Net Collection Percentage

How to Figure Percentages Between Gross & Net Income by D. Laverne O'Neal. Edwin Gentzler Contemporary Translation Theories Pdf File. Divide the net figure by the gross figure to find the net percentage of gross.

Using benchmarks to rate the success of your practice’s revenue cycle is an age-old “best practice.” No matter the specialty or size of your practice, it is important to periodically track, trend, and review performance data. It is the only surefire way to understand your financial strengths and weaknesses, and subsequently improve both. One of the biggest challenges I’ve found, however, is that practices may think they’re adequately tracking certain benchmarks when they’re not. In reality, it’s not at all unusual for practices to be a little uncertain about whether they’re correctly calculating and analyzing important numbers. So, I’d like to address two standard benchmarks that, in my experience, are particularly thorny: days in accounts receivable (A/R) and net collections percentage. It’s essential to track both accurately, because they demonstrate a practice’s ability to quickly turn over A/R and collect all money due. Let’s walk through: the definition of each term; the proper way to calculate each; an example calculation; and some common potential analysis pitfalls.

Days in A/R first. This is a measure of the rate of A/R turnover. It represents the number of days of A/R outstanding, based on the practice’s average daily charge volume. Here’s how to calculate it: Take your total A/R divided by the practice’s average daily charge amount. (For the average daily charge, divide total charges for the last three months by 90.3 days, representing three months). For example: If total charges for three months equal $81,270, the average daily charge equals $900 ($81,270/90.3). If total outstanding A/R is $50,000, days in A/R equals $50,000/$900, which is 55.55 days.

Once you have your number, it is important to recognize that a good overall level of days in A/R can hide areas of underperformance, including: • Specific insurance carriers whose days in A/R are higher than they should be. For example, if your entire practice days in A/R level is 45 (good), but your Medicare days in A/R level is 48 (not good), there is a problem with Medicare that needs to be addressed. If you don’t break out days in A/R by payer, you may be missing potential trouble-spots. • Claims that have aged past 90 or 120 days. A good overall days in A/R level also can hide elevated amounts in the older aging buckets.

That’s why it’s so important to utilize the “A/R>90 days” benchmark. (Note: Check back to the blog in the coming weeks, when I’ll develop a further discussion on this aging benchmark). Now let’s take a look at net collections percentage, which is a measure of a practice’s effectiveness in collecting all legitimate reimbursement. This figure reveals how much revenue is lost due to factors such as: uncollectible bad debt; untimely filing; inappropriate adjustments; payment posting errors; or claim underpayments.

Here’s how to calculate it: Divide payments (less refunds) by charges (less approved write-offs) for the selected time frame. This calculation should be based on dates of service—that way you avoid comparing charges generated in the current month with payments and adjustments taken on claims from many prior months, which can lead to great fluctuations for this calculation. Additionally, it’s recommended that you perform this calculation utilizing aged data, typically from 4-6 months back, so that you ensure a majority of the claims used for the calculation have had ample time to clear. For example: For dates of service 10/1/2009 through, payments equal $485,698.75, refunds equal $13,368.75, total charges equal $842,985.00, and total approved write-offs equal $344,500.73. Divide payments less refunds ($485,698.75 -$13,368.75) by charges less approved write-offs ($842,985.00 – $344,500.73), then multiply by 100. The total net collections percentage comes to 94.75%. Potential pitfalls when it comes to this calculation include: • Counting inappropriate write-offs as part of the calculation.

This is one of the most common mistakes that practices make. Inappropriately adjusting off a balance while posting payments, adjusting off a patient balance due to a physician order, etc., provides an inaccurate view of a practice’s ability to collect on all monies “earned.” • Not having access to your fee schedules or reimbursement schemas for each payer. This will disable the practice from truly knowing what should have been paid, adding to the aforementioned inappropriate write-offs. I hope these suggestions for calculating days in A/R and net collections percentage prove beneficial.

If you stay tuned, I’ll post a similar blog in the upcoming weeks to describe how to correctly perform calculations for “lag time” (e.g., between date of service and date of submission) and A/R>90 days. For more information, download Navicure’s resource guide,, which identifies four critical KPIs and gives detailed instructions for calculating them.

The, or AR, report is designed to analyze the of the. Using the discharge date of the patient account, the AR report calculates the length of time it takes for medical claims to get paid. Why is it important to know this information? If you see a patient today and in ten days the account has been paid in full and reflects a zero balance, it is clear that you are being paid for your services very quickly and your medical office is operating efficiently. However, if you see a patient today and six months from now the account still has not been paid, it is clear that it is taking way too long to resolve patient balances and your medical office is not operating efficiently. Example - Calculate Denial Rate. Photo courtesy of Joy Hicks Denial resolution is necessary for achieving financial goals for a medical office.

One important way to improve cash flow in the medical office is to track denials by calculating denial rates. Cashbook Complete Keygen. Why is it important to know this information? Your goal is to get payment as quickly as possible. Taking a proactive approach to handling denials can improve AR days substantially. In order to reduce denials, the medical office must calculate denial rates to see how well or poorly the office is performing. The formula for calculating denial rates is as follows: Denial rate equals the total dollar amount of denied claims divided by the total dollar amount of submitted claims.

Based on the volume of claims in your medical office, this can be calculated using monthly, quarterly, or yearly time frames. (Denial rate = Denied dollars/total dollars submitted) Denial rate can also be calculated by the actual number of claims submitted and denied. If you choose to use this method, the formula for calculating denial rates is as follows: Denial rate equals the total number of denied claims divided by the total number of submitted claims. Based on the volume of claims in your medical office, this can be calculated using monthly, quarterly, or yearly time frames. (Denial rate = # of Denied dollars/ # of total claims submitted). Example - Calculate Collection Rate. Photo courtesy of Joy Hicks Collection rates help the medical office determine how successful the office is in collecting receivables. This rate tells a lot about the financial performance of the medical office how effective you are at collecting receivables.

Why is it important to know this information? All collection efforts should be evaluated for efficiency. The collection rate is different because it actually shows the correlation to the portion of collectible receivables to the portion of actual collectible receivables collected. Any collection rate less than 100 percent means there is room for improvement.

The formula for calculating collection rate is as follows: Collection rate equals total dollars received divided by total expected receivables (collection rate = total dollars received/total dollars expected) Total expected receivables is calculated by subtracting the contractual adjustment amounts from the total charges.