Understanding which payers are helping or hindering your revenue cycle is crucial for improving your practice's financial health. Here's how to use payer scorecards to your advantage.
Key metrics to focus on
Gross collection rate (GCR)
This metric shows how much you’re being paid per dollar billed. This rate will vary depending on how close your billed charges are to the contracted amounts in your fee schedules. A GCR close to 100% indicates that a practice charges less than or close to the payer allowable amount. If a practice charges more than the payer allowable amount, their GCR might be 40-60%.
Comparing GCR across payers helps you understand which payers are more favorable for your practice. A higher gross collection rate may mean you have negotiated contracts with higher reimbursement rates with those payers and/or you experience lower denial rates from that payer
Denial rate
Payers with lower denial rates may offer more stable cash flow, even if their reimbursement payments are lower. The industry benchmark for denial rate is less than 5%, with the average being 10.8%.
Patient responsibility percentage
It can be very time consuming and difficult to collect from patients. Patient responsibility rates help you understand how much time by patient population you’re going to spend talking to patients and trying to collect their portion of the allowable. From 2013 to 2023, patients’ share of healthcare costs increased from 10% to 30%, highlighting a growing revenue risk.
Days to adjudicate
Timely payments can reduce the burden of following up on claims. Some payers may pay in under 5 days, while others may take much longer. However, the industry standard for days in AR is between 30- 35 days, with the total AR percentage over 90 days below 15%-20%.
Actionable steps
Compare payers objectively: Use the aggregated performance metrics in the Payers template to identify top and poor performers.
Drill down into metrics: For example, examine a payer’s denial rate or contracted reimbursement rates in conjunction with their gross collection rate to assess the root cause of a below average gross collection rate.
Plan your payer mix: Use insights to inform your payer strategy, shifting your focus to higher-rated payers if they bring in better reimbursement with fewer hassles.
Optimize your charge prices: If your GCR is close to 100%, you may be charging less than the allowable rate you've negotiated with a payer. Compare your charge prices to your fee schedule rates to make sure you aren't losing money to lesser-of contract clauses.
Tip: Regularly review your payer scorecards to track performance over time and make any necessary adjustments to contracts or billing processes.