Achieve Greater Financial Control by knowing how to calculate your Key Performance Indicators and what they mean.

1. The Power of Key
Performance Indicators
Know your KPIs
Patti M. Peets , Director RCM Services

2. Why do need to know your KPIs?
Image: www.iconshut.com
―If you can't measure it,
you can't improve it.‖
- Peter Drucker

3. Reports Needed to Calculate KPIs
Reimbursement Analysis – 12 month period
• By Date of Service *
• By Payer Group (Financial Class)
Transaction Summary Report – 12 month period
• By effective date *
• By Payer Group (Financial Class)
Accounts Receivable Aging
• Total A/R broken into aging buckets *
• By Payer Group (Financial Class)
• By Responsibility (Insurance vs Patient)
* minimum information needed for trending and benchmarks

4. A/R Over 120
• Total Accounts Receivable Over 120
• Patient A/R Over 120
Days in A/R
Reimbursement Rates
• Gross Collection Rate
• Revenue Realization Rate
• Net Collection Rate
Average Reimbursement per Encounter
First Pass Resolution Rates
Denial Rates
Definition: Metrics that can help you determine whether your revenue
management cycle processes are efficient and effective
What are Key Performance Indicators?

5. A/R > 120 - KPI
• Accounts Receivable (A/R) is generally grouped into aging buckets based on 30-day increments of
elapsed time (30, 60, 90, 120 days).
• Total A/R that falls into the inclusive A/R>120 bucket is the KPI we are looking for.
• Benchmark: Less than 25% of your A/R should be in the >120 days bucket.
• Benchmarks exist per specialty. Know your specialty benchmark.
• The percentage of accounts receivable greater than 120 days old (A/R>120) is a measure of a
practice’s ability to obtain timely reimbursement.
• Identify what your 120+ is made of.
• By Payer Group or Financial Class
• Uncollectable A/R?
• What are your write-off policies, insurance follow-up policies?
• What do your denials look like and the processes you follow to work denials?
• Patient responsibility?
• What are your processes for collecting co-pay, eligibility verification, pre-authorization
processes?
• Are you looking at how much of deductible has been met and collecting this?
• How many statements are you sending out for a patient balance?
DEFINITION: Total amount owed to practice for services rendered either by 3rd party
insurance or patients that is 120 days old or older

6. A/R > 120 - Calculating
EXAMPLE:
• Total A/R = $538,874
• A/R > 120 Days = $266,275
• $266,275 / $538,874 = 49%
CALCULATION: Dollar Value of A/R >120 Days / Dollar Value of Total A/R
Practice A/R 0-120 Over 120 Balance
No Unapplied Amts $272,599.33 $266,275.16 $538,874.49
Percentages 50.6% 49.4% 100%
A/R 0-120 Over 120 Balance
Benchmark $425,710.85 $113,163.64 $538,874.49
Percentages 79.0% 21.0% 100% $0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
A/R > 120 Days Compared to
Benchmark
Practice A/R
Benchmark
Benchmarking on A/R > 120
21% of A/R > 120 is benchmark for
this example

7. A/R > 120 - Impact
If the A/R over 120 is insurance
• Timely filing risk
• Indicates insurance is not being followed-up in timely manner
• Indicates insurance denials may not be worked effectively
• MGMA states 25% of denials and no-response claims are never
If the A/R over 120 is patient – bad news
Consider this – you have 21% chance of collecting money from patients if
you let the patient balance reach 120 days old
Impact of Patient A/R>120
Patient A/R Over 120 364,130.90$
Patient A/R 91-120 21,867.08$
Total 385,997.98$
Probable LEAK 302,970.37$
**79% of Patient A/R over 120 never collected
**70% of Patient A/R over 90 not likely to pay
Is money lost?
No but possible
Is money lost?
No but probable
Impact of A/R over 120 Days
Current A/R Over 120 381,073.44$
Benchmark A/R >120 55,367.14$
Difference 325,706.30$
At NET 146,567.84$
EXAMPLE:
EXAMPLE:

