Blog, Revenue Cycle, The Hospital Finance Podcast®

Key Revenue Cycle Management Metrics [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by BESLER’s Olga Barone-Allan to discuss key revenue cycle management metrics and how they can measure performance.       

Learn how to listen to The Hospital Finance Podcast® on your mobile device.

Highlights of this episode include:

  • Reasons why key metrics are important to establish to guide hospitals thought the revenue cycle process.
  • Background on DNFB (discharged, not final billed) cases and how important they are to the revenue cycle.
  • Why the percentage of clean claims is related to your billing scrubber.
  • Why the aged trial balance is an important tool for determining how long it takes to collect claims.
  • And more…

To view the transcript of this podcast episode, click HERE.

For more insight from BESLER’s experts on revenue cycle, listen to our podcast episode “Strengthening the healthcare revenue cycle” which discusses how creating cross-functional initiatives can improve the revenue cycle.

Key Revenue Cycle Management Metrics

Healthcare providers that are looking for ways to improve their cash flow can begin by measuring their performance against several established industry benchmarks. 

By trending and comparing performance over time, leaders can understand their true cost to collect giving them the information they need to make important operational decisions. 

Generally, the cost to collect increases the longer a claim remains receivable, becoming more difficult and more time consuming to collect as it ages. Appropriate automation of business processes can help deliver cleaner claims resulting in fewer resources to collect on each claim. 

Hospital revenue cycle metrics to know 

Established benchmarks for patient financial services and patient accounting functions include:   

  • Percentage A/R over 1 year = <2%
  • Late Charge hold period = 2-4 days
  • Final billed/claim not submitted backlog = <1 A/R day
  • DNFB A/R days = < 4-6 A/R days
  • Credit Balance A/R = <1-2 A/R day
  • Billing Turnaround = 5 days from Date of Service or Discharge
  • Percentage of Clean Claims submission = 97%
  • Secondary/tertiary payer billing = 5 days from receipt from Primary
  • Medicare Return to Provider (“RTP) denial rate = < 3%
  • Payer turnaround (average time to pay):
    • Electronic = 7-10 days
    • Paper = <30-45 days
  • Claim Rejection turnaround = 10-15 days
  • Denial overturn ratio = 95-98%
  • Underpayment overturn ration = 95-98%
  • Cost-to-collect Ratio = <2.5 – 3%

Aged Trial Balance 

Another helpful tool is an Aged Trial Balance (“ATB”). The most common use of an ATB is to identify and prevent timely filing claims by payor or financial class. The breakdown of the aging category, service type and financial class provides a quick snapshot of bottlenecks allowing drill down to the account level to identify the root cause of issues. 

For example, if Medicare has charges over ninety days, one can assume that the account balance is not being worked appropriately. Keep in mind, these cases could involve Medicare as a secondary payor.

Medicare denials such as C7272 can be due to a contractual allowance that was not applied appropriately. This becomes evident because Medicare billing is processed electronically and paid within 5 – 15 days for clean claims. In cases where Medicare has a secondary payer, claims should automatically crossover and pay within 30 days.  

If there is no secondary payor to a Medicare account, the claims switch to self-pay leading to an aggressive letter campaign to collect the balance due. Or, the amount due should have been collected at the time of registration. 

The C7272 rejection received by Medicare is due to claim overlaps. CMS has edits in place to ensure overlaps are rejected. When this happens, it means the discharge status code on the claim is incorrect. CMS admits these edits are not 100% accurate and require review to prevent overpayment. Currently, these overpayments are being reviewed by the OIG.


Revenue cycle management (RCM), in simple terms, refers to the process of identifying, collecting and managing the provider’s revenue from payers and patients based on the services provided. A successful revenue cycle management process is essential for a provider to maintain financial viability and continue to provide quality care for their patients.  Leveraging established revenue cycle management metrics can help any hospital leaders manage a healthy bottom line.

