How to Evaluate A Billing Operation
Whether you are billing in house or utilizing a medical billing company, you should periodically evaluate the effectiveness of your billing operation. Poor billing operations can result in thousands of dollars of lost revenue for your practice.
There are three simple indicators that provide a quick overview of how effective your billing operation is.
Days in account receivable (A/R). This indicates how long it takes from the date services are rendered to when charges are collected. You should typically have less than 60 days in A/R. To calculate A/R divide your actual A/R balance by your daily average charges.
Accounts receivable over 120 days. This indicates the percentage of your A/R that is older than 120 days. Generally A/R that is over 120 days should be 15%-18%. The longer accounts age the more difficult it is to collect the balance due.
Net collection percentage. This indicates the percentage of the net charges that you have collected. Net charges are your actual (gross) charges minus your contractual adjustments. Net collection percentage varies by specialty but should typically be greater than 95%.
Overall MGO PR Billing Company indicators:
Days in A/R: 28
Accounts Receivable Over 120 Days: 5%
Net Collection Percentage: 98.5%
MGO PR Billing Company clients receive monthly reports of their actual results.
To find out how MGO PR Billing Company can assist your practice click
here to contact a Practice Resource Consultant.
