Numbers Don’t Lie: FQHC Key Performance Indicators

Categories: Accounts Receivable, Billing, CHC, FQHC, PMG Insights Blog

May 18, 2015

Key Performance IndicatorsReimbursement in the community health center (CHC) world has changed drastically over the program’s last 40 years. Gone are the grant dependent entities of the past. Today’s CHC must constantly navigate the stormy waters of the health care world in an effort to remain fiscally solvent. There is ever increasing pressure on health centers to act as patient centered medical homes, improve care quality while decreasing costs, manage changes resulting from the Affordable Care Act, and juggle the implementation of ICD-10, etc. This slew of external factors mixed with a CHC’s own internal challenges make it increasingly difficult to manage revenue cycle in an effective manner.

In an effort to identify knowledge gaps in a center’s revenue cycle management (RCM) we at PMG often turn to key performance indicators (KPI). These measurable and track-able numbers never lie and can provide a window into your organization’s RCM strengths and weaknesses. What KPIs do you monitor at your health center? Can you trust your data (i.e., is the integrity elevated or sketchy)? Do you have the information needed to make key financial decisions? There are several helpful and relatively simple KPIs that you can use to monitor your revenue cycle. Here are a few of PMG’s favorites:

  • Payment Percentage – An estimated value of your accounts receivable (AR). Just the calculation is vexing for some; i.e., payments over a fixed period (numerator) divided by the sum of those same payments and the adjustments necessary to account for the contractual limits, bad debt, sliding scale fee, etc. (denominator). Multiply this percentage times your total AR to determine exactly how much money is sitting out there for your team to collect.

Payment Percentage Calculations

  • Days in Accounts Receivable (DAR) – How long does it take you to collect on your claims? That is exactly what this formula will tell you. Again, do the numbers… divide the last three months’ charge total by the total calendar days in those three months. This will give you your average daily charge.  Then divide your AR by the average daily charge to come up with your DAR.

Days in Accounts Receivable Calculations

  • Blended Encounter Rate (BER) – The overall average payment per patient visit. The national CHC average is $114.45. How do you compare? Run this by payer, by provider, by location… you must know how much money (payment) you make for each visit. Simply take total payments and divide by total unique patient visits (encounters).

Blended Encounter Rate Calculations

If you cannot quickly and accurately report KPIs, your revenue cycle might not be performing at an optimum level and you won’t even know. Along with the above mentioned challenges you must also be able to manage system issues, organization behavior struggles, and staff turnover.

If this sounds familiar, you are not alone. Don’t wait. Get past these hurdles by considering the following options:

  • Evaluate your internal team objectively. What production standards are acceptable and which require improvement? This includes evaluating system capabilities, staff knowledge, gaps in education, policies and procedures, and reporting processes.
  • Not certain where to start with item 1? Hire a consulting firm with CHC know-how to assist you in this process overhaul.
  • Think you just can’t ever be truly great at revenue cycle with so many other priorities? Find an outsourcing partner who can optimize income, assess risk areas and maximize opportunity.

In the name of transparency, this is penned by an employee of a CHC consulting and revenue cycle management ( a.k.a., billing) firm. So, yes, I know this sounds like a sales pitch. However, if you need help do your homework and find a firm that fits your needs and that you feel comfortable working with. At PMG, we believe you should have the peace of mind knowing you are not leaving money on the table.