The Importance of Your Anesthesia Practice’s Net Collection Ratio:
Part 2 of our Anesthesia Billing Revenue Cycle Health Series
The formula for determining your anesthesia practice’s net collection ratio (NCR) or percentage is quite simple:
Dollars that were collected against your payer contracted amount (expected)
There should be no variations to this formula. When reviewing reports, if your anesthesia practices’ net collection ratio is quite high but the dollars collected don’t seem to add up, this could be an indication that certain write-offs are erroneously being categorized as a contractual write-off. For more information on write-offs visit Part 1 of our series on Revenue Cycle Health here. Knowing your net collection ratio not only for your overall anesthesia practice but by payer as well, are crucial metrics to have when it comes to managing your revenue cycle.
Why It’s Important to Know Your Anesthesia Practice’s Net Collection Ratio Percentage
The amount of revenue your anesthesia practice collects is directly related to your billing vendor’s performance. It’s easy to collect the initial 80% of billed charges but the remaining 20%, those are the labor intensive hard to collect dollars that require relentless follow-up. That 20% can have a huge impact on your practice’s bottom line. Anesthesia practices were already facing decreased reimbursement prior to the pandemic. In our experience, many insurance companies were already subtly underpaying claims. That problem was compounded during the pandemic and the process to follow-up on those underpaid claims became more convoluted.
At Fusion Anesthesia Solutions, we load your contracted rates by payer right into our anesthesia-specific billing platform. We have processes in place to ensure that any payment outside of the contracted amount is flagged for follow-up by our staff. As a result of the increased difficulty in reaching certain insurance payers, we have successfully instituted a rigorous follow-up process with our staff to address underpaid claims. We have seen increases in the revenue of anesthesia practices switching from a competitor from 5-15%. By using the net collection percentage as our key metric, it becomes the primary driver of our ability to deliver revenue to our clients ensuring we are collecting every penny they are due. Fusion Anesthesia clients can view their net collection percentage, by payer, at any given time via our CogitoAnalytics platform.
If information regarding your net collection ratio is not available or does not seem to make sense, request a custom report from your Client Service representative for a specific time period. The report should include:
- 3 months of data that includes claims that have been fully adjudicated
- Claim level detail including:
- Date of Service
- CPT & ASA
- Applicable Modifiers
- The fee charged
- The expected allowed (along with carrier unit rate)
- The contractual write-off
- Other adjustments including a complete categorical breakdown of the adjustment types
- Payment received categorized by Primary, Secondary or Tertiary insurance payments as well as guarantor payments
- Net payment amount
Your Client Service Representative should be intimately familiar with your account and easily able to tell you the formula your vendor uses to determine your anesthesia practice’s net collection ratio and provide the data to back up their numbers. Be sure to request the payer contracted rates that coincide with the timeframe of the data requested. We will dive into payer contract negotiations in Part 3 of our series on Revenue Cycle Health.
For further insight on your revenue cycle health contact Fusion Anesthesia Solutions at firstname.lastname@example.org.
Written by Jeanette Mini