Editor's note: This is Part 2 of a 12-part series focused on optimizing medical group financial performance. Each brief in this series takes 2 to 3 minutes to read and identifies specific actions medical groups can take to achieve sustainable financial improvements.
Assessment
Effective revenue cycle management (RCM) is essential for financial sustainability. RCM success depends on the seamless execution of various functions before, during, and after the episode of care. These functions include provider credentialing, registration and authorization, time of service (ToS) payment resolution, coding and documentation, charge posting, and claims management.
The insurance net collection rate serves as the primary metric for evaluating this opportunity. This metric is calculated by dividing the amount collected by the expected collections based on contractual allowables. If contracted allowables are unknown, they can be estimated by subtracting contract adjustments from gross charges. However, to ensure accuracy, only allowable-based reductions should be included in contractual adjustments.
A conservative estimate for the revenue opportunity can be identified by subtracting the actual insurance net collection rates from 98.5% and multiplying the difference by the total insurance portion of allowable payments.
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