Key Takeaways
- Sixty-six percent of physicians cite administrative work as a significant or somewhat significant challenge to daily operations.
- Three critical KPIs—posting amount, payment or allowable mismatch, and complete charge capture—can help significantly with practice management.
- Understanding the fundamentals of insurance aging can give you a clearer idea of opportunities for improvement.
That mystery can add extra stress to an already stressful scenario of juggling patient care with the responsibilities of running a practice—one report found 66% of physicians ranked administrative work as a significant or somewhat significant challenge to daily operations.
Luckily, a few key metrics can offer just the right launchpad for you to begin refining your operations and buttoning up your practice management. Let’s explore three must-know KPIs that need to be tracked and optimized to ensure complete financial oversight.
1. Posting Amount
Key Question: How much was posted and from what sources?
It might seem obvious that you’d want to know how much was posted or how much revenue was received each month. However, there are several relevant questions that also should be answered when looking at this measurement.
This amount, more than any other, determines the answers to the following questions:
- Are all services rendered completely, correctly, and promptly billed?
- Are claims billed completely, correctly, and promptly paid?
- Do you know where you make your money and understand the revenue drivers?
Posting should generally be a lagging indicator of charges. If you didn’t perform surgeries or bill in the previous month, your posting will naturally decrease this month. When everything is consistent, posting trends should remain steady each month. If they don’t, it could signal a billing issue. It’s essential to track posting trends alongside charges to spot irregularities. Using a rolling 3-month window helps smooth out monthly fluctuations and provides a clearer picture of your revenue cycle management.
What else do you want to learn from your posts? That’s the heart of your revenue stream. Different procedures can vary widely in how well they reimburse based on time spent, complexity, or charges (like RVU-based costing). Your goal is to maximize revenue per unit of time or cost, and posting analysis plays a key role in making that determination. Grouping service lines into functional units—such as separating ancillary providers (PAs, NPs), surgeries, or diagnostic services—can give you a clearer picture of where your practice is most profitable. This insight helps you focus on promoting the services that drive your revenue.
Insurance payment. Which insurers offer better reimbursement rates, and which ones may be impacting your bottom line? Analyzing your posting data allows you to compare payment trends across insurers, giving you the insights needed to make strategic decisions about your payer mix. For instance, you may discover that certain insurers consistently reimburse less for the same procedures, increasing your overhead without sufficient return. By identifying these patterns, you can evaluate whether it’s worth continuing with low-paying insurers or if dropping them will better align with your practice’s financial goals. This analysis empowers you to optimize payer contracts, improve cash flow, and ensure you’re focusing on the relationships that contribute the most to your practice’s success.
Is the money posted reconciled with the money in the bank? Reconciliation should occur between the amount posted in your practice management system, the amount deposited in the bank, and the amount recorded in your general ledger. If this isn’t the case, there could be instances of money siphoning off or going unrecorded in certain areas of your practice, potentially indicating a problem.
By keeping track of your postings and answering related business questions, you can continuously optimize both your processes and your business, while enhancing your revenue cycle management.
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2. Payment or Allowable Mismatch
Key Question: Is the practice being paid correctly and completely?
Generally, insurance companies won’t pay randomly, but they could pay you wrong systemically (i.e., incorrectly apply the contracted amount and pay you less than you’re due). This is where the payment or allowable mismatch metric matters. By auditing payments for each provider and each insurer over time, you can determine that each provider is paid correctly for each service type for each insurer.
Two types of reports can help you identify this metric: one is an audit that reviews a subset of charges targeting an insurer, provider, or period of time for proper and complete payment. The other is an automated report based on entering and maintaining each insurer’s fee schedule. If someone enters an incorrect amount as allowable, the system flags this amount.
Once operational errors are corrected with the insurer, then conditions don’t usually change. However, left unattended, underpayments can compound significantly over time. That is why it’s important that someone is monitoring this for your practice.
3. Complete Charge Capture
Key Question: Are all services rendered being billed and paid?
This metric helps you audit the medical record and schedule to ensure that all services rendered are operationally finding their way onto a claim. Furthermore, it helps you understand if all claims have been paid properly.
Simply put, due to improper communication or charting, an informed provider may regularly miss an incorrectly charted service. The complete charge capture ratio allows you to monitor and manage this. You can determine, correct, and monitor process errors leading to missed charges on an ongoing basis by periodically and methodically monitoring the medical record. This is also a lagging indicator, but if left unattended, it could result in a significant billing shortfall.
The act of reviewing and monitoring is as critical as the report itself. It lets all medical providers in the practice know that charge capture is essential to the financial health of the practice.
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