Quick answer: Look past the summary report. Check four things: denial rate by payer, write-offs split into contractual and non-contractual, AR (accounts receivable) over 90 days by payer, and whether old claims are being resolved or just statused. If those look healthy, your team is doing its job. If you can’t tell, get an independent second opinion before you think about switching.
In this episode of the NatRevMD Podcast, Dr. Heather Signorelli explains why most practices don’t have a billing problem. They have a not-knowing problem. She walks through the numbers she checks first, and why an outside review doesn’t mean firing your current team, in-house or outsourced.
Why the summary numbers can fool you
Most owners see one denial rate and one AR total. Those numbers can look fine while money leaks out underneath. For example, a 5% denial rate sounds healthy. But 5% of what? It may be low with most payers and 10% with one Medicaid managed plan or one commercial payer.
The stakes add up fast. A practice billing $300,000 a month in gross charges with a 7% denial rate has a lot of money that could come back every month. In practices we’ve taken over, we often find an added 10% or more in collections to go after. That’s why the detail under each number matters more than the number itself.
The four numbers to check
- Denial rate by payer, provider and code. Ask why the top denials happen. Is it eligibility, prior authorization, coding, or one payer? Then fix the root cause, not just the claim. For example, an allergy clinic may need to change how it handles injections.
- Contractual vs. non-contractual write-offs. Contractual write-offs are the expected payer discounts. Non-contractual write-offs are money your team chose to give up. Make sure non-contractual write-offs are not hidden under a contractual code. Our team logs them in a tracker, and the practice approves each one before anything is written off.
- Net collection rate. This is the share of what you’re owed, after contractual write-offs, that you actually collect. June dates of service aren’t paid in June, so look back 30, 60 or 90 days and trend it over 12 months. This is often called a mature net collection rate.
- AR over 90 days, by payer. Keep this as low as you can. Split patient balances from insurance balances, because each one is collected differently. “AR is being worked” and “AR is moving” are not the same thing.
Check whether claims are worked or just statused
A claim can sit for months while someone calls the payer for a status update over and over. Nothing gets resolved. So look at the claim notes, not only the reports. Ask three questions:
- Is each open claim touched every 21 to 30 days, or sooner when needed?
- Does each touch move the claim closer to payment or a final answer?
- Who reviews the work? We audit claims weekly across our team, so everyone has a second set of eyes on their work.
Larger practices can go one step further. Subtract contractual adjustments from AR. Charges often run 200% to 250% of Medicare, so raw AR overstates what will ever arrive. The adjusted number makes monthly cash forecasting more realistic.
Three things to do this week
- Pull your denial rate by payer, not just the overall number. Ask why on the top two categories.
- Pull your real AR aging over 90 days, broken out by payer, not the summary line.
- Compare this quarter’s payer mix to last quarter’s. Flag anything that moved more than a few points, because a quiet shift often shows up as an unexplained dip months later.
Most of this comes from your practice management software. If you use eCW, the data can be harder to pull. In that case, your clearinghouse may have it at the right subscription tier, or your billing team should be able to help. If the numbers point to a real problem, see our guide for practices that are unhappy with their billing but afraid to switch.
Frequently asked questions
The overall rate alone doesn’t tell you much. A 5% rate can hide a 10% rate with one payer. Break denials out by payer, provider and code, and look for the cause behind the biggest groups.
Contractual write-offs are the discounts your payer contracts require. Non-contractual write-offs are balances your team decided not to collect. The second kind should be tracked and approved by the practice, never coded as contractual.
Dr. Signorelli recommends touching each open claim every 21 to 30 days, or sooner depending on the claim. Each touch should move the claim toward resolution, not just record a status check.
Yes. An independent review looks at your denials, write-offs, net collection rate and AR. If things look good, you hear that. If not, you can work with your current team, in-house or outsourced, to fix the issues.
Want an outside read on your numbers? Book a free second opinion, our free metrics audit. Dr. Signorelli and our team review your denials, write-offs, net collection rate and AR with you in about 20 minutes. There is no cost and no pressure to switch.