Transcript for “Key Revenue Cycle Management Metrics”:

Mike Passanante:
Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance Podcast®. Understanding how well your hospital’s revenue cycle is doing begins with being able to measure its performance. To explain a few of the key revenue cycle management metrics you can monitor, I’m joined by Olga Barone-Allan, Senior Manager of Onboarding and Reporting here at BESLER. Olga, welcome back to the show.

Olga: Hi Mike. Thank you for inviting me again.

Mike: Glad to have you back, Olga. Olga, why is it important to establish a set of key metrics to guide your revenue cycle process?

Olga: Well, it’s extremely important in the fact that directors, CFOs need to understand what their current revenue cycle, how it’s performing so that they compare it to what the industry expectation and also to understand what their true cost to collect is for their claims. This really impacts their budgets, their forecasting, and to understand really how long their claims– how much work their employees have to focus on claims in order to get them resolved as quickly as possible.

Mike: Understood. And there are many, many metrics that revenue cycle teams use to measure their performance. We’ve got a whole series of them up on the blog associated with this podcast so we’ll talk about that more in just a minute. But Olga, let’s focus on just a few that in your experience you found to be critical. First would be final billed claim not submitted. Why don’t you tell us about that?

Olga: So the final bill claims not submitted backlog, if there’s a backlog that’s greater than a day, it can create a timely filing issue and it can create additional resources to resolve those claims. When a bill drops from the mainframe, it really should not take more than a day to really resolve to have a go through, a billing scrubber, and then out the door. If there is a delay, that is adding to the aging of the claim, and depending on the payor, it could impact the claim to be denied right off the bat as a timely filing. There are some payors out there that only allow 90 days from discharge date. So if it’s being held up, whether it’s in final bill status or waiting for additional information, you’re counting against the clock at that point. So it’s extremely important to make sure that someone is monitoring the reasons, the causes, that these claims are being held up from being billed immediately out the door and go back to the departments and possibly create crosswalks or algorithms that may be the mainframe cannot handle and bill them what you’re billing scrubber vendor and create those crosswalks and algorithms so that the claims are as soon as they’re inputted into billing scrubber they are out the door that day or at least the next day.

Mike: And the next metric that you look at is DNFB. Why don’t you tell us what that stands for and why that’s worth taking a look at.

Olga: DNFB stands for discharged, not final billed, so normally a hospital will hold an out-patient claim or an in-patient claim for a specific number of days. For example, and in-patient claim, four days, to allow all the departments to post all their charges and make sure that the claim that’s going out is a complete claim and that there aren’t any late charges. So a hospital does allow a certain– 7 to 10 days is the norm, from my experience, that they will hold an in-patient claim before it drops from the DNFB. However, there are times that a claim is held in a DNFB status for longer than 10 days. In my experience, at a few of the locations that I’ve worked at, we would get an aged trial balance from the DNFB and make sure that we would meet with the departments to find out what is causing the claim from not dropping.

And sometimes it’s a glitch in the system in the mainframe. Sometimes is a coding modifier or a condition code that hasn’t been placed on the claim, and for some reason, the mainframe is indicating that it’s built to say, “If not all these fields are completed, the bill is not going to drop.” This causes the claims to age, because the insurance company is not going to care why the claim was held up in DNFB. The insurance company is going to look at the discharge date and count the days from there to determine whether the claim is timely or not. There have been cases that I’ve seen where there are claims that are in DNFB over a year old, and the majority of the payers would deny them even if you forced them to drop at that point. So it’s really important to make sure that this aged trial balance of the discharged, not final billed is monitored on a regular basis by patient accounting, HIM, and the various clinical areas.

Mike: Next up is percentage of clean claims.

