Running a successful behavioral health practice involves much more than providing excellent care to your clients. Behind every therapy session and treatment plan lies a complex revenue cycle management process that directly impacts your practice’s financial health. For behavioral health providers, especially those offering ABA therapy services, understanding and tracking key billing metrics is extremely important because they help ensure that your practice stays financially viable and capable of providing the best quality care to those who need it.
This blog explores eight key metrics you should be tracking to streamline your revenue cycle management and ensure efficient and effective behavioral health billing practices.
Why accuracy is important in behavioral health billing
Billing for behavioral health services is by no means a simple process – it involves managing many factors, from claim submissions and reimbursements to regulatory compliance. In behavioral health billing, particularly for ABA therapy, these challenges are only amplified by the need for frequent, recurring treatments. Each session must be properly documented and billed to ensure continuous care isn’t interrupted by payment issues.
Because of how complex ABA therapy billing can be, it’s incredibly easy to make mistakes. But, even the smallest errors with behavioral health billing codes can significantly affect your practice’s reputation and bottom line. These mistakes can lead to payment delays, short payments, and even claim denials or rejections, affecting your revenue and the perception of your practice by both patients and insurance companies.
8 Important revenue cycle KPIs for behavioral health billing
Accuracy and efficiency are crucial when billing patients for behavioral health services. If you know which key performance indicators (KPIs) to track, you can identify and address potential issues early, reducing claim denials, saving you time on your ABA therapy billing, and improving your cash flow.
Here are eight key metrics you should be tracking for better patient billing.
1. Claim denial rates
Your claim denial rate is one of the most critical indicators of the health of your billing process. This metric measures the percentage of claims insurance companies reject, which can significantly impact your practice’s cash flow. A high denial rate often signals underlying issues in your billing process that need attention, such as problems with documentation, coding errors, or problems with your authorization processes. Tracking denial rates and their specific causes allows you to resubmit problematic claims quickly and correctly, identify patterns, and implement targeted strategies to prevent future denials.
2. Days in Accounts Receivable (AR)
Days in Accounts Receivable (AR) measures how long your practice takes to collect payment after submitting a claim. It provides a more focused look at the collection process, indicating how quickly your practice takes to collect outstanding payments. Your goal should always be to minimize the number of days claims spend in your AR, ideally not letting them age past 30 days. A high number of days in AR could be caused by several factors, from issues with claim submission timing to payer processing delays or ineffective follow-up procedures. These issues indicate problems with your collection process that could be costly for your practice.
Tracking your Accounts Receivable Aging in conjunction with Days in AR can give you a more detailed view of unpaid claims, breaking them down into age categories (for example, 0-30 days, 31-60 days, etc.). This helps your team identify overdue accounts and better prioritize their follow-up efforts, ensuring that claims are addressed timeously.
Days Revenue Outstanding (DRO)
Days Revenue Outstanding (DRO) is a metric similar to Days in AR, measuring the average time it takes to collect revenue once you have billed for your services. While Days in AR and Accounts Receivable Aging help identify bottlenecks in your collection process, tracking DRO assesses the overall efficiency of your billing process, highlighting any delays or inefficiencies that could negatively impact your practice’s cash flow and financial health.
3. First-Pass Resolution Rates
First-Pass Resolution Rates refer to the percentage of claims accepted and paid on the first submission without any need for resubmission or corrections. High first-pass resolution rates (ideally above 90%) often indicate that your claims are clean, complete, and effectively meeting payer requirements. Lower rates, on the other hand, could suggest problems with your documentation processes, coding accuracy, or staff training needs.
4. Reimbursement rates
This is a term that refers to the amount of money being reimbursed by insurance companies compared to the amount that was billed. Monitoring this metric can help you ensure you’re being paid appropriately for your services. It’s important to keep detailed records of reimbursement rates across different insurance payers and types of services. This information is invaluable during contract negotiations and can help you quickly spot when payments don’t match your expectations, allowing you to take necessary actions to address any discrepancies.
5. Bill charge lag times
This metric measures the time between service delivery and claim submission, which is crucial for maintaining healthy cash flow because the longer you wait to submit claims, the longer they take to get paid. A good rule of thumb is to aim to submit claims within 24–48 hours of service delivery. Or, for recurring services like ABA therapy, establish a consistent weekly or monthly submission schedule to ensure timely billing. It is always best to submit claims sooner rather than later because longer lag times can lead to increased denial rates and delayed payments.
Keeping your bill charge lag times low can also help ensure that all services you provide are properly documented and billed while the details are still fresh. This reduces the risk of missing charges or making documentation errors that could lead to denied claims or compliance issues.
6. Clean claim rates
Your clean claim rate represents the percentage of claims that pass through your billing system without errors or manual intervention. This metric is directly tied to how quickly you get paid and how much time your staff spends on billing tasks. The higher your clean claim rate, the better. Lower rates often signal underlying problems with your documentation processes, coding accuracy, or claim submission procedures. So, monitoring this metric can help you identify any training needs or areas for process improvements.
7. Cost to collect
Cost to collect is the amount of money spent to collect payments, including billing staff salaries, software, and other resources. Keeping this cost low is essential for maintaining profitability. By optimizing your billing process, you can reduce the cost to collect and increase your practice’s net revenue.
8. Overall patient satisfaction
Patient satisfaction with your billing processes can significantly impact the success of your practice. This metric goes beyond clinical care to include the entire patient’s financial experience, from initial insurance verifications to payment collections.
This metric reflects the quality of service and care provided by your practice, directly impacting your patient retention and referrals. Satisfied patients are more likely to return and recommend your services to others. To improve these metrics, it’s important to be as informative and transparent in patient billing as possible and provide easy-to-use payment options.
Optimizing your billing strategy
While the above metrics provide a solid framework for understanding the financial performance of your behavioral health practice, they only scrape the surface of a long list of factors that impact your billing and operational efficiency. Metrics like your net and gross collection ratios, turnaround time for refunds, average treatment revenue, and tracking receivables over 120 days are just a few additional considerations that demonstrate the intricate process of effective behavioral health billing.
Navigating these complexities in-house, while possible, can present several unnecessary challenges for your practice, from significant funds being spent on resources to continually training staff on evolving billing processes and regulatory changes. These challenges can also increase the risk of billing errors and compliance issues, ultimately taking up valuable time and focus from patient care.
Missing Piece specializes in behavioral health billing services, focusing on supporting ABA therapy practices to navigate these complex billing landscapes. With our patient billing services, you can access an experienced team with all the specialized expertise and resources your practice needs to ensure accurate, efficient billing. This gives you the time to focus on what matters most – your patients. To find out more, reach out to our team, and we will happily answer any questions you may have, debunk any ABA therapy billing misconceptions, and walk you through exactly how we can help you.