Steps
- Measure payment timeliness. How long does it take to get 50% of claims paid? Keep in mind that national average is 73 days. A good quality billing process has relatively small median, e.g., half of the claims must be paid within 30 days,
- Measure completeness of payment. What is the percent of accounts receivable beyond 30 days, 60 days, and 120 days? The actual amount of Accounts Receivable beyond 120 days is considered uncollectable and labeled as a provider's loss for write off.
- Payment DistributionChart payment distribution. The shape of the distribution curve of Accounts Receivable illustrates billing quality. A steep drop in terms of percents of accounts receivable shows good quality.
Warnings
- Traditional medical billing quality measures look at write-off percentage and long-term gross and net collection ratio. Such measures depend on charges, which are almost arbitrary for every practice. Instead, focus on % of AR beyond 120 days is a more objective measure: since the likelihood of payment drops by 0.6% every day, % of AR beyond 120 days reflects the total of money you are not likely to collect ever. Therefore, % of AR beyond 120 days represents a reliable and charge-invariant measure of billing quality. For reference, national average of % of AR beyond 120 days is 23.2%.
Sources and Citations
- Advanced medical billing technology
- Specialized Chiropractic Billing
- Audit Risk Webinar
- Advanced medical billing service
- Wiki for advanced medical billing concepts
- Billing Search Engine
- OfficeFrogs, Inc. Washington State billing
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