How can you gain better control over your ASC's revenue cycle performance?
By monitoring key performance indicators (KPIs).
This first in a two-part series identifies more than 15 ASC revenue cycle
KPIs worth tracking. It explains the importance of monitoring each KPI,
offers target benchmarks (where applicable), and identifies warning signs
to watch for that may indicate a KPI is moving in the wrong direction.
Part two will share common problems that can contribute to poor KPI performance,
describe solutions to help address obstacles to success, and provide guidance
for effectively analyzing trends.
Days to Bill/Charge Lag
Why monitor: Monitoring the average days to bill each month helps ensure cases are billed
promptly and, in turn, payments are received in a timely manner. Higher
or inconsistent lag days make it more difficult to ascertain revenue estimation.
Lengthy delays could lead to denials, lost payments, and increased days
sales outstanding (discussed below).
Benchmark: The standard benchmark is less than two days (48 hours).
Warning signs: A deviation from this benchmark signifies a delay in billing that must
be addressed before other metrics are impacted.
Days to Pay
Why monitor: This KPI indicates how long it takes to receive primary insurance payments.
As with days to bill, payment delays can negatively impact the bottom
line. Trend this metric by payer or financial class.
Benchmark: Since days to pay varies by payer, the benchmark will vary by ASC. A "sweet
spot" to target is 45 days overall, 18 days for Medicare, and up
to 55 days for workers' compensation.
Warning signs: An increase in this KPI compared to the benchmark means an ASC is likely
dealing with payer delays, billing issues, and/or denials. Such a trend
should be examined further to determine the cause(s).
Specialty Volume Trending
Why monitor: Trending the case volume of each specialty will help determine potential
scheduling issues and future (projected) revenue. A center may be in line
with its total projected monthly volume, but if the volume of a higher
paying specialty is lower than projected, net revenue will be impacted.
Note: This KPI will not apply to single-specialty ASCs.
Benchmark: Since specialty types vary by center, so will the benchmarks.
Warning signs: Trend the percent of total billed charges to each specialty and compare
this to the percent of revenue for each specialty. If charges are high
and revenue is lower than normal, this may indicate an issue.
Consider an ASC performing orthopedic and pain management cases, with a
typical monthly volume split of 80% orthopedic, which tends to be higher
paying, and 20% pain management, which tends to be lower paying. If that
volume split shifts to 50% orthopedic and 50% pain management on a given
month, net revenue for that month will likely decline. If this specialty
split trend continues, it can have a long-term, significant financial impact.
Payer Volume Trending
Why monitor: Trending the volume of each payer or financial class will help determine
potential scheduling issues and future revenue. A center may be in line
with its total monthly payer volume, but if the volume of a higher reimbursing
payer is lower than projected, net revenue will be impacted.
Benchmark: Since payer types vary by center, so will the benchmark(s).
Warning signs: Trend the percent of total billed charges to each payer or financial class
and compare it to the percent of revenue for each. If charges are high
and revenue is lower than normal, this may indicate an issue.
Consider an ASC typically performing 80% commercial cases and 20% Medicare
cases each month. If that split shifts to 50% commercial, which tends
to be higher paying, and 50% Medicare, which tends to be lower paying,
on a given month, net revenue for that month will likely decline. As with
specialty trending, if this payer or financial split trend continues,
this can have significant financial implications.
AR > 90
Why monitor: Tracking accounts receivable (AR) greater than 90 days is a powerful means
of helping with early identification of payer issues.
Benchmark: The total AR percentage over 90 days should be below 15% of AR. Break
this benchmark down by financial class at a minimum or go deeper and segment
it by specific payer. Omit personal injury and litigation cases from this
percentage as such cases can take years to resolve and would significantly
influence the figure.
Warning signs: When AR percentage over 90 days hits and exceeds 15%, this indicates revenue
cycle problems. Review the offending financial class for issues immediately.
Days in AR (i.e., Days Sales Outstanding)
Why monitor: Tracking days in AR is an effective means of identifying potential revenue
cycle issues. This KPI may be confused with "days to pay," but
the two figures are distinct and serve unique purposes in the monitoring
and maintenance of a healthy revenue cycle.
