A billing report can look perfectly fine and still be hiding a problem. Charges are up. Collections are close to last quarter. Nothing on the page says anything is wrong.
What that report won’t tell you is how long the money took to show up, how much of it you gave away on the way, or how much is still sitting out there unpaid.
These five numbers will. Here’s what each one is telling you and what good looks like.
1. Days in Accounts Receivable
Days in A/R estimates how long, on average, revenue remains tied up in outstanding receivables. It reflects overall revenue cycle performance, not only the time between claim submission and payment. It’s the broadest of the five, and usually the first place a problem shows up.
What good looks like: a number measured in weeks rather than months, and one that holds steady instead of creeping up quarter after quarter. What counts as healthy depends on your specialty too, since billing complexity varies a lot from one to the next. The comparison that matters is against practices like yours, and against your own trend.
The catch is that it’s an average, so it can hide as much as it shows. A practice with slow days in A/R might just be slow getting charges out the door, or it might have a pile of old unworked denials dragging the number up. Two different problems, two different fixes.
Bringing this number down is one of the first things we go after. Across our client base, practices have seen a 57% reduction.
2. Clean Claim Rate
Your clean claim rate is the share of claims that pass required edits and are accepted for processing on the first submission without rejection or manual correction. A clean claim can still be denied or underpaid after the payer reviews it. It’s the closest thing you have to a read on how well the work is done before a claim ever leaves the building.
What good looks like: the large majority going out and coming back paid without anyone touching them again. A claim that fails on the first pass costs you twice. The payment sits in a payer queue somewhere, and someone on your staff spends part of their week redoing work that was already done.
Many clean claim problems begin before the claim exists, including incorrect patient or insurance information, missing claim data, coding errors, or required modifiers that were not included. When this number slips, review registration, coding, claim edits, and billing workflows to identify where the errors are occurring.
3. Denial Rate
Denial rate is the percentage of claims a payer refuses to pay. Working those denials recovers some of that revenue, but not all of it, and even the claims you win sit unpaid in the meantime.
What good looks like: a low denial rate that keeps getting lower. Payers are tightening rules and automating more of their decisions, so even holding your rate steady takes consistent effort.
One overall denial rate isn’t that useful on its own. Break denials out by payer and by reason, and the patterns show up fast, usually with a handful of categories accounting for most of the volume. Those are the ones worth building a process around, and a denial you prevent is always worth more than one you win on appeal, since even a win costs staff time and pushes payment out by weeks. Our clients have seen a denial rate reduction of up to 5%.
4. Net Collection Rate
Net collection rate asks a narrower question than it sounds like. Of the money payers agreed to pay you, how much did you actually collect? It leaves out what you originally charged, which is exactly what makes it useful.
What good looks like: capturing nearly all of it, with write-offs you can explain. This is the metric that catches what the others miss. You can have reasonable days in A/R and a decent clean claim rate and still be losing money through small write-offs, underpayments nobody caught, and balances that quietly aged past the filing deadline.
Worth saying it’s not the same as gross collection rate, which compares payments to your full charges and mostly reflects your fee schedule. Net is the one that tells you how the revenue cycle is doing. Practices sometimes report the friendlier number without realizing there’s a difference.
5. A/R Over 90 Days
This one is the share of your outstanding receivables that’s been sitting unpaid for more than 90 days. Where days in A/R gives you an average, this shows you the tail underneath it.
What good looks like: a small slice of the total, with most of your A/R still in the newest bucket. Claims collected early get collected in full far more often than old ones, and patient balances drop off faster still.
Aged A/R also feeds itself. Old claims are harder to work, so staff goes after the easier wins, and the pile keeps growing. Backlogs are recoverable, though. One of our engagements involved clearing a 6,000-case backlog, and clients have seen a 10% improvement in A/R aging.
Reading Them Together
Any single metric can point you toward the wrong fix. Reviewed as a set, they tell you where to focus.
If days in A/R are slow and your clean claim rate is weak, the issue begins before the claim goes out, at registration or in the documentation. If days in A/R are slow while claims are going out clean, the question is how aged denials are being worked; if days in A/R look healthy while your net collection rate lags, claims are moving on schedule, but revenue is being lost somewhere along the way.
Review all five monthly, and give more weight to the direction than to the number itself. A clean claim rate that has declined three months running warrants more attention than one that has held flat for two years.
If you are not tracking these yet, days in A/R and your denial reasons are the place to start. Together they will identify most of what needs work.
Where Encompass Comes In
Encompass Health Solutions was started by physicians who wanted to fix the business side of healthcare, and we’re nationally accredited by the Healthcare Business Management Association! Those partnering with us have achieved increases in net revenue up to 18%.
Curious about where your revenue cycle stands? Schedule a free review or call us at (920) 202-3371!