Seven Billing Metrics That Matter
Key performance indicators (KPIs) your specialty practice should consistently track—and how to calculate them.
Every day, specialty practices generate a wealth of data—from the moment an appointment is scheduled to the time a claim is submitted and reimbursed. To ensure long-term financial stability and operational efficiency, it’s crucial to identify and regularly monitor the right KPIs. These insights can help you stay aligned with your revenue cycle goals and make informed decisions based on actionable data.
1. Percentage of Accounts Receivable (AR) Over 60 Days
Analyzing aging balances at 60, 90, and 120 days helps evaluate the overall health of your revenue cycle. A high percentage may point to inefficiencies that need immediate attention.
Formula:
% of AR > 60 Days = Total AR > 60 Days / Total AR (All Ages)
2. Days in AR
This metric shows the average number of days it takes to collect payment after a patient encounter. It helps you manage cash flow and plan for operational expenses.
To calculate, divide the total accounts receivable at month-end by your average daily charges (typically over a 90-day period). Monitoring this monthly allows you to detect and respond to payment delays early.
Formula:
Days in AR = Total AR / (Total Charges in
3. Collections Per Visit
This KPI measures the average revenue collected per patient visit. It provides insight into profitability by appointment type, payer mix, and helps optimize your scheduling strategy to focus on higher-yield services.
Formula:
Collections Per Visit = Total Payments / Total Visits (over a defined period)
4. First Pass Resolution Rate (FPRR)
FPRR reflects the percentage of claims paid upon first submission. A high rate indicates an efficient revenue cycle, while a low rate suggests systemic issues in claim processing or payer interactions.
Improving this metric may involve better claim scrubbers, automated rules engines, or partnering with a revenue cycle management provider experienced in reducing denials.
Formula:
FPRR = Claims Paid on First Submission / Total Claims Submitted
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5. Gross Collection Rate (GCR)
GCR evaluates how well your practice collects against total billed charges. A high GCR suggests alignment between your fee schedule and what payers reimburse. However, declines in GCR may signal write-offs, denials, underpayments, or collection gaps.It’s important to track this internally over time, as fee schedules vary significantly between practices.
Formula:
GCR = Total Payments / Total Charges × 100%
6. Net Collection Rate (NCR)
NCR measures how effectively you collect the revenue you’re contractually owed after allowable adjustments. It reflects losses due to late filings, denials, bad debt, and administrative errors.
Unlike GCR, this metric allows for benchmarking with similar practices and specialties to assess revenue cycle performance.
Formula:
NCR = (Total Payments / (Total Charges – Contractual Adjustments)) × 100%
7. Contractual Variance
Contractual variance identifies shortfalls between what you expected to collect (based on your payer agreements) and what you actually received. Often, underpayments result from incorrect billing practices or payer processing errors.
Having clear analytics in place helps identify and correct these discrepancies before they become a recurring issue.
Formula:
Contractual Variance = Contracted Rate – Allowed Amount on ERA
