By Lemuel Areglo, CPC | Director of Revenue Cycle Management Services
Key Takeaways
- Many pediatric practices face a visibility gap rather than a billing crisis. When cash flow is inconsistent, identifying which metrics are underperforming is the first step toward improvement.
- Denial rates exceeding 10% can significantly impact revenue. High-performing pediatric practices maintain rates below 5% by implementing proactive measures and efficient appeals processes.
- Claims should be submitted within 24 hours of a patient visit. Delays in submission extend the payment timeline and can accumulate across multiple claims.
- Monitoring relevant KPIs is essential for assessing the performance and efficiency of your billing operations.
If your pediatric practice is tracking revenue cycle performance but still experiencing slow cash flow, the issue often lies in a lack of visibility. Most clinics do not have a billing crisis; they have a measurement gap.
Here are nine key performance indicators (KPIs) that can be directly improved by professional billing services, along with benchmarks and actionable insights to achieve them.
Table of Contents
How We Selected These Nine
Not every billing metric warrants your attention. We focused on those directly linked to revenue, controllable by billing services, and applicable to pediatric practices. If it doesn’t impact cash flow, staff workload, or compliance, it didn’t make the list.
1. Days in Accounts Receivable
This metric indicates how long it takes to convert a patient visit into cash. High-performing pediatric practices aim to keep this under 30 days. If your days in accounts receivable exceed 50, there may be issues with claim submission or follow-up on aging accounts.
The solution is straightforward: ensure same-day claim submission, verify insurance eligibility prior to appointments, and actively monitor accounts that are 61–90 days old.
2. Clean Claim Rate
Every claim that is denied costs time and delays payment by days or even weeks. The industry standard is to achieve a clean claim rate of 95% or higher, with top billing operations reaching 98%.
The difference often lies in pre-submission scrubbing, which involves identifying missing modifiers, incorrect codes, and payer-specific requirements before the claim is submitted. This foundational work is essential for ensuring a smooth cash flow.
3. Denial Rate
Currently, denial rates in the industry have risen to 12–15%. High-performing pediatric practices maintain rates below 5%. This discrepancy represents a significant amount of revenue that practices may either recover slowly or write off entirely.
Billing services address this through two main strategies: prevention (eligibility checks, prior authorization tracking, accurate coding) and recovery (appeals, pattern analysis, and addressing root causes to prevent recurring denials). Both strategies are crucial, yet many practices focus on only one.
4. Net Collection Rate
This metric reveals the percentage of the revenue you are actually collecting. A rate below 90% indicates that you are leaving money on the table due to underpayments, missed charges, or unaddressed denials.
Aim for a net collection rate of 95% or higher. Achieving this requires conducting charge capture audits, implementing automated underpayment detection, and diligently working accounts until they are fully paid.
5. First-Pass Resolution Rate
This metric assesses the efficiency of your billing process by measuring how often a claim is paid correctly on the first submission—without rejections, underpayments, or appeals. A low rate indicates that your billing staff may be spending too much time resolving issues instead of processing new claims.
Target a first-pass resolution rate of 95% or higher. Improving this metric often uncovers specific failure points that, once addressed, can enhance overall performance.
6. Charge Capture Rate
This metric highlights preventable revenue loss. You provided the service, documented it, but failed to bill for it.
Missed charges often occur in ancillary services, supplies, and procedures that are documented but not coded. A proficient billing service can reconcile clinical notes with submitted charges and identify missing items before filing deadlines close.
7. Patient Collection Rate
With patients now responsible for a larger share of their healthcare costs, the average collection rate on these balances ranges from 34% to 48%. This is not merely a billing issue; it’s primarily a communication challenge.
Providing clear, understandable statements, offering practical payment plans, and proactively reaching out before balances age into bad debt are essential strategies. While these practices are not revolutionary, many pediatric practices lack the systems to implement them consistently.
8. Claims Submission Speed
Medicare has a 14-day payment floor. Each day a claim remains unsubmitted adds unnecessary time to your payment timeline. Claims should be submitted within 24 hours of a patient encounter—this is non-negotiable.
The bottleneck often occurs at the transition between clinical documentation and billing. When these systems are integrated, delays are minimized. If they are not, manual data transfers can lead to errors and inefficiencies.
9. Cost to Collect
This metric is often overlooked. If you are spending 10 cents to collect every dollar, it significantly impacts your operating margin, a detail that can be easily missed in monthly reports. The target should be under 5%.
Outsourcing billing does not automatically reduce this cost; however, a competent billing service can help lower it by distributing technology and staffing expenses across a larger client base than any single pediatric practice can justify.
A Quick Reference Guide
KPI
Target
Primary Lever
Days in A/R
<30 days
Faster submission + follow-up
Clean Claim Rate
≥95%
Pre-submission scrubbing
Denial Rate
<5%
Prevention + appeals
Net Collection Rate
≥95%
Persistent A/R work
First-Pass Resolution
≥95%
End-to-end tracking
Charge Capture Rate
≥98%
Documentation audits
Patient Collection Rate
>50%
Clear statements + payment plans
Claims Submission Speed
<24 hours
Same-day processing
Cost to Collect
<5%
Process efficiency
Where to Start
Focus on the areas where your metrics are furthest from benchmarks; this will provide the quickest route to recovering lost revenue. If your denial rate exceeds 10%, that’s a critical issue. If claims are delayed for three days before submission, prioritize addressing that.
A reliable billing service will establish baseline metrics before committing to outcomes and will provide regular reports thereafter. If they cannot inform you of your denial rate, that should raise a red flag.
Pediatrics Billing Services integrates seamlessly with clinical documentation, which is crucial for improving metrics such as clean claim rates and submission speed. With no data re-entry and no manual handoffs, billing begins as soon as the provider closes the encounter. This structural improvement leads to sustainable enhancements in performance—not just temporary fixes.
Curious about your clinic’s performance? Establishing a baseline RCM assessment is the essential first step.
Lemuel Areglo, CPC
is the Director of Revenue Cycle Management Services at WRS Health, bringing nearly 15 years of experience leading medical billing, coding, credentialing, and revenue cycle operations across the healthcare industry. Lemuel’s expertise spans the full revenue cycle, including claims management, denial resolution, payment posting, accounts receivable, and practice operations. He has extensive experience supporting specialties including pediatrics, psychiatry, physical therapy, pain management, internal medicine, orthopedic surgery, speech therapy, and sleep medicine.
