Assessment prepared for
name of clientAmbulatory Health Center Sample
Proprietary and Confidential
Financial Health in
8 Essential Metrics You Need to Know
Already challenged with an overly complex,
ponderous, and slow-moving healthcare
system, physician practices today also face
stringent regulations, increased payer rules
and edits, and eroding bottom lines.
Healthcare managers must run physician
practices not just as healthcare delivery sites,
but also as real businesses. As a NextGen
Healthcare client, you have the technology to
take your business to the highest level. The
question is–are you capitalizing on your
system’s functionality to optimize your
reimbursements every visit?
To help you benchmark your practice’s performance, assess
your financial outcomes, and identify opportunities for
improvement, we offer a two-pronged approach:
Analysis: Assessedthe last 90 days of ERAs for processing time,
denial detail, andpayment data.
Best Practices Financial Assessment: Collecteddata fromNextGen® Practice Management
and analyzedcurrent trends of charges, payments, and net revenue.
The report whichfollows is a sample of an assessmentsummary. It shows the eight
performance indicatorsneededto gauge, and sustain, your practice’sfinancial health.
These metrics include:
1. Revenue Cycle Assessment
3. Staff Processing Time
4. Payer Processing Time
5. Charge Lag
7. Accounts Receivable Management
8. Additional Revenue Enhancements
Compare howyour practice performs againstour best practice metrics, which alignwithour
software’s optimized, automatedoutcomes. Leverage our experience with similarly sized
organizations, andwithrevenue cycle issues. See howoptimizing keysoftwarefunctions can
drive your business andclinical success.
Your opportunities for optimization include:
Denial Management (annual) $1,307,387
Accounts Receivable Improvement (one-time) $312,318
Decreasing Charge Lag (one-time) $50,290
Revenue Cycle Assessment
Thisanalysisisintendedto providea “snapshot”ofanAmbulatoryHealth Center’s
financial healthinthecontext ofits revenuecycle, andtoidentifytangible
opportunitiesto improve revenueandefficiencywithNextGenRCM Services
The table above shows the eight areas of
focus, comparing current results against
This graph represents the practice’s per-
formance relative to the optimized metrics
above. There are areas for improvement in
Denial Management and Accounts Receiv-
able, First Pass Clean Claims, Charge Lag,
Staff Processing Time, and Collections.
Performance Indicators Current State Optimized
Office Visit Average Charge Lag (days) 4.62 <1
Staff Processing Time (days) 43 14
First Pass Clean Claim Rate 80% 96%
Denial Percentage 14.2% 4%
Percent of Eligibility Checked Before Each Visit 55% 95%
Days in A/R 57 35
A/R Over 90 Days 35% 14%
Net Collection Ratio 95% 96-99%
Connecting the Data with Comparative Analytics
Yourrevenuecycle problemswill beeasierto solvewithactionableinformationinhand. We
generatedthefollowingdata fromanassessment ofyourlast 90 daysofERAs usingthe
comparative benchmarkingtool,Insight Reporting™. Thisview enablesyourpracticeto
benchmark andcontextuallyassesscode utilization,denial information,and productivity
The graph above shows average existing patient E&M code
distribution for your practice in blue. State averages in red
and national averages in green.
The graph above shows average new patient E&M code
distribution for your practice in blue, state averages in red,
and national averages in green.
Howdoesmy codeusage compare tomypeers? Thegraphsbelow compareyourE&M code
usageagainstothersimilar practicesatthestateand national level.
Your Existing Patient Utilization
Profile is 4.9% below your peers.
• Taking into account your
average reimbursement for an
existing patient visit, and the
variance from your peers, more
direct alignment with state
averages could result in an
additional $10,474 in missed
opportunity for this 90-day
period, or $41,896 annually.
Your New Patient Utilization Profile
is .8% below your state peers.
• Direct alignment with your state
peers would result in $5,646
additional opportunity for the
90-day sample period, or
Staff Processing Time
The time between the date of service and the date the payer writes a check for the
claim is your processing time. InSight Reporting breaks this time down between staff
processing time and payer processing time.
How is your staff performing?
The graph shows monthly staff processing time in blue, compared to state
averages in red, and national averages in green.
Days 82 17 35
As seen in the table above, the staff processing time is nearly five times the state average
and over two times the national average.
Payer Processing Time
Am I being paid at the same speed as my peers? Payerprocessingtimeisthenumberofdays
fromthedateof payerreceipt to thecheck dateofaclaim.
Days 15 15 13
As seen in in the table above, payer processing time is relative to your state and national peers.
The graph shows monthly payer processing time in blue, compared to
state averages in red, and national averages in green.
Below isacomparisonof payerprocessingtimesbyweek,comparedto stateand national
peers. Yourpayerprocessingtimeisconsistentwiththestateand national levels.
We’ve assessed your weekly payer processing time for codes 99211-99215. Your
payers average 22 days to process code 99213, which is five days more than any other
code below. Payer processing time for all payers has leveled out in the recent weeks.
Average Charge Lag:
Thetime betweenthe dateof serviceanddateof charge
entry. Delaysin bothclaim submissionandstaff
processingtimeimpactthetimeto collection. A90-day
sampleofdatawasassessed. Thetablebelow showsthe
resultsforyour practice:43% ofchargeswereenteredin
thesameday,65% ofchargeswere enteredwithintwo
days,and92% ofchargeswereenteredwithin sevendays.
Cost of maintaining the current state:
• Nearly 8%ofcharges,valuedatover$360k gross, arestill outstandingatsevendays,
resultingin delayed subm ission and im pactingtim eto paym ent.
• Thevalueofdecreasingchargelagbyone dayis$50,290.