8. Days in A/R - KPI
• Days in accounts receivable (A/R) is perhaps the single most important
revenue cycle metric because it tells a practice the number of days that money
owed remains unpaid.
• The lower the number, the faster a practice is obtaining payment on average.
• Days in A/R should stay below 50 days at minimum, but should generally be
more in the 30-40 day range
• Benchmarks for Specialty exist
CAUTION: Low Days in A/R doesn’t necessarily mean you are collecting all
collectible money. What if you are writing off collectible money because it went
uncollected? Your Days in A/R may look great but did you collect everything that
could have been collected?
DEFINITION: Average number of days it takes a practice to get paid

9. Days in A/R - Calculating
STEP 1: Determine your total current receivables, then subtract any credits. Credits are
funds owed by the practice to others. They offset receivables; therefore, you must subtract
credits from receivables.
STEP 2: Determine your average daily charge amount by dividing total gross charges for
the last 12 months by 365 days
STEP 3: Divide the total from Step 1 (receivables) by the total from Step 2 (charge amount)
CALCULATION: Total Receivables ÷ (Average Daily Charge Amount) = Days
in A/R
EXAMPLE:
Total Billed Charges (12 months) = $18,000,000
Total Accounts Receivable = $2,000,000
$18,000,000 ÷ 365 = $49,315.10 (Average Daily Charge Amount)
$2,000,000 ÷ $49,315.10 = 41 Days in A/R

10. Days in A/R - Impact
• Delayed money in door
• Days in A/R by Payer can identify slow to pay carriers
• Indicates poor revenue cycle management processes overall
- Charge lag, timely filing, lack of follow-up, lack of front-end processes to
collect, verify, pre-cert., etc.
• Does this mean $202,629 from example is money that is lost? NO
• It means there is an opportunity to get $202,629 in the door much faster and
avoid putting that money at risk of not being collected in a timely manner
Impact of Days in A/R
1 Day of charges $49,315.10
Days in A/R 41
Benchmark 31
Current A/R $2,000,000.00
Total A/R at Benchmark $1,528,768.10
Difference $471,231.90
At Net $202,629.72
EXAMPLE:

11. Additional Tips on Days in A/R
Collection accounts—Accounts sent to a collection agency are often written off
the current receivables. As a result, they are not part of the days in A/R equation.
Sending accounts to collections may improve days in A/R, but camouflage deeper
issues.
TIP: Calculate days in A/R with and without accounts sent to collections to see a
true picture of the situation.
Credit balances—They offset receivables; therefore, you must subtract credits
from receivables.
TIP: Monitor these statistics separately.

12. Reimbursement Rates
• GCR (Gross Collection Rate) = Payments / Charges
• RRR (Revenue Realization Rate) = Payments + Adjustments / Charges
• NCR (Net Collection Rate) = Payments / Charges - Contractual Adjustments
Reimbursement Analysis Report
• Run by DOS – Payment and Adjustments tied to charges
• Run for 12 month period going back at least 90 days
• Adjustments (Insurance Adjustments and Other Adjustments)
• Payments (Insurance Payments and Patient Payments)
• Number of Encounters
• Example: 02/01/2014 – 01/30/2015 (90 days back)
• Example: 01/01/2014 – 12/31/2014 (120 days back)

