KPIs measure health of agency’s revenue cycle

As home health and hospice billers work harder to keep up with an expanding array of payors, insurance plans and requirements in a heavily regulated field, SimiTree revenue cycle experts say the only way to measure how well billers are doing is to track some important numbers.

Key performance metrics, or KPIs, can tell agency leaders whether an in-house billing staff is ready to handle agency growth, and when it’s time to consider outsourcing the agency’s revenue cycle management (RCM).

The right numbers also tell agency leaders already using an outsourcing partner when to look for a different revenue cycle management partner capable of delivering stronger AR performance to fortify cash flow, reduce outstanding debt, shore up billing compliance and improve overall health of the home health or hospice organization’s revenue cycle.

“It’s vital for agencies to rely on an experienced billing staff – a staff specializing in the nuances of home health and hospice – to keep the agency financially healthy despite regulatory challenges and an increasing workload,” said Lynn Labarta, SimiTree VP of Revenue Cycle Management.

The increasing workload for home health billers  

Because patients are increasingly covered by a variety of insurance plans that can bog down billing at verification, eligibility, and documentation checkpoints, billers are having to spend extra time matching documentation to varying plan requirements.

“The result of all the different plans and requirements is a more complex billing matrix, with a more time-consuming verification process, an increasing workload and significant labor burden,” said Jordan Cichon, SimiTree Director of Financial Consulting.

At the same time the billing workload is increasing, billers are experiencing less time to complete claims processing.

“While Medicare gives you a full year to file and get paid, most non-Medicare claims must be filed within 100 to 180 days,” Cichon said. “This is increasing the pressure on busy billers.”

A proven workflow is essential for tackling the increasing workload, according to Cichon and Labarta.

Home health, hospice KPIs to watch

Here are some important Key Performance Indicators Cichon and Labarta advise agency leaders to monitor in evaluating the agency’s revenue cycle performance.

Keeping an eye on these numbers makes it possible to determine when the workload may be too much for in-house billers, or when existing outsourcing partners may not be providing the level of experience and performance an agency needs for optimized revenue cycle management.

Accounts Receivable (A/R)

    • Medicare aged over 90 days = <10%
    • Non-Medicare aged over 90 days = <20%
    • Total A/R aged over 90 days = <15%

Unbilled Claims

    • <10% of unbilled DOS aged over 30 Days
    • Medicare final claims held over 30 days negatively impacts cash flow
    • Track/trend by held reasons (unsigned orders, F2F, visits etc.)

Days Sales Outstanding (DSO)

  • Medicare = 25-30 Days
  • Non-Medicare = 55-60 Days
  • Total = 45-50 Days

Learn more about Revenue Cycle Management KPIs

These and additional performance metrics are explored and explained in detail in “Revenue Cycle Management KPIs and Best Practice Metrics,” a free webinar presented by Cichon and Labarta.

The webinar may be viewed on demand and at no charge on the SimiTree web site. Visit the webinar page on the SimiTree web site, and click on the Outsourcing archive to select the webinar.

A formula for deciding to outsource

Cichon has a formula he recommends agencies use for making the right decision about when and whether to outsource.

“Bad debt can be the deciding consideration,” Cichon said. “Your bad debt write-off should be less than 2 percent of your agency’s annual net revenue. That’s the standard for best practices.

“Reducing bad debt increases cash flow. If your bad debt is greater than 2 percent of your net revenue, think about the additional cashflow you are going to see from outsourcing,” Cichon said. “And, if your bad debt is currently 4 percent or more of your total net revenue, outsourcing starts to pay for itself.”

If you’re considering outsourcing, the revenue cycle experts at SimiTree are available to answer all your questions.

Use the form below to reach out to us today.


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