Medical Billing KPIs and Metrics Every Practice Should Track

KPIs help measure and manage medical billing effectiveness. Benefits of consistent monitoring include:

• Identify high-level trends like rising claim denial rates.
• Enable data-driven process enhancement initiatives.
• Keep productivity and accuracy on track through metrics monitoring.
• Set performance goals and benchmarks for continuous improvement.
• Reduce revenue leakage by catching billing problems early.
• Assess vendor, staff, and system performance.
• Gain insights needed for strategic decisions on tools, training and growth.
• Support data-driven justification for added resources or technology investments.

These vital indicators help gauge the health of your billing operation:

1. Claim Denial Rate – Percentage of submitted claims denied. Goal: Minimize.
2. Days in A/R – Average number of days to collect on claims from date of service. Goal: Reduce.
3. First Pass Resolution – Percentage of claims that pay as billed without rejection or denial. Goal: Increase.
4. Clean Claim Rate – Percentage of claims sent that contain no errors. Goal: Maximize.
5. Bad Debt % – Uncollectible patient-owed amounts divided by total billed. Goal: Lower.
6. Revenue Impact of Denials – Total revenue not collected due to rejections and denials. Goal: Reduce.
7. Coder Productivity – Number of charts coded per hour/day. Goal: Increase.
8. Net Collection Rate – Revenue collected divided by total billed. Goal: Improve.

Beyond big picture KPIs, daily metrics provide ground-level insights:

1. Claims Submitted/Resolved Daily – Helps identify claim volumes to meet revenue goals.
2. Call Volume/Abandon Rates – Measures patient collections staff effectiveness.
3. Credentialing Status – Percentage of physicians properly enrolled with payers. Critical to prevent claim denials.
4. Claims Approaching Timely Filing Deadlines – Monitors stalled claims at risk of denial due to filing limits. Prompt follow up needed.
5. EOBs Entered Timely – Speed of payment posting impacts revenue cycles.
6. Patient Billing Metrics – Hours spent, calls made, cases resolved weekly.
7. Provider Documentation Delinquency – Indicates charts lacking coding details needed for clean claims.
8. Time Per Task – Coding, billing, follow ups, appeal preparation, etc. Identifies workflow inefficiencies.

Consistently measuring KPIs requires proper calculations

1. Claim Denial Rate = Claims Denied / Claims Submitted
2. Days in A/R = Total Outstanding A/R / (Net Charges/Per Day Average)
3. First Pass Resolution Rate = Clean Claims Paid / Total Claims Submitted
4. Clean Claims Rate = Clean Claims Sent / Total Claims
5. Bad Debt % = Bad Debt Charges / Gross Charges
6. Denial Impact = (Denied Charges $) x Collection Rate %
7. Coder Productivity = # Charts Coded / Hours Worked
8. Net Collection Rate = Total Collections / Total Charges

Once KPIs baselines are established after a few months of measuring, set reasonable improvement targets:

• Reduce average days in A/R from 45 to 40 days within 6 months.
• Increase clean claims rate from 85% to 90% in the next quarter.
• Cut denial rate from 10% to 8% by year end.
• Improve coder productivity from 65 to 75 charts daily by Q3.

Manually tracking metrics becomes quickly overwhelming. Leverage solutions that automate monitoring:

1. Practice Management (PM) or Billing Systems – Built-in PM reporting and dashboards centralize key metrics.
2. Business Intelligence – Custom dashboards can integrate data across multiple systems for a consolidated view.
3. Revenue Cycle Analytics Tools – Specialized platforms recognize billing metrics needed for managing workflows and cashflow.
4. Advanced Analytics – Using transparent algorithms and machine learning to detect patterns and predict future performance.

While goals vary between specialties, below provides general targets to aim for:

• First Pass Claims Resolution – 75-85%
• Claims Denial Rate – Under 8%
• Bad Debt Percent – Less than 6%
• Average Days in A/R – 45 or less
• Coder Productivity – 65-75 charts/day
• Clean Claims Rate – At least 90%
• Net Collection Rate – 92-98% range

Old school wall charts, spreadsheets and hand counts to gather metrics have major drawbacks:

• Data delays – Info is outdated by time it’s collected and circulated.
• Accuracy errors – Manual processes invite mistakes.
• Disconnected data – Information trapped in silos rather than integrated.
• Lack of drill-down capability – Hard to derive root causes.

Today’s analytics tools digitize tracking for real-time insights. Benefits include:

• Automated dashboards to view metrics at a glance.
• Data integration from multiple systems for complete perspective.
• Interactive graphs to easily filter, compare, and analyze.
• Scheduled reporting to distribute insights.
• Drill-down capability to pinpoint underlying factors driving trends.

Drilling into top-line KPIs reveals helpful details for improvement initiatives:

1. Denial Rates – Compare between payers, denial reasons, providers, coders, claim types, and service location.
2. Days in A/R – Breakdown average by payer, specialty, claim status, and providers.
3. Bad Debt – Analyze by payer class, patient age, location, providers, and reasons.
4. Clean Claims – Assess between coders, claim types, practices, and common errors flagged.

Metrics should be tailored and shared based on staff role:

1. Billing – Denial rates, first pass resolution, A/R days, coder productivity
2. Coding – Coding accuracy rate, coder productivity, compliance audit results
3. Leadership – Financial KPIs, denial impact on revenue, clean claim rates
4. Providers – Claims status, days in A/R, coding timeliness, patient coverage ratios
5. Front Desk – Patient collections, balance transfers to billing, eligibility verification compliance

Effective visuals make billing data easier to digest. Best practices include:

• Dashboards with high-level KPIs and drill-down options
• Trend graphs to quickly convey progress over time
• Charts comparing metrics across different subsets
• Color-coding and icons to denote good, fair and poor performance
• Automated scheduled reports delivered to stakeholders
• Short explanations to add context around trends