Consider an ASC that performs procedures exclusively on Medicare patients.
While days to pay and days in AR both monitor how quickly Medicare pays
for these procedures, days to pay is the indicator of how quickly the
center receives the initial insurance payment. Days in AR indicates how
long it takes for the center to entirely resolve the case from its AR,
which includes any secondary insurance and patient billing.
Benchmark: The industry standard is 35 days. However, this figure will be center
specific as it is dependent upon multiple factors, including payer mix,
percentage of out-of-network claims, outstanding litigation cases, and
billing/collections staff performance. Track the days in AR by financial
class as this will support efforts to be proactive in identifying issues.
Warning signs: An increase in days in AR, barring any major changes to the factors influencing
the benchmark, points to developing issues. If a center is receiving insurance
payments but the figure continues to rise, there is likely an internal
problem keeping cases open.
Days to Dictate
Why monitor: Tracking this KPI helps determine whether providers are completing their
dictation in a timely manner. Identification of slow dictation completion
time will necessitate a discussion with the responsible provider about
what is required for a timelier dictation.
Benchmark: The standard benchmark is one day, with dictation preferably completed
the same day as the case is performed.
Warning signs: If a provider's days to dictate is consistently greater than one day,
this signifies a problem. It is typically an indication of a provider
who falls behind on dictation and may then struggle to catch up, potentially
leading to days or even weeks passing between case completion and dictation.
Such delays will then delay completion of claims submission, which will
then delay receipt of payment. If dictation delays become significant,
a center can risk losing payment due to timely filing deadlines.
Why monitor: If denials are not addressed in a timely fashion, they will negatively
affect the majority of a center's KPIs.
Benchmark: The standard benchmark is less than 5%, although a rate as low as 1% is
Warning signs: A high denial rate percentage indicates a center has one or more problems,
which can include coding issues, billing issues, documentation/dictation
issues, and performing cases without proper medical necessity approvals.
Denial Reason Trending
Why monitor: Equally as important as monitoring denial rate, tracking denial reasons
will help a center identify whether it is experiencing an issue with a
single claim or a possible trend that can contribute to ongoing denials.
Warning signs: Be aware of continuous denials by a specific payer, for a specific case/specialty,
for a specific code(s), and/or associated with a specific provider or
business office team member. This indicates a breakdown in one or more
revenue cycle components.
Clean Claim Percentage
Why monitor: Calculated by measuring the percentage of payers' rejections of claims,
submission of clean claims reduces the denial rate and ensures timely payment.
Benchmark: The industry standard is 98%.
Warning signs: A high volume of rejections that leads to a drop in the clean claim percentage
indicates an ongoing claims or clearinghouse issue.
Percentage of Collections for Cases > 90 days
Why monitor: While not a typical KPI tracked by ASCs, this metric has great value.
Many centers (and even some billing companies) will choose not to pursue
collections for cases with outstanding payments greater than 90 days because
of the labor-intensive work often involved in achieving successful collections
of such payments. If collections are still outstanding 90 days after completion
of a case, there are one or more factors contributing to the ongoing delay
in payment. Rather than continuing to work to address these factors and
secure payment, it can be easier to ignore this collections bucket and
focus on easier collections. Doing so leaves potential cash that could
be captured sitting on the table.
Benchmark: 25% or above is a worthwhile target.
Warning signs: A declining percentage of collections for cases greater than 90 days indicates
older AR is not receiving the appropriate attention it deserves. As this
percentage rises, AR greater than 90 will also increase.
Why monitor: This KPI compares performance of areas including charges, case volume,
payments, and AR for one period to the same period the previous year.
The period can be for an entire year (e.g., 2019 vs. 2018), quarter (3Q2019
vs. 3Q2018) or month (October 2019 vs. October 2018). It is a high-level
view of performance that can provide value, but only if the KPI is carefully
The potential shortcoming of this KPI is that there are numerous factors
that can impact areas of revenue cycle performance over a year's time.
These include changes in payers/payer types, providers, specialties, case
types, case volume, staff, managed care contracts, billing companies,
and clearinghouse. While tracking this KPI may not help pinpoint specific
issues, it may inform leadership that their ASC is performing better or
worse in an area when compared to the previous period and can guide discussions
concerning what has changed over that time.
