5 RCM benchmarks for ASCs to know and improve upon

To maintain profitability as new challenges continually emerge in the healthcare industry, it is critical for ASCs to have a firm grasp on revenue cycle management.

Michael Orseno is responsible for developing and deploying unique revenue cycle service models for clients of Regent Revenue Cycle Management, which provides RCM services exclusively to ASCs. During Becker's ASC Review's 23rd Annual Meeting in Chicago, Mr. Orseno discussed important metrics for RCM success and strategies for improving them.

Here are five RCM benchmarks examined during the discussion.

1. Days outstanding: This is the most commonly used benchmark on the list. Essentially, this is a measure of the time it takes for a claim to be paid. This measure can help assess the health of an ASC's accounts receivable database and can detect billing or collection problems by identifying extreme variances in month-to-month collections. To calculate this measure, divide total AR by the total charges taken from the last 90 days. A good standard to shoot for is less than 30 days, but this standard will change based upon the population the facility serves.

"You may think you're not doing so well if you're in the high 50s, but if you're completely out of network or you have a large workman's comp population, that may be good," said Mr. Orseno.

To improve, make efforts to decrease your total AR.

2. Claim lag and charge lag: The charge lag represents how many days from the day of service until the charges get entered, while the claim lag is the time between the day services are provided until the charges are dropped. These measures can help determine how quickly charges are being sent. A high charge or claim lag has an adverse impact on days outstanding. A good standard is three days. The lags should match up.

"When we see a difference in these two, we realize the facility is holding charges," said Mr. Orseno. "There is no reason not to be dropping charges daily."

To improve, drop charges as quickly as you can to compensate for physicians who do not report services in a timely fashion.

3. Percentage of outstanding claims greater than 90 days: This is the amount of money as it pertains to total AR greater than 90 days. To calculate a percentage, divide the AR greater than 90 days by the total AR. A good standard to shoot for is less than 15 percent. This metric is also greatly influenced by the types of payers an ASC is contracted with. This number may help detect issues with patient collections or insurance denials.

"If you're heavily contracted, we expect our centers to be around 12 to 10 [percent]," said Mr. Orseno. "For those that are more out of network, typically they're maybe 15 to 20 [percent]."

To improve, focus on working with accounts over 30 days.

4. Net collection rate: This demonstrates the percentage of eligible money from contractual payers the facility has actually collected. To calculate, divide total payments by total charges (subtracting for bad debts and refunds). A good standard is greater than 97 percent. This metric can help determine how well your business staff members are doing at collecting on contracted accounts.

"We call it the great lie detector," said Mr. Orseno. "This one cannot be manipulated."

To improve, measure frequently and develop a concrete definition of bad debt.

5. Percentage of claims denied and clean claims: The percentage of claims denied, represents the amount of claims rejected by payers. The percentage of clean claims demonstrates claims sent without edits. Good standards are 98 percent clean claims and less than 5 percent claim denial rate. A high denial rate could highlight issues with certain payers and a low clean claim rate may identify issues with either your biller or front office.

When discussing strategies for improvement, Mr Orseno said, "I tell all my billers to take an extra minute or two to make sure claims are correct before sending, because a couple extra minutes on the front end can save up 36 days on the back end."

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