News & Insights

In the fast-paced world of Federally Qualified Health Centers (FQHCs), executive leaders often find themselves juggling numerous responsibilities. With limited time on their hands, it becomes crucial to focus on key performance indicators (KPIs) that provide a quick and accurate snapshot of their center's health. In this article, we'll explore the top KPIs that busy FQHC leaders should prioritize to ensure the efficient operation and financial stability of their healthcare facilities.

Having a high amount of accounts receivable isn’t a bad thing. Having a high aged-receivable balance is. The difference is time. In the world of FQHC Billing, time is our enemy. Many payers like to play games and invent timely filing limits that are much shorter than CMS Medicare and Medicaid. Together, we can hold them accountable and make sure FQHCs get paid for the valuable services they provide.

1. Accounts Receivable Aging: The 30-Day Rule

Not all accounts receivable have the same value. For instance, we typically don’t expect to collect 100% from our uninsured patients so we take an allowance for bad debt. FQHCs should have different metrics and targets for their commercial and government payers as compared to their self-pay accounts.

One of the first KPIs that should always be on the radar of FQHC leaders is the percentage of their accounts receivable that are aged greater than 90 days AND accounts receivable that are aged less than 30 days.

Why the 30-day rule?

Typically, accounts receivable that are within 30 days are current accounts. These balances are in progress and shouldn’t be a reason to panic. Balances greater than 90 days are aged receivables that should be creating some concern within the revenue cycle operations.

You’ll need to develop your own targets, but we recommend measuring your insurance and patient accounts that are greater than 90 days from the visit date. Your target should be anything below less than 20% of the balances.

In a nutshell: The idea behind measuring this metric is to aim to maintain an accounts receivable aging report that shows most of the aging within 30 days. Getting medical and dental claims paid the first time can significantly improve cash flow.

For example, if your insurance accounts receivable balance is $5,000,000 – you want well under $1,000,000 (20%) to be older than 90 days. Optimally, a well-running revenue cycle operation of this size would demonstrate $4,500,000 (90%) within 0-30 days aged and not more than $500,000 aged at any period beyond 30 days. Pro tip – remember to look at your patient accounts receivable separately. Reference your company’s bad debt policy to make sure that bad debt is regularly adjusted in your medical billing software.

2. Days That Billed Visits Remain in Accounts Receivable

While monitoring accounts receivable age is essential, it's equally important to track the number of days that billed visits remain in the accounts receivable. This metric provides insight into how quickly your center is converting billed visits into paid visits. In essence, if your daily billing production is $50,000 and your accounts receivable balance is $1,500,000, then you have 30 days-in-AR (DAR).

In a nutshell: Your goal when tracking this metric should be to minimize the number of days billed visits remain in accounts receivable. Timely payment collection not only improves cash flow but also reduces the risk of bad debt write-offs. The target days-in-AR is 40 days or less.

3. Timely Conversion of Billed Visits to Paid Visits

It's crucial that these billed visits are turned into paid visits, promptly. Your success rate is measured by the number of qualified encounters that get paid at or above $1. If you have your fee schedule loaded, you can measure to ensure they are being paid correctly, as well. If there is no money on the claim transaction, it is “Not Paid” and reduces from the overall effectiveness.

In a nutshell: This metric will tell you more than just how long unpaid bills are sitting in AR. It'll tell you how successfully unpaid bills are getting paid in the grander scheme of things. The goal here should be to implement efficient billing and collections processes to convert billed visits into paid visits in a timely manner. Streamlining this process can boost revenue and reduce financial strain.

4. Error Rates: The Cost of Mistakes

Errors in billing and coding can be costly for FQHCs. High error rates not only result in financial losses but also consume valuable time and resources for correction and re-submission. Additional training or working with FQHC billing experts, like Synergy Billing, can alleviate this burden.

In a nutshell: Keep an eye on those errors and work to maintain low error rates by investing in staff training, quality assurance, and error detection systems. This proactive approach saves time and resources in the long run.

5. Claim Denials: Identifying and Addressing Issues

Tracking the number of claims that are denied is a critical KPI. While it may seem like a "Debby Downer" to focus on a negative metric like this one, it weighs heavily on the overall financial health of your center. Frequent claim denials can indicate underlying issues in your billing and coding processes. 

In a nutshell: Investigate the root causes of claim denials and implement corrective actions. Reducing claim denials speeds up revenue realization and minimizes administrative burdens.

6. Cash on Hand: The 90-Day Rule

Finally, perhaps one of the most important KPIs for FQHC leaders to monitor is the amount of cash on hand. Ideally, your center should maintain at least 90 days' worth of operating expenses in cash reserves.

In a nutshell: Having a robust cash reserve provides financial security and flexibility. It ensures that your FQHC can weather unexpected challenges without compromising patient care. It is also looked upon favorably by HRSA.

Prioritizing Your KPIs for Efficiency

With so much on your plate, busy FQHC leaders like yourself need a streamlined approach to KPI monitoring. Here are some ways to make it efficient: 

1. Use Automated Reporting Tools: Implement software solutions that can automatically generate reports for these KPIs. This saves time and ensures data accuracy. Need help with this? Let's chat.

2. Set Clear Benchmarks: Establish benchmarks for each KPI so you can quickly identify when performance deviates from the desired standard. This takes arbitrary numbers and turns them into goal-setting tools.

3. Delegate Responsibility: Assign staff members or hire billing experts to be responsible for tracking and reporting on specific KPIs. This delegation frees up your time while ensuring that KPIs are monitored consistently.

4. Regularly Review and Adjust: Schedule regular meetings to review KPI reports and discuss strategies for improvement. Adjust your approach as needed to address any issues that arise.

In the fast-paced world of FQHC leadership, time is a precious commodity. Prioritizing the right KPIs can make all the difference in efficiently managing your healthcare facility. By focusing on measurements that show effectiveness and efficiency, you can ensure the financial health and stability of your FQHC. Remember, non-profit is a tax status not a business model.

The biggest mistake a person can make is not getting started. If you want to work with the industry’s leading FQHC revenue specialists, you need to speak with Synergy Billing. Are you ready to begin? We are here to serve you, 386-675-4709.

HOW TO MEASURE PERFORMANCE

How to Measure Performance by Jayson Meyer, CEO & Founder Synergy Billing