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Revenue Cycle KPI Glossary: Definitions and Benchmarks You Should Know

The world of revenue cycle management (RCM) is full of acronyms and jargon. Even seasoned billing experts can get disoriented by the jumble of letters and numbers flying through their heads. 

But when it comes to healthcare revenue cycle KPIs, or key performance indicators, keeping those letters and numbers straight is critical — it’s a matter of business success and failure. You also need to know the benchmarks for these revenue cycle analytics and whether your organization meets these standards.

Why Revenue Cycle KPIs Matter

There are many different metrics you need to track to run a successful medical practice or healthcare business. But revenue cycle KPIs not only help you monitor important financial measures, they also allow you to gauge the health of your operations and find opportunities to improve processes. 

Ultimately, a healthy revenue cycle gives your business stability and makes sure you have consistent cash flow. That means you can allocate resources appropriately and grow your team strategically, so you can care for more patients or expand your business. 

Healthcare Revenue Cycle Management KPIs: A Glossary

Keeping revenue cycle KPIs straight isn’t always easy. That’s why we’ve created a handy guide you can reference for definitions and benchmarks. Bookmark this page to reference the guide below, or download the glossary and save it to your computer for convenience.

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Key performance indicator (KPI) Definition Goal Why Is It Important?
A/R >90 The percentage of unpaid invoices or accounts receivable (A/R) that have been unpaid for 90 days or more. <10% Typically, the longer an invoice or claim stays in A/R, the less likely your practice will get paid in full. Once a claim lands in the >90 day bucket, it’s critical you work through any outstanding issues to secure payment.
Average days in A/R The average number of days it takes to get reimbursements from the date of service (DOS). A/R = accounts receivable. 35 days A/R is a normal part of the RCM process, but it’s not something you can ignore. The more accounts you have in A/R, the less money your practice collects. When your practice’s A/R piles up, you have less cash flow to maintain operations and pay staff.
Bad debt rate The amount of non-contractual charges that the business or practice writes off. <5%*
*Ideally, insurance should be 0%; however, patient bad debt can be <5%.
This includes “write offs” — payments that are very late or unpaid. If you have a large amount of bad debt, it means you are not getting paid for the services you’re providing.
Cash collection The percentage of patient service revenue that a business converts to cash. Cash collection = Total cash collected/average monthly net revenue. >90% This metric helps show how efficient your practice is in collecting patient payments. A higher cash collection means more cash flow for your business, which helps you maintain operations.
Charge lag The number of days from date of service (DOS) to the date the practice or business enters charges. 1-5 days (ideally within 24 hours) The shorter your charge lag, the more efficient your billing and RCM operations are. Longer charge lags mean more time to reimbursement or slower cash flow for your practice. Depending on the payer, a long charge lag could also mean you run into rejections or denials due to timely filing issues.
Clean claims rate or first acceptance rate The number of claims the payer accepts divided by the total number of claims submitted in a time frame. >95% A higher clean claims rate means you have fewer edits and manual intervention with your claims. When you have clean claims, you’ll likely avoid denials and get paid quicker by insurers.
Denial rate The percentage of claims that payers deny. <8% A denial threatens your income because you’re not getting paid for the services you provide. It’s critical to have a solid denial management plan in place. When denials pile up, they can negatively affect your practice’s financial health.
Rejection rate The percentage of claims that payers reject. <10% While a rejection is not as severe as a denial, it is still a threat to your cash flow. When a claim is rejected, it slows down the reimbursement process, which means it will take longer for your practice to get paid. A low rejection rate means your claims are processing smoothly.

How to Track Your Revenue Cycle Analytics

Now that we’ve sorted out all the KPI acronyms, how do you track this revenue cycle data? 

The best way to stay on top of your revenue cycle analytics is to use billing and RCM software. This software should be able to track your claims throughout the reimbursement process and give you complete visibility into how your practice gets paid by insurance.  

Ideally, the software will integrate with your electronic health record (EHR), so you can seamlessly track data from appointments to claims to payments. Although your EHR may have some RCM analytics, using a dedicated RCM software can ensure you have a best-in-class tool focusing on one area: getting reimbursed.

How to Improve Your RCM Metrics

Unfortunately, there isn’t one magic bullet for improving your healthcare revenue cycle KPIs. Instead, you should incorporate several tactics and best practices into your billing workflows. 

Some of these best practices include:

  • Verifying eligibility before appointments
  • Collecting payments upfront
  • Filing claims promptly 
  • Staying on top of payer changes

For more details on how to improve your revenue cycle KPIs, we recommend checking out these blog posts:

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Editor’s note: This post was updated on August 10, 2023. It was originally published in May 2022. 

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