Net Collection Ratio

Description:

Shows total collections, as it relates to expected contracted reimbursement rates from payors.

Why is This KPI Important?

While a practice may charge $300 for a series of CPT codes, the managed care company may have a contract to pay you $210 when you add up the combined allowables for the billed CPT codes. As such, many practices use the Net Collection Ratio to examine the amount of payments compared to the negotiated rates.

PMI Recommended Frequency to Run This KPI:

Monthly

Formula:

Total Payments / (Total Charges - Contractual Adjustments)

 

Show the Math:

$685,000/ ($800,000 - $100,000) = 97.86%

 

How Should I Track It?

This KPI can be tracked using an Excel spreadsheet by Practice and/or Department.

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