13. Reimbursement Analysis Report
Example:
From This Report
• Gross Collection Rates per month and average
• Revenue Realization Rate per month and average
• Net Collection Rate per month and average
• Average Reimbursement per Encounter per month and average
DOS Encounters Billed Charges
Insurance
Payments
Patient
Payments Total Payments
Insurance
Adjustments
Patient
Adjustments
Total
Adjustments
2013-10 448 353,150.09$ 111,148.79$ 12,654.09$ 123,802.88$ 197,342.19$ 20,965.30$ 218,307.49$
2013-11 330 251,696.74$ 63,386.39$ 12,913.30$ 76,299.69$ 150,742.21$ 8,524.71$ 159,266.92$
2013-12 319 214,231.43$ 51,642.03$ 15,470.74$ 67,112.77$ 102,260.85$ 30,786.80$ 133,047.65$
2014-01 300 281,597.15$ 73,401.32$ 11,002.32$ 84,403.64$ 172,286.56$ 17,773.27$ 190,059.83$
2014-02 243 175,488.68$ 41,801.07$ 10,039.32$ 51,840.39$ 99,205.09$ 18,719.99$ 117,925.08$
2014-03 296 349,391.93$ 63,490.07$ 17,369.53$ 80,859.60$ 230,861.22$ 9,461.61$ 240,322.83$
2014-04 323 356,448.26$ 97,308.94$ 17,017.31$ 114,326.25$ 205,994.15$ 26,296.37$ 232,290.52$
2014-05 213 193,886.49$ 45,520.58$ 14,722.31$ 60,242.89$ 111,462.93$ 7,413.42$ 118,876.35$
2014-06 265 263,173.64$ 68,334.79$ 11,008.87$ 79,343.66$ 157,246.01$ 10,023.20$ 167,269.21$
2014-07 257 230,667.76$ 49,410.85$ 26,983.96$ 76,394.81$ 115,126.61$ 18,369.83$ 133,496.44$
2014-08 253 337,024.07$ 68,373.19$ 8,266.12$ 76,639.31$ 197,462.91$ 29,507.48$ 226,970.39$
2014-09 216 246,109.92$ 59,623.24$ 6,628.79$ 66,252.03$ 161,357.49$ 5,239.87$ 166,597.36$
Totals 3463 3,252,866.16$ 793,441.26$ 164,076.66$ 957,517.92$ 1,901,348.22$ 203,081.85$ 2,104,430.07$

14. Gross Collection Rate - KPI
**There are benchmarks per specialty.
Fee schedules can impact this greatly
• Very high fee schedules produce lower GCR
• Really low rates – fee schedules may need to be reviewed
- 120-130% of Medicare fee schedules?
• Really high rates – fee schedules may need to be reviewed
- Are you charging less than what is allowed?
- If high variance from benchmark – review GCR by payer
• Trending is good to look at GCR month after month
DEFINITION: Percentage of Gross Charges Collected
Indicator PSR Range **
Annual Gross Charges * $1,864,217 - 2,446,785
Gross Collections Percentage 45 - 49
Net Collection Percentage 98.6 - 99.6

15. Gross Collection Rate - Calculating
EXAMPLE:
• Total Billed Charges (12 months) = $7,213,597
• Total Payments (12 months) = $3,168,150
• $3,168,150 / $7,213,597 = 43.92% Gross Collection Rate
CALCULATION: GCR (Gross Collection Rate) = Payments / Charges
Charges Total Payments Contractual Adj Manual Adj GCR
7,213,597.62$ 3,168,150.98$ 3,575,354.27$ 138,945.37$ 43.92%
January 2014 - December 2014

16. • Formula: (Payments + Adjustments) Divided by Charges
• Caution: If using ALL Adjustments vs Contractual Adjustments in this formula
• If number is high – Ideal Scenario
• Practice is billing out timely
• Claims are adjudicated (contractual adjustments are made)
• Patient balances are all collected
• If number is high – Not so Ideal Scenario
• Practice is billing out timely
• Claims are adjudicated (contractual adjustments are made)
• Patient balances are NOT collected (other adjustments are made)
• If number is high – Not good at all Scenario
• Practice is billing out timely
• Claims are adjudicated and denied (contractual adjustments are disguised or
adjusted off due to uncollectible reasons)
• Patient balances are NOT collected (patient adjustments are made)
DEFINITION: Percentage of Charges that were collected or adjusted off
Revenue Realization Rate - KPI

17. Net Collection Rate - KPI
Cash collections divided by net charges (charge value)
• Net charges are the difference between gross charges and required government and third party
adjustments.
This is using Contractual Adjustments only
If number is high
• Practice is billing out timely
• Claims are adjudicated (contractual adjustments are made)
• Patient balances are all collected (not a lot of non-contractual adjustments)
If number is low
• Practice is not billing out timely and/or claims are not being followed-up
• Balances are not being collected after payer adjudication
• Money is not being collected
CAUTION: All contractual adjustments may not be in system – (Back up 90 days) – all claims should be
adjudicated by then. Compare Contractual Adjustment percentages to fee schedules. Key is getting Allowable
Amounts for your charge value. Check your Contractual Adjustments and if you are in line – this represents the
REAL NUMBER.
DEFINITION: The net collection rate represents the percentage of reimbursement collected
from the total amount allowed based on contractual agreements and other payments (i.e., what
you collected versus what you could have/should have collected)

