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  • Are Your Key Performance Indicators Costing You Money? (Part 3)

    Co-written by Scott A

    Co-written by Scott A. Moore, Esq., Principal, Moore EMS Consulting LLC

    A Critical Look at How Common KPIs Are Being Used (or Misused) by Ambulance Billing Offices

    (6 min read) This is the third blog in our Key Performance Indicator (KPI) series. We’re taking a critical look at some of the more common revenue cycle management (RCM) performance metrics used by EMS agencies. Used properly, these performance metrics can be an invaluable resource. Our intent is to help you try to place these performance metrics in their proper context (not to convince you that these performance metrics are inherently wrong, or that they have no place in your billing operation).

    In our last article, we emphasized that individual RCM vital signs can sometimes be important on their own. More often, it is how the various metrics relate to one another at a snapshot in time, as well as how they trend over time, that provides the clearest indication of the organization’s financial health and viability.

    Previous KPIs: Billing Lag Time and Days Sales Outstanding

    In previous blogs, we tackled Billing Lag Time and Days Sales Outstanding (DSO). Billing Lag Time is the interval between the date on which a trip is completed, and the date on which the claim is billed and submitted to the payer. DSO is the interval between the date a transport was completed, and the date on which the claim is paid. As a general rule, a longer period for either of these metrics indicates an adverse effect on your organization’s cash flow.

    Percentage of Accounts Receivable Over 90 Days (AR>90)

    AR>90 is one of the most basic RCM vital signs. As you would suspect, the percentage of AR>90 is the percentage of your total accounts receivable that remains outstanding more than 90 days after the date on which the transport was completed. Typically, an organization’s claims aging is distributed into buckets: Current, 31-60, 61-90, 91-120, 121-180, and Over 180.


    As a general rule, you want the majority of your outstanding AR to fall within the first three buckets. However, some percentage of AR>90 is unavoidable, as there are certain types of claims that typically do not settle within 90 days. For example, personal injury, workers’ compensation, out-of-network claims, and estate claims may take longer than 90 days to collect.

    These claims can take a year or more to close (i.e., fully resolve). This means you should have a process for periodically checking on the status of these accounts. Do not just place these accounts in a “Review” status; in our experience, this is simply a place in your billing software where difficult or time-consuming claims go to die.

    Consistent Measurement

    As we have stated in the prior articles, when measuring and tracking any RCM vital sign, you should be using a consistent day to run your reports and/or close your billing period. Often, we will hear people say that they close the billing period once all of the trips from that period have been submitted. That means that their billing period could be closing on the third, fifth, fifteenth, or even the thirtieth day following the end of that billing period (generally, end of month). Moreover, the closing date will rarely be the same from month to month. As a result, it is difficult to compare periods or consistently measure periods of billing activity. It is meaningless to compare inconsistently measured periods of activity. The only meaningful analysis is an “apples to apples” comparison.

    Importance of Trending

    An efficient and effective RCM process will have a lower AR>90. Equally telling, however, is how the percentage increases or decreases over time. As you would presume, if this metric is consistently growing over time, it typically indicates an underlying issue with your RCM process. The issue can be due to internal or external issues. For example, AR>90 could be growing because an increasing number of claims require administrative appeals before they are paid. If this issue is confined to a single payer, it suggests that this payer may have changed its coverage requirements, and your RCM process has not evolved to adjust to this change. If the issue affects multiple payers, the cause is likely an internal process or procedure. For example, there may be an issue with your eligibility verification process, which is resulting in claims being submitted to an incorrect payer. Another common example is automobile accident claims. It is not uncommon for EMS agencies to submit their claim and to receive a request for additional documentation in response. The EMS agency will then submit that additional documentation (e.g., their trip report, police reports, etc.), but the automobile insurer may fail to connect these records to the underlying claim. This can lead to substantial delays, claim denials, etc. If your organization is seeing an increase, further investigation will be required to determine the cause.

    Resetting Aging

    Another important consideration is how your treat your claims following a partial payment or a change in payers. Some systems will reset the payer aging following a shift from a primary payer to a secondary payer. There is nothing wrong with this practice, and, in some instances, it may offer some benefits. However, it is critical that you understand how you handle payer changes. Failing to recognize that your organization resets the aging timeclock upon a payer change can provide a distorted view of your RCM process. One solution might be to run your payer aging reports by both Trip Date and Aging Date.

    Our Recommendation

    According to Healthcare Finance Management Association (HFMA), the benchmark for hospital AR>90 is ≤ 20%. For physician practices, the benchmark is between 15-20%. However, there is no published benchmark for EMS agencies.

    From our perspective, the actual benchmark percentage is less important than understanding the factors that can cause a particular claim to fall beyond the 90-day mark. As we mentioned earlier, certain claims (e.g., personal injury claims) are likely to fall in the 90+ day bucket regardless of your organization’s processes. We recommend that you focus on identifying those claims which should not be outstanding more than 90 days.

    Make a list of your organization’s RCM vital signs. Each RCM vital sign should be documented and tracked consistently from month to month and from year to year. Format your tracking log so that subtle variations will alert you of any negative trends. Revenue cycle mangers should also identify seasonal impacts that can influence these metrics over the course of a year. These known seasonal variations can impact cash flow, and therefore, should be made known to your executive team. Remember, one of the more important roles a revenue cycle manager plays is to provide critical insights into the anticipated cash flow of the organization. Like a meteorologist predicting the weather, this forecast can help your organization avoid getting caught in the (metaphorical) rain.

    The goal is to know the seasonal impacts on all of your organization’s RCM vital signs, and to adjust your RCM processes accordingly, since the vital signs are relational. One vital sign tends to impact or affect another. Pushing your claims out the door to improve AR>90 alone may increase your bad debt and overall collection percentage.

    Read More on Key Performance Indicators for EMS Billing:

    Are Your Key Performance Indicators Costing You Money? (Part 1)

    Are Your Key Performance Indicators Costing You Money? (Part 2)

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