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How can you evaluate the performance of a revenue cycle management partner?

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Revenue cycle management (RCM) is a crucial function for any healthcare practice, as it involves the processes of billing, collecting, and reconciling payments from patients and payers. However, managing the revenue cycle can be challenging, time-consuming, and costly, especially with the increasing complexity of coding, compliance, and reimbursement rules. That's why many practices choose to outsource or partner with a RCM service provider, who can handle the tasks of coding, claim submission, denial management, payment posting, and patient billing on their behalf.

However, not all RCM partners are created equal, and some may deliver better results than others. How can you evaluate the performance of a RCM partner and ensure that they are meeting your expectations and goals? Here are some key metrics and indicators that you should track and review regularly with your RCM partner.

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Muhammad Usama

Medical Billing and AR Manager | Credentialing | CPC and CPB Aspirant | RCM Trainer

1 Net collection rate

The net collection rate (NCR) is the percentage of the total amount of money that your practice is owed that you actually collect. It reflects the effectiveness of your RCM partner in submitting accurate and timely claims, resolving denials, and collecting from patients. A higher NCR means that you are losing less revenue to write-offs, adjustments, and bad debt. The industry benchmark for NCR is around 95%, but you should aim for a higher rate if possible.

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Muhammad Usama

Medical Billing and AR Manager | Credentialing | CPC and CPB Aspirant | RCM Trainer
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There are some CPT codes meant to be adjusted/write off because they serve the purpose of reporting only. There are different incentive programs which reimburse those reporting codes annually or quarterly. When we talk about NCR, it all depends on Medical Coding accuracy. If the claims are getting paid in first claim submission without any denials/rejections then NCR becomes directly proportional to first clean claim submission. In my experience, I have managed the NCR to be more than 99%. And it is very much possible if you are expert at Medical Coding, and sufficient knowledge of use of modifiers.

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2 Days in accounts receivable

Days in accounts receivable (DAR) is the average number of days it takes for your practice to receive payment from the date of service. It measures the efficiency of your RCM partner in processing and collecting claims. A lower DAR means that you are receiving your revenue faster and improving your cash flow. The industry benchmark for DAR is around 40 days, but you should strive for a lower number if possible.

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Muhammad Usama

Medical Billing and AR Manager | Credentialing | CPC and CPB Aspirant | RCM Trainer
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Any claims sitting in 90 and 120+ bucket is a red signal for the practice. That means revenue flow wasn't good and due to it, A/R balance is high. My benchmark is just 30 days except for Workers Compensation and No fault claims because they take some time.

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3 Denial rate

The denial rate is the percentage of claims that are rejected or denied by payers for various reasons, such as coding errors, missing information, eligibility issues, or policy violations. It indicates the quality of your RCM partner's coding and claim submission practices. A lower denial rate means that you are avoiding unnecessary delays, rework, and revenue loss. The industry benchmark for denial rate is around 10%, but you should aim for a lower rate if possible.

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Muhammad Usama

Medical Billing and AR Manager | Credentialing | CPC and CPB Aspirant | RCM Trainer
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Denial rate is something I am expert at. I have managed 0 to 1% denial while handling more than 13 practices at a single time. Again, it all depends on Medical Coding Accuracy and payment in first claim submission.

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4 First-pass resolution rate

The first-pass resolution rate (FPRR) is the percentage of claims that are paid on the first submission without any denials, rejections, or appeals. It shows the accuracy and completeness of your RCM partner's coding and claim submission practices. A higher FPRR means that you are reducing the need for follow-up, correction, and resubmission of claims, and speeding up your revenue cycle. The industry benchmark for FPRR is around 90%, but you should aim for a higher rate if possible.

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Muhammad Usama

Medical Billing and AR Manager | Credentialing | CPC and CPB Aspirant | RCM Trainer
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Now that is the same thing. If you are expert at Medical Coding, sufficient knowledge of NCCI edits and Coding as per LCD/NCD, and if you know the correct use of modifiers, and if there is some injection code and NDC used is FDA approved, then reimbursement will come all the way in very first claim submission.

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5 Patient satisfaction

Patient satisfaction is the degree to which your patients are happy with the quality of care and service they receive from your practice, including the billing and payment process. It reflects the professionalism and responsiveness of your RCM partner's patient billing and communication practices. A higher patient satisfaction means that you are enhancing your reputation, loyalty, and referrals. You can measure patient satisfaction by using surveys, feedback forms, online reviews, or social media comments.

By tracking and reviewing these metrics and indicators, you can evaluate the performance of your RCM partner and identify areas of improvement or concern. You can also use them to set goals and benchmarks, and to compare your results with industry standards or best practices. By doing so, you can ensure that your RCM partner is delivering value and quality to your practice and your patients.

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Muhammad Usama

Medical Billing and AR Manager | Credentialing | CPC and CPB Aspirant | RCM Trainer
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Relationship with patient is a key to lessen the Patient A/R. You know you only bill the patient responsibility to the patient if patient is covered by some insurance. Explaining the bill to patient helps in lessening of patient A/R. Google reviews and other review platforms provide the some information regarding patient experience with the doctor and billing company.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you evaluate the performance of a revenue cycle management partner?

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2

3

4

5

6

1 Net collection rate

2 Days in accounts receivable

3 Denial rate

4 First-pass resolution rate

5 Patient satisfaction

6 Here’s what else to consider

Practice Management

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How can you evaluate the performance of a revenue cycle management partner?

1

2

3

4

5

6

1 Net collection rate

2 Days in accounts receivable

3 Denial rate

4 First-pass resolution rate

5 Patient satisfaction

6 Here’s what else to consider

Practice Management

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