18. NCR and RRR - Calculating
EXAMPLE (NCR and RRR):
• Total Billed Charges (12 months) = $7,213,597
• Total Contractual Adj. (12 months) = $3,675,886
• Total Adj. including non-contractual (12 months) = $3,814,832
• Total Payments (12 months) = $3,168,150
• $3,168,150 / ($7,213,597 - $3,675,886) = 89.55% NCR (Net Collection Rate)
• ($3,168,150 + $3,814,832) / $7,213,597 = 96.80% RRR (Revenue Realization Rate)
CALCULATION:
NCR (Net Collection Rate) = (Payments ) / (Charges – Contractual Adjustments)
RRR (Revenue Realization Rate) = (Payments + Adjustments) / Charges
Charges Total Payments Contractual Adj Manual Adj GCR RRR NCR
7,213,597.62$ 3,168,150.98$ 3,675,886.97$ 138,945.37$ 43.92% 96.80% 89.55%
January 2014 - December 2014

19. Average Reimbursement per Encounter - KPI
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
EXAMPLES:
• Diversifying your patient or payer mix
• Improving collections – assess your current performance
• E&M Utilization review – assess your current performance
• Review fee schedules
DEFINITION: This is the average amount a practice collects per encounter

20. Average Reimbursement Encounter
EXAMPLE:
• Total Payments (12 months) = $957,517
• Total Encounters (12 months) = 3463
• Average Reimbursement per Encounter = $276.50
• $957,517 / 3463 = $276.50 Average Reimbursement per Encounter
CALCULATION: Total Encounters (12 months) / Total Payments (12 months)
Benchmarking on Average
Reimbursement per Encounter
Benchmark varies per specialty

21. First Pass Resolve Rate - KPI
• Practice wants this to be high.
• Less deals to work and less deals to follow up on if paid first time.
• 95% or higher is great
• Most systems don’t track this
MGMA states 25% of all claims not paid are never followed up on
Why are they not getting paid?
• What are the denial reasons and categories?
What are your processes?
• How do you follow up on delinquent claims?
• How do you check for under-payments even if you got paid?
• Who on your staff handles the follow-up process?
DEFINITION: Percent of claims that are successfully resolved on the initial
submission (e.g., paid or transferred to patient responsibility)
CALCULATION: Total claims submitted first pass / Total claims paid

22. Denial Rate - KPI
• Practice wants this to be low. Less denials to work. 4% or lower is great (benchmarks
are available)
• MGMA states 25% of denials are never paid.
• MGMA states cost to work denial is $49/claim.
Why are they getting denied?
• Eligibility Verification
• Authorizations
• Coding
• Enrollment/Credentialing
Process questions
• How do you work denied claims?
• Who on your staff works denials?
• How do you verify eligibility?
• Check-in processes?
DEFINITION: Percent of claims (both pended and denied) that require the
practice to perform back-end rework
Benchmarking on Denials
0.00%
5.00%
10.00%
15.00%
2014-12
DenialRate
Denial
Rate
Benchm
ark
Financial Impact of Denials and No-Response
Impact of Denied and No-Response Claims
Charges Denied/No-response $834,600.00
25% (MGMA *RISK) 208,650.00$
Amount at RISK At Net 93,892.50$
GCR used to calculate At Net

23. Contact Information
Patti Peets | Director of Revenue Cycle Management
5200 Blue Lagoon Drive - Suite 900 Miami, FL 33126
direct: 305.265.4200 mobile: 601.214.1009 | main: 1.877.
342.7517
Patti Peets | Director of Revenue Cycle Management
Direct: 305.265.4200
Mobile: 601.214.1009
Email: ppeets@carecloud.com
Linkedin: https://www.linkedin.com/in/pattipeets