ASCs that effectively implement processes to monitor and analyze key performance indicators (KPIs) strengthen their center's revenue cycle performance. This is made possible by recognizing problems that negatively affect revenue and profits. Once identified, ASCs can apply data-driven changes that stop and reverse negative trends.
This fifth and the penultimate article in a series about improving ASC KPIs focuses on percentage of collections for cases greater than 90 days, write-off percentages, and three related — and often overlooked — metrics: credit balance, refund trends, and collection agency referrals. Note: Access the previous article on clean claim percentage, denial rate, and denial reason trending.
Why you should monitor these KPIs
While percentage of collections for cases greater than 90 days is not a KPI typically tracked by ASCs, this metric has great value. Many centers — and some billing companies — will choose not to pursue collections for cases with outstanding payments greater than 90 days. The rationale: Labor-intensive work is often involved in achieving successful collections of such payments, so rather than continuing to work to address these factors and secure payment, it can be easier to ignore this collections bucket and focus on easier collections. The problem with this approach is that it leaves potential cash — possibly significant amounts — that could be captured sitting on the table.
By monitoring write-off percentages, your ASC will gain a means of identifying write-offs due to bad debt, denials, timely filing, and other adjustments potentially not identified at the time of billing.
Monitoring credit balances and refunds can provide important insight into the performance of your ASC's insurance verification team and whether staff are calculating patient responsibility correctly. Monitoring these KPIs is also essential for refunding patients and government payers in a timely manner. Tracking collection agency referrals helps ensure such referrals occur in a timely manner and thus avoids increasing specific accounts receivable (AR) metrics.
For percentage of collections for cases greater than 90 days, 25% or above is an advisable, achievable target.
Bad debt and denial write-off percentages should remain low, but consistent. The timely filing write-off percentage should be zero.
While not a benchmark per se, monitoring of credit balances, refund trends, and collection agency referrals should be performed consistently and preferably monthly or every other month.
Red flags to watch for
If your ASC's collections remain outstanding 90 days after completion of a case, there are one or more factors contributing to the ongoing payment delay. A declining percentage of collections for cases greater than 90 days indicates older AR is not receiving appropriate attention. As this percentage rises, AR greater than 90 will also increase.
For bad debt and denial write-off percentages, watch closely for spikes. These may indicate a new problem contributing to your issues. Timely filing write-offs should never occur as these are caused by a breakdown(s) in the revenue cycle process that resulted in the failed submission of a claim or appeal before its filing deadline.
If collection agency referrals are not handled by your ASC in a timely manner, it will have a negative impact on your days in AR. Refunds that are not handled in a timely manner may result in payer audits, loss of contracts, and poor patient satisfaction.
As long as your work on AR buckets is consistent, the percentage of collections for cases greater than 90 days should also remain consistent. If collections on older cases show any sign of decreasing, this may indicate your AR team is shifting its focus away from older AR. Consider this a potential follow-up opportunity.
Concerning write-off percentages, create specific journal codes to monitor backend adjustments. Break out these adjustments to track the type of denial or bad debt write-off. Monitor adjustments each month. Doing so will help ensure consistency in patient collection agency referrals.
Trending refunds, credit balances, and collection agency referrals is important to avoiding breakdowns in processes. Such processes can easily fall through the cracks, so keep them as high-priority responsibilities.
Furthermore, resolve all patient credit balances on a monthly basis. Doing so will keep refunds current. Monitor for potential government overpayments, refunding any in a timely manner. Finally, review all other insurance credit balances monthly. Advise your staff to note completion of the review in its respective account.
Next in the KPI series…
Stay tuned for our final article is this KPI analysis series, which will focus on four KPIs: cases in AR, patient balances, revenue per case, and year-over-year changes.
Angela Mattioda (firstname.lastname@example.org) is vice president of revenue cycle management services for Surgical Notes. Surgical Notes is a nationwide provider of revenue cycle solutions, including, transcription, coding, revenue cycle management (RCM), and document management applications for the ASC and surgical hospital markets. Mattioda oversees the SNBilling RCM service, the fastest-growing component of Surgical Notes' complete end-to-end revenue cycle solution offering.