RCM Resources

[andrewallenbruce]

Incorporate previously created work:

• The Art of DAR
• KPI Guide: Days in AR
• KPI Guide: PARBX & BPI
• Shiny App 1
• Data Wrangling: EHR Healthcare Claims Data
• R Cookbook: Healthcare Revenue Cycle
• R Cookbook: Medical Billing
• Anscombe’s Quartet: Healthcare Edition
• R Cookbook: Aging of Accounts

[andrewallenbruce]

Rejection Rate

First Pass Pay Rate

Denial Rate

Average Days to Bill

Aging of Accounts

PARBx

BPI

Payer Mix

Payer mix is defined as the percentage of revenue coming from each type of contracted payer such as government-based insurance, commercial insurance, and self-paying individuals for a facility or provider. Because payers will pay for services at different rates, a shift in your patient population to a payer who generally pays less can have a substantial impact on your practice revenues. Monitor on a regular basis the percentage of services associated with each of your payers and verify a good payer mix that represents a strong revenue stream for the practice. Having a well-balanced mix decreases the control any one payer will have on your practice.

Payer mix should be monitored and reviewed in the interest of developing a marketing strategy to derive a different payer mix if need be. Marketing manifests itself in various ways for medical practices in the current payer market, including marketing strictly to third-party payers and, in some instances, marketing directly to business/industry or the patient.

Payer Mix Ratio

A detailed understanding of a practice’s payer mix is essential to achieving a comprehensive analysis of the entity’s broader financial stability, as well as being critical to ongoing financial management on behalf of the practice’s leadership. A typical payer mix ratio is based on Net Charges for a payer, divided by Total Net Charges for the practice.

Compensation Per wRVU Ratio

This ratio is often referred to as the conversion factor and is a key variable in wRVU productivity models. It is also used to gauge the appropriateness of a physician’s compensation in relation to benchmark data. For example, in private practice, assessing the compensation per wRVU ratio would indicate whether the physician was receiving a proper level of compensation at the respective level of productivity. If this is not the case, it would indicate that changes are likely necessary within the practice to realize more compensation for the same level of productivity. This would involve cost reductions, negotiating better payer contracts, etc. In a hospital employment setting, a higher conversion factor could indicate that a model may not be deemed to be within fair market value limitations. This is because it could be assumed that, for the physician’s level of productivity, he or she was receiving too much compensation.

Compensation to Collections

Similar to the above but it replaces wRVUs with collections. This ratio is very important in private practice, as it allows the practice to understand how much of each dollar received in collections gets taken home as cash compensation. A high compensation to collections ratio would indicate that the practice is good at managing its overhead. This ratio is also used in hospital employment settings, but to a lesser degree in terms of determining appropriate compensation (unless the model used is a percentage of collections model.) This places much more focus on wRVU-related metrics.

Days in AR

Net Collections Ratio

Measures how well a practice collects on Allowable Charges. It is the total payments received divided by the total charges, minus all write-offs and adjustments. Month-to-month, this percentage rate may change due to differences in timing between when charges are posted and when collections are received. For this reason, it is most beneficial to look at net collections rates over a 3-6-9-12 month rolling average. A collection ratio of 90% is not optimal, as this essentially means that for every dime coming in, only nine cents is actually collected, meaning AR is increasing and, as such, net working capital is decreasing.

Adjustments to Collections Ratio

Monitors the effect that adjustments are having on the Net Collections Ratio and Days in AR. Adjustments should be monitored by category (i.e., contractual adjustments, bad-debt write offs, small balance write-offs, etc.) to verify that money is not being written off unnecessarily.

RVUs Per Visit

Charges Per Visit

Charges Per RVU

Payment Per Visit

Payment Per RVU

New/Established Patient Count

AR Turnover Ratio

Also known as the Debtor’s Turnover Ratio, this is an efficiency ratio that measures a company's ability to collect revenue in a timely manner. It measures the number of times over a given period that a company collects its average accounts receivable balance.

AR Turnover in Days

Also known as Days in Sales Receivables, this is the average number of days that it takes a customer to pay the company for sales on credit.