Charges entered same day 43.3%
Charges entered 2 days or less 65.2%
Charges entered 7 days or less 92.3%
Charges entered 31 days or less 97.3%
Longest Charge lag (days) 83%
Everyhealthcareprovider expectsto bepaid. However,payerscontinuallyfindreasonsto deny
payment,to underpay,orto delay payment. Inthetypical practice,upto 47% ofdeniedclaims
The first passcleanclaim rate,ortherateoffirst-passclaimacceptanceat theclearinghouse,is
an indicatorof how often a claim beingsent outiscorrect thefirst time. AlthoughNextGen
Healthcareclientsaverage 95% first passcleanclaimrates,thepractice’srateis80%;that
is, 80out of100claimsare processedupontheirinitial submission. Asyouwill seebelow,5.8%
ofclaimsare rejectedat theclearinghouseand14.2% ofclaimsaredenied bythe payer.
Thegraphbelow reflects anassessmentofthelast 90daysofElectronicRemittanceAdvice,
showingthecurrent denial ratecomparedto stateandnational peers.
• Approximately 14.2% of claims are denied, which equates to about 21,580 claims
per year requiring manual intervention to fix and re-submit
• Although Worklog manager is available, no tasks have been set up, including those
prioritizing denials to ensure all denials are being worked.
Tracking and Preventing Denials
Your denial rate is 14.2%, which is substantially higher than the 8.9% state average
and 9.5% national average. NextGen® Revenue Cycle Management clients in your
specialty realize an average of 3.5% denials.
Why do payers deny claims? Below are the top ten denial reason codes. The claims
represented had missing or incorrect information, ineligible insurance, or were
submitted too late per the payer contracts.
• 208 denials (3.5%) were due to timely filing (Reason Code 29), charged out at $243,234 gross.
Even if these claims are fixed, they have exceeded the timely filing parameter for payers.
• At your GCR, these timely filing denials equate to $132,057 in lost income.
Cost of Denials
• There were 5,862 claims, totaling $1.2M in gross charges, denied during the 90-day reporting
period. This equates to nearly 23,500 claims per year, totaling $4.8M in gross charges, requiring
intervention to fix.
• MGMA estimates 47% of denied claims never get reworked; these end up as lost revenue.
• If 47% of your denied claims were not reworked, this would total $1,307,386 annually in
lost net income.
The benefit for this service is included in the payment allowance for
18 Duplicate claim/service 1153
A1 Missing Remark Code 908
16 Claim/service lacks information which is needed for adjudication 365
31 Patient cannot be identified as our insured 301
29 The time limit for filing has expired 208
These are non-covered services because this is not deemed a “medical
necessity” by the payer
27 Expenses incurred after coverage termination 190
B7 The provider was not certified to be paid for this procedure this DOS 176
109 Claim not covered by this payer/contractor 176
Accounts Receivable Management
Thisclient’sA/Risa runningagingofall billed,outstandingcharges;that is,thechargeswhich
are awaitingpayment. Atypical measureofA/Ris daysinA/R:Theaveragetimeit takesto
collect payment.LowerdaysinA/Raremore favorable,meaninglesscash islockedin
• Thispracticehas57days inA/R;it takesthemon average57daysto get paidonaclaim
• A moreappropriatebenchmarkfor yourspecialty is35 daysinA/R
In addition, too many claims are aging in A/R, not getting paid:
• 34%of A/Risover90daysold;a moreappropriate benchmarkforyourspecialtyislessthan
• 18%of A/Risover180daysold
• 4% ofA/Risoveroneyear
Over 90 Over 180 Over 365
$1,771,347 $967,213 $212,846
34% 18% 4%
This graph is the current A/R aging,
showing current A/R by aging category,
compared to optimized A/R
management, closer to 35 days in A/R.
electronic claimsoverthe past 90days.
Cost of maintaining the current state:
• Totalof$5,235,442isinA/R. Massre-billingleads to 57DaysinA/R,delays in payment,
andtimelyfilingwrite-off’s. Over34% ofA/Risover 90days,comparedto theMGMA
Opportunity for Prompt Account Reconciliation and
• Aged A/Rhasbeenadjustedfor
• All Commercial >180days (90daystimely
• The AdjustedCurrentDaysOutstanding
is 47 days.
• RCMcustomersinyourspecialty realize
• The difference between47 and35Daysin
Last 90 Days of Charges $8,336,559
One Day of Charges $92,628.43
Days in A/R 57
Adjusted Current DSO 47
Total A/R At Benchmark $3,241,995
At Net $600,613
Gross Difference GCR NET per GCR
$1,106,256 54.3% $600,612
Taking into account the amount of patients due in A/R and the
status of aging claims, a more appropriate expectation for a
one-time cash infusion due to a decrease to days in A/R is a
fraction of the upside above, closer to $312,318.
Summary of Total Opportunity Costs
Additional Revenue Enhancements
Net CollectionRatio:relationship betweenactual collectionsandwhat apracticeshouldhave
TheNet CollectionRatio (NCR)isgenerallyusedas abarometerto assess how closelyaligned
A comparativebenchmark forthismeasureis96-100%. A practicewithoptimizedoperational
andtechnological processeswouldbecollectingascloseto itsfullcontractedratesaspossible.
Factorsthat impact NCRincludeunderpayments, inwhichpayerspayless thanthecontracted
rate,aswell ascollections that aretiedupinpatient pay,amongothers.
Denial Management (annual) $1,307,387
Accounts Receivable (one-time) $312,318
Charge Lag (one-time) $50,290
JULY 2011 - JUNE 2012
Charges Collections Contractual Adjustments
$36,081,051 $19,589,255 $14,201,058
Improvements are not cumulative;
enhancements in one area may inherently improve another.