The days in accounts receivable (DAR) measurement represents the length of time it takes, on average, for a claim to be paid. The industry benchmark most practices should strive for is 33 days. If a claim is tied up with payers, the practice isn’t receiving that money. As a result, cash flow decreases, as do opportunities to invest and earn interest.
Timely filing limits are also a DAR concern. Deadlines established by insurance carriers requiring that claims be filed within a certain period from the date of service are more favorable to the carriers than to providers. Once these deadlines have passed, it is often difficult to receive any payment for services rendered.
It is not uncommon for commercial carriers to require that claims be filed within 90 days of the date of service. While that timeframe may seem sufficient, the nuances of a busy practice can make these parameters challenging, especially without a solid RCM strategy that addresses DAR.
Maintaining a low DAR — preferably under 45 days — will ensure your practice’s financial health.
Clean claims ratio
Also known as the first-pass ratio, the clean claims ratio (CCR) is the percent of claims that are paid at first submission. A clean claim has never been rejected, does not have a preventable denial, has not been filed more than once and contains no errors. The perfect claim.
Most practices’ clean claim rate is in the 70-85 % range. If your CCR is above 90 %, then that’s a reflection of proper systems and effort in place to succeed. It’s important to identify your clean claims ratio to understand how much time practice staff is devoting to reworking denied claims and why claims require rework. Once you have this information, you can determine staffing needs, measure costs, and implement new processes to improve your clean claims forecast. More clean claims equal more money, faster.
Net collections ratio
The net collections ratio is the percentage of total potential reimbursement collected out of the total allowed amount. Denial rates, unreimbursed visits, and other factors affect this ratio.
An important distinction to be made is that your financial metrics should be calculated based on net collections, not gross charges. Net collections will help you measure what your organization can realistically receive in reimbursement, while gross charges are often unreliable.
The net collections ratio is critical because it represents the efficiency of the revenue cycle overall and is thus the ultimate indicator of success with collections. A large component of this figure is the ability to specifically manage patient collections, which are more difficult to collect due to the rise of high-deductible health plans.
To learn more about how Greenway Health can help your practice reach its revenue goals, click here.