RCM Spotlight: The #1 Metric in Revenue Cycle Management

For 15 years, I have swum around in the acronym soup of healthcare RCM Metrics: NCR, GCR, A/R over 120 days, DSO, DAR, FPRR, FPAR. It has been my goal to help providers understand and gleam insights from these metrics. The challenge with all these metrics I have learned is that each is flawed. Each has a way of being “gamed” by billing staff or billing companies. There is one metric, however, that doesn’t lie; one metric that tells the entire story; one metric that every medical practice should look at on a regular basis. That metric is Reimbursement per Encounter.

You can’t run away from Reimbursement per Encounter. You can’t write it off to make it better. You can’t move it to “A/R” or the "Patient Bucket." You either have it or you don’t. It is truly where the rubber hits the road, and if you know your practices metric and the specialty benchmark range, you can quickly diagnose the problem.

For example, if you are a primary care practice and your Reimbursement per Encounter (RPE) is under $125 per encounter, I know you have a problem. I might not know exactly where the problem is but I know that number is under the standard. Now I can get down to asking the questions that will lead you to the solution. Let’s say Practice XYZ has an RPE of $105. I would quickly flag the practice and walk them through this rubric to diagnose the problem:

• Is the practice payer mix to standard?
• Is the practice E/M distribution to standard?
• Do I see large issues in RCM like Net Collection Rate, Days in Accounts Receivable, or A/R over 120 days?
• Are there credentialing issues impacting claims?
• Are Commercial Payer contracts up-to-date?

Boom! With five simple questions, I’m getting down to really solving the practice's problems and Reimbursement per Encounter led me there.

At Kareo Managed Billing, we are able to take this data and create a material plan within 15 minutes of entering the data. It is an incredibly powerful way to view the financial health of your practice and then decide if attention is needed.

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