Key Performance Indicators

Average Days in Accounts Receivable (A/R)


(Industry best practice benchmark = 35 days)

  • This metric is perhaps the best single assessment of billing health.
  • Low days in A/R is typically indicative of an attentive billing team quickly posting payments from insurance companies and patients, sound follow up on denied claims and claims for which no response has been received from the insurance company in a reasonable amount of time.

Average % of Accounts Receivable (A/R) Over 120 Days


(Industry best practice benchmark = less than 12%)

  • Best practice standards indicate that less than 12% of your overall A/R should be older than 120 days.
  • Comparing A/R aged over 120 days to overall A/R is a good assessment of financial health.
  • Percentage of A/R aged 120+ days that is higher than 12% can be indicative of many billing ailments including untimely and/or incomplete posting, untimely follow up on denied claims or claims for which you have not yet received an adjudication decision from the insurance company. This can also be a sign of an insufficient patient due balance policy.

Denial Rate for Processed Claims


(Industry best practice benchmark is 8% or less)

  • Processing clean claims is critical to decreasing the average days in A/R and ensuring a healthy revenue cycle for a practice.
  • A low denial rate is indicative of strong front-end revenue cycle processes, particularly charge review and coding functions.
  • A high denial rate can be indicative of needed improvement in front-end revenue cycle processes, including those managed by front desk staff. It also highlights the need for professional coding review of encounters.

Net Collection Rate


(Industry's best practice benchmark is >98%)

  • Tracking adjusted net collection rate is a good method of assessing billing health and how well a practice collects the dollars “allowed” per insurance contracts.
  • Do you know your adjusted net collection rate?
    • Hint: Here’s how you calculate your adjusted net collection rate:
    • Total Payments / (Total Charges – Contractual Adjustments)