By Lemuel Areglo, CPC | Director of Revenue Cycle Management Services
Key Takeaways
- Many pulmonology practices face a visibility gap rather than a billing crisis. If your cash flow is inconsistent, the first step is identifying which metrics are underperforming and by how much.
- Denial rates exceeding 10% are unacceptable. High-performing practices maintain rates below 5% by combining proactive measures with efficient appeals when denials occur.
- Claims should be submitted within 24 hours of patient encounters. Each day a claim remains unsubmitted extends the payment timeline and accumulates across all claims.
- Monitoring relevant KPIs is essential for assessing the performance and efficiency of your billing operations.
If your revenue cycle performance tracking reveals a slow cash inflow, the issue often lies not in effort but in visibility. Most pulmonology practices do not have a billing crisis; they have a measurement gap.
Here are several key performance indicators (KPIs) that can significantly enhance your billing services, along with benchmarks and actionable changes needed to achieve them.
Table of Contents
How We Selected These Key Metrics
Not every billing metric warrants your attention. We focused on those directly linked to financial performance, controllable by billing services, and applicable to pulmonology 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 revenue. High-performing pulmonology practices aim to keep this under 30 days. If your days in accounts receivable exceed 50, there may be issues with slow claims submission or inadequate follow-up on aging accounts.
The solution is straightforward: ensure same-day claim submission, verify insurance before appointments, and actively monitor accounts that are 61–90 days old.
2. Clean Claim Rate
Every claim that is denied costs you time and delays payment by days or even weeks. The industry standard is a denial rate of 95% or higher, with top billing operations achieving rates of 98%.
The difference often lies in pre-submission scrubbing, which includes identifying missing modifiers, invalid codes, and payer-specific requirements before claims leave your system. While it may not be glamorous, this work is crucial for maintaining a healthy cash flow.
3. Denial Rate
Currently, denial rates in the industry have risen to 12–15%. High-performing practices maintain rates below 5%. This gap represents significant revenue that clinics either recover slowly or write off entirely.
To address this, practices should focus on two strategies: prevention (eligibility checks, prior authorization tracking, accurate coding) and recovery (appeals, pattern analysis, addressing root causes to prevent recurring denials). Both strategies are essential, yet many practices only implement one.
4. Net Collection Rate
This metric reveals the percentage of the revenue you are actually collecting. A net collection 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, not just submitted.
5. First-Pass Resolution Rate
This metric measures the efficiency of your billing process by indicating how often a claim is paid correctly on the first submission—without rejections, underpayments, or appeals. A low first-pass resolution rate means your billing staff spends more time resolving issues than 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 billing efficiency.
6. Charge Capture Rate
This metric reflects 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 were documented but not coded. A billing service can help close this gap by reconciling clinical notes with submitted charges and flagging any discrepancies before timely filing deadlines.
7. Patient Collection Rate
As patients are increasingly responsible for a larger share of their healthcare costs, the average collection rate for these balances ranges between 34–48%. This is not merely a billing issue; it is fundamentally a communication issue.
Providing clear, understandable statements, offering practical payment plan options, and proactively reaching out before balances age into bad debt are essential strategies. While none of these are revolutionary, many 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 closing an encounter—this is non-negotiable.
The bottleneck often arises from the transition between clinical documentation and billing. When these systems are integrated, delays are minimized. Without integration, manual data transfers can lead to errors and omissions.
9. Cost to Collect
This metric often goes unnoticed. If you are spending 10 cents to collect every dollar, it significantly impacts your operating margin, a detail that can be overlooked in monthly reports. The target should be under 5%.
Outsourcing billing does not automatically reduce this cost; however, a competent billing service can lower it by distributing technology and staffing expenses across a broader client base than any single practice can afford.
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 one or two metrics at a time rather than attempting to address all nine simultaneously. Identify the areas where you are furthest from benchmarks—this will be your quickest route to recovering lost revenue. If your denial rate exceeds 10%, that is a critical issue. If claims are sitting for several days before submission, prioritize that.
A reputable billing service will establish baseline metrics before promising results and will provide regular updates thereafter. If they cannot tell you your denial rate, that should raise a red flag.
Pulmonology Billing Services integrates directly with clinical documentation, which significantly impacts metrics such as clean claim rates and submission speed. This eliminates the need for data re-entry and manual handoffs. When the provider closes the encounter, billing begins. 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 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 pulmonology, psychiatry, physical therapy, pain management, internal medicine, orthopedic surgery, speech therapy, and sleep medicine.
