Welcome back to the KPI Spotlight Series, where we break down core revenue cycle metrics and translate them into clear insights you can use to strengthen performance across your organization. Today, we’re focusing on two KPIs that have a direct impact on cash flow and operational stability: Denial Rate and Days in Accounts Receivable (A/R).
Denial Rate
What It Is
Denial Rate measures the percentage of claims rejected by payers due to issues like coding errors, missing documentation, eligibility, or authorization gaps.
How It’s Calculated
Denied claim dollars ÷ total submitted claim dollars × 100 (over a period of time)
Claim-count calculations are also acceptable—just be consistent.
Why It Matters
A high Denial Rate slows down payments, increases rework, and raises cost-to-collect. It’s also a valuable indicator of payer trends and behavior, helping you spot:
Payers with Rising Denial Patterns
Repeatedly Denied CPTs
Shifts in Policy or Documentation Requirements
Contract or Payment Issues
These insights help teams adjust workflows and prepare for payer-specific nuances.
Benchmark
High-performing practices target a Denial Rate under 5%. If it’s high, review:
Authorization and Eligibility Workflows
Coding Accuracy and Modifier Use
Demographic Entry
Payer-Specific Rules or Recent Policy Changes
Addressing denials at the source is always more efficient than reworking them later.
Days in A/R
What It Is
Days in A/R shows how long, on average, it takes to collect payment for services.
How It’s Calculated
Total A/R ÷ average daily charges
Why It Matters
High Days in A/R signals delays in claim submission, denial follow-up, patient collections, or payer response times. It reflects how smoothly your revenue moves through the cycle.
Benchmark
Most high-performing groups maintain days in A/R under 40, often between 30–35 days. If it’s high, check for:
Aging Balances in the 60–120+ Day Buckets
Delays in Coding or Claim Submission
Inefficient Follow-Up
Paper vs Electronic Claims Submission
Patient Payment Barriers
Payer Slowdowns or Repeated Requests
Unresolved Denials
Often, elevated A/R is a sign of rising denials upstream.
How These Metrics Work Together
Denial Rate and Days in A/R are closely linked—higher denials almost always push A/R days upward. Improving denials improves cash flow, reduces workload, and keeps A/R healthier over time. It’s helpful to monitor this metric monthly, quarterly, and annually—and compare the same time periods year over year to see performance trends.
