenue Cycle Management & Medical Billing Key Metrics

Are you a medical billing company looking for effective ways to increase revenue?

Are you a stake holder in a revenue cycle process looking for metrics to reduce your AR?

This blog will definitely help you to get to the bottom of key metrics to be followed in revenue cycle process.

What gets measured gets improved.”

The late, legendary management expert Peter Drucker once famously said, " If you can't measure it, You can't manage it"

cash flow is just one factor in the financial health of a medical practice.

also there are few other metrics which should be followed when evaluating a practice's revenue cycle.

Metric 1:

First Pass resolution rate:

What it is?

The first-pass resolution rate (FPRR) is the share of a practice’s claims that get paid on first submission
FPRR is a reflection of the effectiveness of your revenue cycle management process.

from pre-visit processes like verifying insurance eligibility, adding required authorizations, and maintaining accurate patient demographics to post-visit tasks like coding and billing.

Getting it right the first time is critical to maximizing both efficiency and profitability


Total Number of Claims Paid / Total Number of Claims Submitted (for a given period of time)


FPRR should be 90% or above

Metric 2:


What It Is?

Days in Accounts Receivable (A/R) represents the average number of days it takes a practice to get paid.

The lower the number, the faster a practice is obtaining payment on average Also to providing insight into the efficiency of your revenue cycle management processes, monitoring this metric can help you unearth factors hurting your finances.


There are several ways to calculate this, but the industry standard is

(Total Current Receivables – Credits) / Average Daily Gross Charge Amount.


Days in A/R should stay below 50 days at minimum, but should generally be more in the 30-40 day range.

Metric 3:


What It Is?

Accounts Receivable (A/R) is generally grouped into aging buckets based on 30-day increments of elapsed time (30, 60, 90, 120 days).

All A/R aged over 120 days falls in the inclusive A/R >120 day bucket.


Dollar Value of A/R >120 Days / Dollar Value of Total A/R

In addition to providing insight into the efficiency of your revenue cycle management processes, monitoring this metric can help you unearth factors hurting your finances.

For example, when assessing the cause of an increase, you may spot a problem with a certain payer and can then work to resolve it quickly.


What It Is?

The net collection rate is the percentage of total potential reimbursement collected out of the total allowed amount.

It is also commonly referred to as the “adjusted collection rate".


(Payments - Credits) / (Charges – Contractual Adjustments)

Benchmark: Your net collection rate should be above 95%

This metric lets you assess your practice’s effectiveness when all is said and done (i.e., claims have been submitted, denials processed, patients billed).
It tells you objectively the share of the revenue your practice deserved, but left on the table.
The lost opportunity reflects factors within your practice’s control (e.g., untimely filing) and others beyond its control (e.g., uncollectable debt).

Weak ongoing net collection rates may compel practices to replace staff, revamp processes, invest in new tools or outsource revenue cycle management to increase profitability

Metric 5:


What It Is?

This is the average amount a practice collects per encounter.

Total Reimbursement / # of Encounters in a Given Time Period


Due to variation across specialties, there is no universal industry benchmark for this metric

When benchmarked within a specialty, this metric gives practices a sense of whether they’re performing well or could realistically be bringing in more money.

When tracked over time and compared with historical practice results, it provides a simple, yet powerful gauge of whether your practice is trending in a positive or negative direction, so if negative, your practice must take steps to get back on track


The above metrics are critical performance indicators, empowering practices with the visibility necessary to gain control over their operations and profitability.

While insightful on their own, these metrics are most valuable when analyzed in context, over time and against relevant benchmarks.

Internal benchmarking should include comparisons with historical results for comparable time periods and comparisons with pre-established practice targets.
External benchmarking should include comparisons with industry standards, along with specialty-specific standards.
When it comes to data, less can be more when you focus on tracking, understanding and improving the vital metrics that tell you the most about your revenue cycle.

If your practice doesn’t have clearly defined key performance indicators, it will be difficult to gauge results and raise your practice’s profitability in the long-term