Net Collection Rate (NCR) is a key performance indicator used in healthcare revenue cycle management to measure the effectiveness of the billing and collection processes. It is calculated by dividing the total amount of payments received by the total amount of charges billed, and then multiplying the result by 100. The NCR provides insight into the percentage of billed charges that are actually collected by the healthcare organization. A high NCR indicates that the organization is effectively collecting payments from patients and insurance companies, while a low NCR suggests that there may be issues with the billing and collection processes that need to be addressed.It is important to note that the NCR does not take into account any adjustments or write-offs that may have been made to the billed charges. Therefore, it is important to also track other metrics such as gross collection rate and denial rate to gain a more comprehensive understanding of the revenue cycle performance.
Net Collection Rate (NCR) is calculated by dividing the total amount of payments received by the total amount of charges billed, minus any contractual adjustments or write-offs.
The formula for calculating NCR is: NCR = (Total Payments / Total Charges) - (Contractual Adjustments / Total Charges)
For example, if a healthcare organization billed $100,000 in charges and received $80,000 in payments, with $10,000 in contractual adjustments, the NCR would be:NCR = ($80,000 / $100,000) - ($10,000 / $100,000) = 0.7 or 70%This means that the organization collected 70% of the charges billed, after accounting for any contractual adjustments or write-offs. A higher NCR indicates better revenue cycle management performance, as it means the organization is collecting a higher percentage of the charges it bills.
Best practices to improve Net Collection Rate (NCR) are:
1. Accurate Patient Registration: Ensure that patient registration is accurate and complete. This includes verifying insurance information, collecting co-pays and deductibles, and obtaining pre-authorizations.
2. Timely Claims Submission: Submit claims in a timely manner to avoid delays in payment. This includes verifying that all required documentation is included with the claim.
3. Denial Management: Develop a robust denial management process to identify and address claim denials promptly. This includes tracking and analyzing denial trends to identify root causes and implementing corrective actions.
4. Follow-up on Outstanding Claims: Regularly follow up on outstanding claims to ensure that they are paid promptly. This includes tracking and prioritizing claims based on their age and value.
5. Patient Collections: Develop a patient collections process that is clear and consistent. This includes communicating with patients about their financial responsibility, offering payment plans, and providing financial counseling when necessary.
6. Contract Management: Monitor payer contracts to ensure that reimbursement rates are accurate and up-to-date. This includes negotiating with payers to improve reimbursement rates when necessary.
7. Performance Metrics: Establish and monitor performance metrics to track progress and identify areas for improvement. This includes tracking NCR, days in accounts receivable, and other key performance indicators.
By implementing these best practices, healthcare organizations can improve their NCR and overall revenue cycle performance.
The industry standard benchmark for NCR is typically around 95%. This means that for every dollar billed, the healthcare organization should collect 95 cents. However, it is important to note that the benchmark can vary depending on the type of healthcare organization, the payer mix, and the geographic location.To calculate NCR, the total amount of payments received is divided by the total amount of charges billed, and then multiplied by 100 to get the percentage. For example, if a healthcare organization billed $100,000 and collected $95,000, the NCR would be 95%.A high NCR indicates that the healthcare organization has an efficient billing and collection process, while a low NCR may indicate issues with claims denials, underpayments, or inefficient billing processes. It is important for healthcare organizations to regularly monitor their NCR and identify areas for improvement to ensure optimal revenue cycle performance.
Revenue cycle software can significantly improve the Net Collection Rate (NCR) metric by streamlining the entire revenue cycle process. With the help of advanced analytics and automation tools, revenue cycle software can identify and address the root causes of revenue leakage, such as coding errors, claim denials, and underpayments. By automating the billing and coding process, revenue cycle software can reduce the number of errors and rejections, resulting in faster and more accurate payments. Additionally, revenue cycle software can provide real-time visibility into the revenue cycle, allowing healthcare providers to identify and address issues before they become major problems. MD Clarity's revenue cycle software is a powerful tool that can help healthcare providers improve their NCR metric. With its advanced analytics and automation tools, MD Clarity's software can help healthcare providers identify and address revenue leakage, reduce errors and rejections, and improve overall revenue cycle performance. If you're interested in seeing firsthand how MD Clarity's revenue cycle software can improve your NCR metric, we invite you to book a demo with one of our experts today. Our team will be happy to show you how our software can help you streamline your revenue cycle and improve your bottom line.