December 3rd, 2015
By: Codapedia Editor (Wed, Jan/28/2009)
The gross collection ratio is shockingly low for many practices. Physicians do not understand why they collect only 20, 40, 60 or 80 cents on the dollar. The percentage of collections based on the gross charges varies significantly by practice and specialty. It is influenced by a number of things. The first is how aggressively the practice sets its fee schedules. Fee schedules which are set at a much higher rate than reimbursement allowances result in a lower gross collection rate. Many third party contracts with low reimbursement rates will also affect the ratio. The greater the percentage of Medicaid patients in the practice, the lower the gross collection ratio will be. Also, surgical practices tend to have a much lower collection rate than primary care practices.
Practices that do a good job collecting patient due and insurance due balances have a higher gross collection rate.
This measure is not the best measure of how well the staff is doing in collecting accounts receivable, because it is influenced by so many factors out of the staff's control, including fee schedule rates, the reimbursement rates from third party insurance companies and the group’s payer mix.
It is important, however, to monitor this ratio monthly as an early warning system in your collection process. Normative data, by specialty, may be purchased from the Medical Group Management Association or from Practice Support Resources.