10 Medical Billing KPIs Every Practice Should Track

Effective billing management requires tracking the right metrics. These 10 KPIs give you visibility into your revenue cycle health and highlight areas for improvement.

1. Days Sales Outstanding (DSO)

What it measures: Average days to collect payment after service

Formula: (Average AR / Daily Charges) × Days in Period

Target: < 45 days (Industry average: 45-60 days)

2. Claim Denial Rate

What it measures: % of claims rejected by payers

Formula: (Denied Claims / Total Claims Submitted) × 100

Target: < 5% (Above 10% indicates serious issues)

3. First-Pass Claim Acceptance Rate

What it measures: % of claims paid on first submission

Formula: (Claims Approved First Submission / Total Claims) × 100

Target: > 90% (Benchmark: 90-95%)

4. Accounts Receivable (AR) Aging

What it measures: Distribution of outstanding AR by age

Breakdown: 0-30 days, 31-60 days, 61-90 days, 90+ days

Target: 80%+ collected within 90 days

5. Clean Claim Rate

What it measures: % of claims with no errors or omissions

Formula: (Claims Accepted Without Adjustment / Total Claims) × 100

Target: > 95% (Industry best practice)

6. Net Collection Rate

What it measures: % of billable charges actually collected

Formula: (Payments Received / Total Charges) × 100

Target: > 92% (Benchmark: 92-98%)

7. Cost Per Claim

What it measures: Administrative cost to process one claim

Formula: Total Billing Department Costs / Total Claims Submitted

Target: < $2.50 per claim (Lower is better)

8. Claim Processing Time

What it measures: Days from service to claim submission

Components: Scheduling → Documentation → Coding → Billing → Submission

Target: < 5 days (Industry standard: 3-5 days)

9. Bad Debt Ratio

What it measures: % of charges that become uncollectible

Formula: (Bad Debt Write-Offs / Gross Charges) × 100

Target: < 2% (Benchmark: 1-3%)

10. Revenue Capture Rate

What it measures: % of billable charges that are actually billed

Formula: (Charges Billed / Total Billable Charges) × 100

Target: > 99% (Track to prevent lost revenue)

Creating Your KPI Dashboard

Recommended Tracking Frequency

Daily: Claims submitted, denials received, cash receipts

Weekly: DSO trend, denial rate, claim processing time

Monthly: All 10 KPIs, AR aging, financial analysis

Quarterly: Trend analysis, benchmarking, process improvements

Implementation Tips

✓ Establish baselines for all KPIs before making changes
✓ Set realistic targets based on your practice type and specialty
✓ Automate reporting to reduce manual effort and errors
✓ Review regularly with your billing team and leadership
✓ Link to action items when metrics deviate from targets