Uncollectible Accounts Rate

The Uncollectible Accounts Rate is a key metric in healthcare revenue cycle management that measures the percentage of patient accounts that are deemed uncollectible or bad debt. This metric is calculated by dividing the total amount of uncollectible accounts by the total amount of patient accounts receivable and multiplying the result by 100.Uncollectible accounts are those that cannot be collected due to various reasons such as patient bankruptcy, insurance denials, or inability to pay. A high uncollectible accounts rate can indicate issues with the revenue cycle process, such as inadequate patient eligibility verification, poor claims management, or ineffective patient collections.

By tracking the uncollectible accounts rate, healthcare organizations can identify areas for improvement in their revenue cycle management processes and take corrective actions to reduce bad debt and improve financial performance. It is important to note that while some level of uncollectible accounts is inevitable in healthcare, a high uncollectible accounts rate can have a significant impact on the financial health of the organization.

Uncollectible Accounts Rate is calculated by dividing the total amount of uncollectible accounts by the total amount of charges for a given period and multiplying the result by 100.

The formula for calculating the Uncollectible Accounts Rate is:

Uncollectible Accounts Rate = (Total Uncollectible Accounts / Total Charges) x 100

The Total Uncollectible Accounts is the sum of all accounts that are deemed uncollectible during the period, including bad debt write-offs and adjustments. The Total Charges is the sum of all charges billed during the same period.

For example, if a healthcare organization had $100,000 in uncollectible accounts and $1,000,000 in total charges for a given period, the Uncollectible Accounts Rate would be:

Uncollectible Accounts Rate = ($100,000 / $1,000,000) x 100 = 10%

This means that 10% of the charges billed during the period were deemed uncollectible. The Uncollectible Accounts Rate is an important metric for healthcare organizations to monitor as it can impact their financial performance and cash flow.

Best practices to improve Uncollectible Accounts Rate are:

1. Verify Patient Information: Ensure that patient information is accurate and up-to-date. Verify insurance coverage and eligibility before providing services to avoid billing errors and denials.

2. Train Staff: Train staff on proper billing and coding procedures to reduce errors and improve accuracy. Provide ongoing education to keep staff up-to-date on changes in regulations and policies.

3. Use Technology: Implement technology solutions such as electronic health records (EHRs) and revenue cycle management (RCM) software to streamline processes and reduce errors. Use automated tools to identify and flag potential billing errors and denials.

4. Monitor Performance: Regularly monitor key performance indicators (KPIs) such as days in accounts receivable (AR) and denial rate to identify areas for improvement. Use data analytics to identify trends and patterns that can help improve revenue cycle performance.

5. Improve Patient Communication: Communicate clearly with patients about their financial responsibilities and payment options. Provide clear and concise billing statements and offer payment plans to help patients manage their healthcare costs.

6. Follow Up on Claims: Follow up on denied claims and resubmit them promptly. Monitor claims that are pending payment and escalate them as needed to ensure timely payment.

7. Outsource Collections: Consider outsourcing collections to a third-party vendor with expertise in healthcare revenue cycle management. This can help improve collections and reduce the burden on internal staff.

By implementing these best practices, healthcare organizations can improve their uncollectible accounts rate and optimize their revenue cycle performance.

The industry standard benchmark for Uncollectible Accounts Rate is typically around 2-3% of total patient accounts.

This benchmark is important because it helps healthcare organizations understand the effectiveness of their revenue cycle management processes. A high Uncollectible Accounts Rate can indicate issues with patient billing and collections, as well as potential problems with insurance claims and denials. On the other hand, a low Uncollectible Accounts Rate can indicate that an organization is effectively managing its revenue cycle and collecting payments in a timely manner.

Revenue cycle software can improve the Uncollectible Accounts Rate metric by providing real-time data and analytics that can help identify potential issues before they become uncollectible. With the help of revenue cycle software, healthcare organizations can track and monitor patient accounts, identify trends, and take proactive measures to prevent uncollectible accounts.

MD Clarity's revenue cycle software is designed to help healthcare organizations improve their revenue cycle management by providing a comprehensive suite of tools and features. Our software can help you streamline your billing and collections processes, reduce denials and rejections, and improve your overall financial performance.

If you're interested in seeing firsthand how MD Clarity's revenue cycle software can improve your Uncollectible Accounts Rate metric, we invite you to book a demo with one of our experts. During the demo, we'll show you how our software works and how it can help you achieve your revenue cycle management goals. Don't wait, book your demo today!