Bill Sample / December 9, 2018 / Mabel Cooke
Useful metrics must be comprehensive and simple. They must combine both complete end-to-end processes and their individual components. Metrics must be used consistently over time and compared to standards. Obviously different standards apply to different medical specialties patient demographics payers and samples of CPT codes. Medical billing metrics typically include compliance cash balances charges accounts receivable and collection ratios to help monitor cash flow. This article focuses on performance metrics. For discussion of compliance program see companion article on Medical Billing Compliance. Collection Ratios Traditional metrics include gross and net collection ratios. Both metrics are subjective to individual practice because they compare (often arbitrary) charges to (allowed) payments.
When we started we used a very simple contract that really didnt cover much at all. When situations arose that were problems our contract was no help. We had to re-write it once we had been in the business for a while and knew what needed to be covered. So where does a new billing service start when they havent been in business long? Its hard to write a contract covering all areas and what to do when you havent experienced it yet. Most new billing services are working on limited capital and dont like to spend money on a lawyer writing a contract for them. Unfortunately many new services cut corners here to save money but thats not a good idea. Your contract should be at least looked over by a lawyer if not written by one. If possible you should try to find a general practice attorney who specializes in contracts.
Net collection rate is defined as a ratio of Total Collections and Total Charges less Adjustments. Gross collection rate is defined as a ratio of Total Collections to Total Charges only.) According to Medical Group Management Association (MGMA) 1998 Cost Survey adjusted fee-for-service collections (net collections) for family practices in 1997 averaged 98.65 percent. A declining net collection ratio may be symptomatic of increased contractual write-offs or insufficient number of denial appeals. This metric is especially useful in the absence of modern computer technology when comparison of every payment to allowed amount is impossible or when appeal process of denials is too expensive. Otherwise the use of charges in defining gross and net collection metrics precludes them from productive discovery of process improvement opportunities.