Reporting in Revenue Cycle Management
In the dynamic landscape of revenue cycle management (RCM), accurate and insightful reporting plays a pivotal role in optimizing financial performance. From monitoring accounts receivable to analyzing key performance indicators (KPIs), leveraging various reports empowers dental offices to identify trends, streamline processes, and enhance revenue generation. In this blog post, we dive into the significance of essential reports for your practice, such as the AR insurance aging report, patient aging report, daily collections report, and key performance reports for driving success in RCM.
The Daily Report and Daily Deposit Report: There are a few daily reports that should be ran at the end of each day which are: Production, collections, write-offs, and deposit reports.
The daily production report should be created at the end of each day per provider, each provider should sign-off that the report reflects exactly what was done for that day by procedure, as your leading practice KPIs will start with this number.
Pro Tip: Each provider in the practice should know how to work the PMS and print their production report by the end of the day (if not, front staff should have it ready and printed for the providers) and sign off accuracy and turn it into the practice manager (or owner doctor, best to have a “drop box”) before leaving for the day.
The daily deposit report serves as a vital checkpoint in ensuring the financial integrity of a dental practice on a daily basis. Although there are only two entities that pay your office (patients and insurance companies), payments can still come in many forms. It provides a snapshot of daily transactions, detailing deposits made and payments received. Matching the daily deposit report in the PMS with actual deposits made in the office is crucial for detecting discrepancies and addressing them promptly.
Pro Tip #1: It is crucial to reconcile your daily deposit report in your dental software with the actual bank deposit to avoid any errors.
Pro Tip #2: Reconcile your daily deposit report by payment type: EFT, check, VCC, and cash. This will make it easier to match your numbers to your deposit slip and bank account. This report can catch potential fraud or embezzlement, so it is one of the most important reports you can run on a daily basis to ensure your practice's health.
Daily Collections Report: The daily collections report serves as a real-time snapshot of daily financial transactions, encompassing payments received, adjustments, and write-offs. Monitoring daily collections allows healthcare organizations to gauge revenue performance on a day-to-day basis and promptly identify any deviations from expected targets. By reconciling the daily collections report with actual deposits, dental offices ensure accuracy in financial recording and can detect discrepancies early.
Patient Aging Report: The patient aging report categorizes accounts based on the duration of unpaid patient balances, allowing providers to identify delinquent accounts and prioritize collections efforts. Early intervention with patients in financial hardship can reduce bad debt write-offs and preserve revenue integrity. Analyzing patient aging trends helps tailor financial counseling and payment plan options to effectively meet patients’ needs.
Pro Tip: The way patient collections are addressed is through a systematic approach. Statements should be sent as soon as the balance is incurred and followed up with on a regular basis each month until the very last effort is made and a collections company is needed. In this case, TSI (Transworld) is a great company to work with and will charge a flat fee per patient account, which can be forwarded to the patient balance. Make sure you follow all collection regulations in your state*
Accounts Receivable (AR) Insurance Aging Report: The AR insurance aging report is a helpful tool for managing outstanding insurance claims. It categorizes claims based on their age, which provides visibility into unpaid balances and potential reimbursement delays. With this report, dental teams can proactively follow up on aged claims, resolve them in a timely manner, and improve cash flow. Checking this report on a weekly basis is essential, as insurance companies are required to process claims within 30-45 days of receipt. By researching all claims over 30 days old weekly, dental teams can ensure a healthy revenue flow. Understanding and utilizing the aging report effectively empowers billers to address outstanding claims promptly, improving cash flow and minimizing revenue loss.
Pro Tip #1: Dentrix, Eagle Soft, Open Dental, Denticon, and many other software will display the AR report by insurance carrier from 30 to 90 days overdue. Attack the highest and oldest dollar amounts first and go from there.
Pro Tip #2: As you work the aging report and notice claim denials, requests for additional information, appeals, etc., it is best practice to address these things right away. Do not move on to the following claim until you have resolved the current claim issue. Otherwise, these unpaid claims will pile up, affecting your revenue in the long run and leaving your claim at risk for timely response and filing.
Claims typically appear on the outstanding dental insurance aging report based on their age and payment status. Remember, insurance carriers legally have anywhere from 30-45 days to process a claim. Here's how they are categorized:
30 Days Outstanding: Claims that have been submitted to insurance but have not been paid within 30 days fall into this category. These claims may still be within the standard processing timeframe set by insurance carriers, but they warrant attention to ensure timely reimbursement. Focus your time on claims OVER 30 DAYS OLD; anything before that timeframe will not be necessary to check.
60-day Outstanding: Claims that remain unpaid after 30 days of expected payment move into the 60-day category. This indicates a potential delay in processing or a rejection that requires further investigation and follow-up.
90 Days Outstanding and Beyond: Claims that surpass the 60-day mark without payment are escalated to the 90-day and beyond category. These claims represent a significant concern as they indicate prolonged delays in reimbursement, which can impact cash flow and revenue.
Rejected or Denied Claims: The aging report also includes claims that have been rejected or denied by insurance carriers. These claims require immediate attention to determine the reason for denial and initiate the appeals process if necessary.