Olga: So the percentage of clean claims relates to your billing scrubber. So the goal is always with the electronic era– back in the days, hard-copy claims, you literally, manually put them in envelopes and mailed them out. But with the electronic era and getting most of the pairs accepting electronic claims, the goal is to make sure that all the claims are going out the door electronically through your billing scrubber. So as new insurance companies are accepting electronic claims, you need to add that to the roster of your billing scrubber. So the goal is to get as many as possible that are going electronically and that are not going hard copy. You have your Worker’s Comp, no-fault payers. Those are hard to do Those, unfortunately, are still going out, in most cases, hard copy, and plus, their required medical records attached. So those are a little more difficult to get them to be processed electronically. But 97% of your payers should be accepting electronic claims, therefore, you should always maintain the library or the roster of your billing scrubber up-to-date with new insurance companies that are accepting them. So that way you’re getting your clean claim, your percentage of clean claim rates to increase. And make sure that your algorithms for those pairs because each pair has their own nuance of coding requirements– make sure that those are being reviewed and brought up-to-date to accept any algorithm that you put in that is applicable to that insurance plan. So the goal is to make sure that the claims are going out, they’re going out clean, they get paid within 7 to 10 days, hopefully, but at least within 30 days of the submission.

Mike: Olga, tell us about the underpayment-overturn ratio.

Olga: So this one’s always interesting to me. Nowadays, most mainframes have a contract-management profile built into their mainframe, therefore, your claims should be dropping right off the bat from day one from DNFB to bill at the net reimbursement rate. And if that is not the case, you really should be looking into making sure your mainframe is identifying the claims by the payer code, by the insurance-plan code primary, and when you contract new rates, that contract-management program needs to be updated immediately based on the effective date. And there are some situations like ambulatory services that are more difficult in coding the mainframe, but you really, really should get as close as possible to the net reimbursement rate. And I’ve found that, in the past, even though that program is incorporating a mainframe billing system, it’s not maintained. And what this causes, is it’s over-inflating what you’re expecting as reimbursement. It’s creating double work on the back end because when the payment does come in, your billers or cash posters then have to go back in and do a manual adjustment to bring a claim to the appropriate balance due. It is a lot of work, and its high maintenance to maintain. But your contract management department should really be on top of this and be negotiating. And also, this allows them to monitor and go back to your payers to make sure that they’re paying appropriately. So it benefits all areas if it’s maintained appropriate.

Mike: And Olga, in addition to the metrics we just discussed, there is the idea of the aged trial balance. Can you explore that concept with us and explain what that is?

Olga: The aged trial balance from the billing perspective, not relating to DNFB, is all the claims that are on your receivables by payer, by age, and it allows a manager, director, or CFO to really identify what is out there in the receivable word. And the longer a claim ages, the harder it is to collect. And not appropriately flagging the account to reflect the responsible party also can impact calculations of projections and budgets. For example, a Medicare patient has Medicare and a secondary payer. Nowadays, Medicare will pay, and then it should immediately cross over to balance billed to the secondary. So a Medicare patient that has a primary and secondary normally should not have a balance overdue unless it’s a non-covered item charge. So those claims immediately go to zero. The claims that go to zero will not reflect, obviously, on your aged trial balance, because there’s no more balance due.

In a case there Medicare is primary and the patient doesn’t have secondary, if Medicare paid, that claim should be updated to reflect the self-pay balance. And that’s how it should be reflected on your aged trial balance. So the aged trial balance is a great tool to not only advise a manager, director, or a CFO to determine how long it takes to collect certain claims; it also allows them to determine which claims are at a certain point over the timely filing limit where it’s going to result in a write-off where it’s too late at that point. It also allows them to understand how much money is sitting in a self-pay balance, and then turning that around to bad-debt agencies and outsourcing them for a collection process. So aged trial balances is probably the most important tool out there to manage a business office. And it also allows the manager or director of a patient accounting department to determine how many people are needed to really follow up on these claims. It’s really a great follow-up tool, and it also allows us to understand how long it takes on the average to collect a claim.

Mike: And in addition to the metrics we’ve discussed here today, there are several more posted to the blog post associated with this podcast. So you can head up to, click on the Insights button, visit Revenue Cycle, and you’ll see a blog post for key revenue cycle management metrics, that you can take a look at. Olga, thanks so much for joining us again today on the show.

Olga: Mike, thank you, and be safe.

Mike: You as well.

The Hospital Finance Podcast

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