With nearly one-hundred metrics related to healthcare revenue cycle management (RCM) available, it’s easy to lose sight of metrics that matter. That’s why it’s important to understand key performance indicators (KPIs). One of the KPIs Prochant believes is crucial to your revenue cycle success is your 90+ Accounts Receivable (A/R) metric.
What is 90+ A/R?
Your 90+ A/R is the percentage of your open outstanding accounts receivable balance that has aged 90 days or more from the date it became billable.
Outstanding A/R is the open accounts receivable (open A/R) that is outstanding and what you expect to receive payments on. It’s important to understand that the invoice must be deemed billable (not pending or on hold) as the collections managers are responsible for ensuring that the open A/R is resolved.
Aging by date of service will provide an expanded view of all A/R, and would be the responsibility of both a billing and a collection manager. It is critical to track the age of that A/R, since the longer a claim is outstanding, the higher the risk for non-reimbursement.
How is 90+ A/R Percentage calculated?
This percentage is the balance of A/R that is over 90 days based upon Open date / Total A/R
- Total A/R = Total of outstanding balance on the invoice based upon Open date
- 90+ A/R total = Total of outstanding balance on the invoice based upon the age of the Open date
- 90+ A/R Percentage = 90+ A/R total / Total A/R
Why is 90+ A/R Percentage important?
There is not any other metric that gives you a bird’s-eye view of how effectively your A/R is managed. Those of us who have been in healthcare reimbursement for a while know that the probability of collecting on a delinquent account drops sharply based on the length of delinquency.
By the time a claim reaches “90 days aged,” it has most likely already been touched twice: Once to try to resolve a denial or rejection and once to follow up. As the claim continues to “age” and accumulate touches and follow-ups, the probability of collecting decreases sharply. This percent decrease is largely dependent on each provider’s individual collection practices.
It is important to ensure that Cash Posting is timely so that the collection team doesn’t spend time following up on open invoices that are in fact paid or have a denial, which requires a different path.
Additionally, you want to keep the 90+ A/R clean, because if you don’t, you may be inflating the opportunity for reimbursement.
If you have done everything you can to get the claim paid and they are all unsuccessful, you will have to make the decision to write off that claim. Keeping the A/R clean not only reflects a more accurate assessment of the outstanding A/R, but it also saves unnecessary touches and time spent on claims that are not going to get paid.
What is considered Good, Okay, Poor?
- Good: Less than 20%
- Okay: 21-30%
- Poor: 30% or more
This metric is based upon observation of the most healthy companies, who handle write-offs responsibly and billing on time. They are usually around 20%.
What else should you be looking at for correlation or causation?
The 90+ A/R Percentage is impacted by the Total A/R and the percent that is aged beyond 90 days. Therefore, there are other factors that need to be considered when reviewing that rate.
For example:
- If the billing is up, then the Total A/R will be higher, causing 90+ A/R to become lower. (Until it gets into the 90 day bucket, if you aren’t monitoring it.)
- If your billing is down, that will cause the 90+ A/R rate to increase because the total A/R will be a lower number.
Held A/R is not part of this A/R calculation, so if there is a hold project conducted to reduce the inventory on hold, it will increase current A/R, which would bring the 90+% lower initially. There is a time component in that it may go down, but in the long term, it will go back up.
Prochant is the leading reimbursement firm with a dedicated focus on HME and pharmacy. We have a proven track record of helping HME and pharmacy providers meet their financial goals. Our scalable solutions, years of experience, and advanced technology provide best-in-class results to the healthcare community. Headquartered in Charlotte, North Carolina, our client base includes national HME and pharmacy providers and health systems.