Warning signs: If year-over-year performance changes in an undesirable and unexpected
manner, this indicates a concerning performance issue in a specific area(s).
Research is warranted if it is not immediately understood what has contributed
to the change in performance.
Write-Off Percentages (Bad Debt, Denials, Timely Filing)
Why monitor: This KPI provides a means of identifying write-offs due to bad debt, denials,
timely filing, and other adjustments that were not identified at the time
Benchmark: Bad debt and denial write-off percentages should remain low, but consistent.
The timely filing write-off percentage should be zero.
Warning signs: For bad debt and denial write-off percentages, watch for spikes that may
indicate a new problem contributing to the issue. Timely filing write-offs
should never occur as these are caused by a breakdown in one or more parts
of the revenue cycle process that resulted in the failed submission of
a claim or appeal before its filing deadline.
Revenue Per Case
Why monitor: This KPI should be trended by specialty and payer to help identify potential
issues that can lead to a growing loss of revenue. The metric can also
be trended by provider if physicians are interested in comparing their
performance to other physicians at the ASC. This can motivate physicians
to support efforts to improve their individual revenue per case.
Benchmark: Since case types vary by center, so will the benchmark(s).
Warning signs: A decline in revenue per case can signify any number of problems, including
a contract issue, missed coding opportunity, and missed implant billing
opportunity. An unexpected increase in revenue may also be a warning sign
worth researching as it can indicate a concerning issue such as upcoding.
Credit Balance, Refund Trends, and Collection Agency Referrals
Why monitor: These KPIs are typically overlooked. Monitoring credit balances and refunds
can provide insight into the performance of an ASC's insurance verification
team and whether staff are calculating patient responsibility accurately.
It also is essential to monitor these metrics to ensure patients and government
payers are refunded timely. Collection agency referrals should be tracked
to ensure they are referred in a timely manner to avoid increasing specific
Benchmark: These processes should be consistently performed on a monthly or bi-monthly
(every other month) basis.
Warning signs: If collection agency referrals are not handled in a timely manner, this
will have a negative impact on an ASC's days in AR. If refunds are
not handled in a timely manner, this may result in payer audits, loss
of contracts, and upset patients.
Supply Cost vs. Reimbursement
Why monitor: While not a revenue cycle management KPI per se, tracking this metric
can help a center identify when a procedure is costing the center money
or not earning the center as much profit as expected.
Warning signs: If supply costs exceed reimbursement or if the difference between supply
costs and reimbursement is not as wide as anticipated, consider this a
warning sign. Contributing factors can include performing a non-covered
procedure, failing to receive coverage for/reimbursement of an implant,
or a provider opting to use a more expensive supply or device.
Cases in AR
Why monitor: This KPI tracks how many cases are in the collections process. It is a
metric that should generally remain consistent, taking into consideration
influencing factors such as seasonal swings in volume.
The figure has taken on greater importance in recent years as patient financial
responsibility has increased. A higher number of cases in AR may indicate
successful collection from payers but not patients. In the past, when
patient financial responsibility was lower, failing to collect from patients
had less of a significant impact on the profitability of a case. Now,
failing to collect in full from patients can greatly reduce profitability
and even turn a profitable procedure into one that costs an ASC money.
Benchmark: Since the number of cases performed varies by center, so will the benchmark.
Warning signs: An increase in this metric when not accompanied by a corresponding increase
in case volume is an indication that the center is failing to close out
its cases and leaving money on the table.
Why monitor: Collecting what patients owe for their care was always an important aspect
of maintaining an ASC's solvency and profitability. As patient financial
responsibility has increased, success in this area has taken on greater
significance. The patient balances KPI informs a center of the number
of patients who must still pay for their care and the amount they owe.
Warning signs: An increasing figure indicates that the number of patients with balances
is growing and may require additional attention.
Take Control of Your Data
Understanding the importance of monitoring revenue cycle KPIs, benchmarks
to strive for, and warning signs that may indicate suffering KPI performance
is vital to ensuring a highly productive revenue cycle. The second article
in this two-part series will share common KPI performance problems, solutions
to help overcome obstacles, and guidance for analyzing trends.