KPI Reports
Key Performance Indicator (KPI) Reports: In addition to RCM reports, monitoring key performance indicators (KPIs) is essential for assessing overall revenue cycle health. Key reports such as the production report, write-offs report, collections report, and AR report offer valuable insights into various aspects of your RCM performance. The production report highlights provider productivity and service utilization, while the write-offs report identifies uncollectible balances and write-off trends. The collections report tracks revenue collected over a specific period, whereas the AR report provides a comprehensive overview of outstanding balances and aging trends. Analyzing these KPI reports helps dental offices to measure performance to goals, identify areas for improvement, and drive strategic decision-making to optimize revenue outcomes.
The four Key Performance Indicators (KPI) of Revenue Cycle Management (RCM)
1. Production Report: A production report can be run in any PMS to analyze production by day, month, or year. This report will reflect all the procedures that each provider completes each day.
Pro Tip: Run this report daily at the end of each day, have each provider check their own report, sign off that all procedures were posted correctly, and turn it in before leaving for the day. This method also works well if your office implements a bonus structure based on hygiene or associate production.
2. Write-offs Report: This report is very important as it indicates how much money is actually subtracted from your total production. It can be run in any PMS by day, month, or year. Write-offs will typically be done once a patient's claim is posted and contractual adjustments need to be made on the patient's account.
Pro Tip: Setting the PMS to reflect insurance fees on the patient ledger and billing UCR on claims is recommended. This ensures the least amount of “write-offs” needed to account for your net production. Run this report daily and limit access to the ability to “write-off” services or delete transactions from the ledger, as this is an easy way to steal funds from the practice; keep a close eye on this report at all times.
3. Collections Report: Revenue comes from two sources, the insurance companies and your patients. The collections report can be run by day, month, or year. The collections report will reflect all the different payment methods in coming to the office, like cash, credit cards, 3rd party financing, and insurance payments by payment method. Basically, any and all financial transactions collected by the dental office should be reflected in this report.
Pro Tip #1: At the end of each day, before your front office staff leaves for the day, whoever was collecting payments throughout the day (checking patients in and out) should reconcile this collection report with the daily office deposit slip (merchant receipts, cash deposits) and cross reference all charges collected for the day making sure the total number reflected in the office PMS is the same as what is reflected on the merchant deposit slip (credit cards, VCC’s, etc) and turn into the office manager (or have a drop box).
Pro Tip #2: The collections report will reflect all insurance payments posted for the day. We recommend that whoever is in charge of this task reconcile the insurance payments they posted for the day to reflect what is deposited into your bank account before the end of the day. Whatever is posted for the day needs to reflect the deposit report with the bank, including any insurance checks.
4. A/R Report: The accounts receivable reports contain all insurance and patient amounts owed to your practice. Although this information can usually be pulled from one report, it is best to work separately by pulling the patient A/R report and the insurance aging report. Regarding KPIs, the total amount of pending collections reflected on the aging reports will need to be calculated against your net production as it's not considered “in the bank” (yet).
Important Calculations
Production - Write-Offs = Net Production $.........(What should be reflected in your bank)
Collections / Net Production = Collection Percentage %...........(Should be 91-100%)
Net Production - A/R report total = True Net Production $ (what is actually reflected in your bank)
Once you understand your current KPIs clearly, you can start creating and implementing goals based on your “benchmark.”
Additional financial ratios to measure the health of your practice:
Gross Profit Margin = (Revenue - Cost) / Revenue x 100 …(A higher gross profit margin indicates a more profitable practice)
Net Profit Margin = Net Profit / Revenue …(A higher net profit margin indicates a more profitable practice)
Debt-to-Equity Ratio = Total Liabilities / Total Equity ….(Shows how much debt a dental practice has relative to its equity.)
Current Ratio = Current Assets / Current Liabilities….(Measures a dental practice's ability to pay its short-term debts.)
Accounts Receivable Turnover Ratio = Revenue / Average Accounts Receivable ..(Measures how quickly a dental practice is collecting payments from patients. Higher turnover ratio indicates a healthy practice)
Return on Investment (ROI) = Net Profit / Total Assets …(Indicates how much profit a dental practice is generating relative to its investments.)
Return on Equity (ROE) = Net Profit / Total Equity…(A higher ROE indicates a more successful practice)
Expense Ratio = Overhead Expenses / Revenue ….(Indicates the percentage of revenue that is spent on overhead expenses.)
Production-to-Collections Ratio = Collections / Production.. (Measures the percentage of production that is actually collected.)
New Patient Conversion Rate = Number of New Patients / Number of Patient Inquires… (Indicates how many leads are turned into established new patients)
In this specific article, we will only highlight the main KPIs important to your Revenue Cycle Management (RCM), which are Production, Collections, Write-Off’s, and Accounts Receivable. In order to maintain a healthy cash flow, these reports should be run and tracked on a daily, monthly, quarterly, and yearly basis. Each practice will have additional KPIs that are important to their office.
For an example of other KPIs that are great to track in addition to your RCM health, check out this article by Roger P. Levin, DDS. (Click the link) The ADA also has a great article that goes more in-depth regarding other vital KPIs.
In the ever-evolving landscape of Revenue Cycle Management, leveraging comprehensive reporting tools is essential for maximizing financial performance and operational efficiency. By harnessing the insights provided by reports such as the AR insurance aging report, patient aging report, daily collections report, and key performance indicator reports, healthcare organizations can proactively manage revenue cycles, enhance collections processes, and achieve sustainable financial success.
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