Revenue cycle management (RCM)
Everything between scheduling a visit and collecting the final payment for it: registration, eligibility checks, documentation and coding, claims, follow-up, and payment posting. Many revenue cycle problems start before a claim ever reaches billing.
Read: Revenue Cycle Management Problems Your Biller Can't Fix
Net collection rate
What you collect as a share of what you're owed under contract. It's a net measure, based on contracted (allowed) amounts rather than billed charges, so it isn't inflated by list prices.
How to calculate it: payments collected for a set of visits ÷ the contracted (allowed) amount for those visits, including the patient's share.
Read: A/R Over 90 Days: Why Aging Claims Lose Value
Total cost of medical billing
Our all-in measure of what it costs to get paid: the vendor fee; the staff, outside collections, and contract management that billing touches; and the revenue written off along the way. Counted all-in, it's often 30 to 40 percent of gross annual revenue, many times the vendor fee.
How to calculate it: add up 12 months of those costs, including write-offs, and divide by 12 months of gross annual revenue. The target is under 15%.
Why gross annual revenue, not collections? Most of the market measures billing cost as a share of collections. Measured that way, write-offs drop out of view: they never reach collections, so they never show up in the number. We count them because they're dollars the practice earned, and many of them can be reclaimed.
Read: Medical Practice Overhead: Is Your Cost Mix Balanced?
Write-offs
Revenue the practice earned under its contracts but removed from its books as uncollectible: denials that were never worked, underpayments that were accepted, and patient balances that were never collected. They're different from contractual adjustments, which are the expected gap between list prices and what a payer agreed to pay. A written-off balance leaves accounts receivable right away, so a low A/R can hide a high write-off rate. That's why we count write-offs in the total cost of medical billing.
How to calculate it: write-offs for a period (excluding contractual adjustments) ÷ gross annual revenue for the same period. Review them monthly, by reason.
Read: A/R Over 90 Days: Why Aging Claims Lose Value
Free guide: The Real Total Cost of Medical Billing
Gross annual revenue
What the practice is owed for 12 months of care under its contracts, before anything is written off. It's the base we use for the total cost of medical billing, so that write-offs are counted as a cost rather than disappearing from view.
How to calculate it: 12 months of contracted (allowed) amounts for the care you provided, including the patient's share.
Contract reimbursement rate
What a payer pays you for a service under your contract. It's most useful next to a market reference, such as a percentage of Medicare or published rate data.
How to calculate it: for your top payers and top codes, compare each contracted rate with the market reference, then multiply each gap by 12 months of volume to see what it's worth.
Read: How to Negotiate Reimbursement Rates With Insurers
Charges
What the practice bills for a service at its own list prices (its fee schedule), before any payer discounts. Charges are usually higher than what a payer has agreed to pay. The difference is written off as a contractual adjustment, not lost revenue. That's why net collection rate uses contracted (allowed) amounts rather than charges. Charges still matter: they track volume over time, and they're the basis for A/R days. A fee schedule set below a payer's allowed amount can also leave money unpaid, since many payers pay the lesser of the two.
How to calculate it: total billed amounts for services delivered in a period. Average daily charges = charges for the period ÷ days in the period.
Accounts receivable (A/R) and A/R days
A/R is money owed to the practice for care already delivered but not yet collected. A/R days is how many days of charges are sitting in A/R. The longer a claim waits, the less of it you collect, and the more it costs to chase.
How to calculate it: total A/R balance ÷ average daily charges. We also track the share of what's owed that arrives within 30, 60, and 90 days of the date of service.
Read: A/R Over 90 Days: Why Aging Claims Lose Value
Denial rate
The share of claims a payer refuses to pay as submitted. Many denials trace back to the front desk and the exam room: eligibility not verified, authorizations missed, or documentation that doesn't support the code.
How to calculate it: claims denied ÷ claims submitted in the same period.
Read: Revenue Cycle Management Problems Your Biller Can't Fix
First-pass claim acceptance
The share of claims a payer accepts the first time they're submitted, with no correction or resubmission. It shows how much rework your claims process creates.
How to calculate it: claims accepted on first submission ÷ claims submitted in the same period.
Read: AI Revenue Cycle Management: Automate Paperwork, Not Care
Global obstetric package
A single code that bundles routine prenatal visits, delivery, and postpartum care into one service. For dates of service from January 1, 2027, the American Medical Association's (AMA) Current Procedural Terminology (CPT) code set replaces it with separate reporting for prenatal care, labor management, delivery, and postpartum care.
Read: Global OB Billing Ends in 2027: What Practices Should Do
Shared-savings agreement
A payer contract in which the practice shares in the savings when its care lowers what the payer spends. Benchmarked outcomes data can help make the case.
How it's measured: against a baseline the practice and payer agree on. Terms vary by contract.
Read: Negotiate Better Payer Contracts With Outcomes Data
The Physician Barometer
Our view of 22 criteria covering each physician's care and productivity, benchmarked against peers. Each physician chooses their top 3 changes together with leaders and managers.
Read: The Physician Barometer: Fair Physician Performance Feedback
The Assessment
Days 1–30 of our paid 90-day plan. We review your billing, collections, payer contracts, workflows, and clinical data, benchmark them, and turn the findings into a plan ranked by impact. It's different from the free first look in a discovery call, which comes before it.
Read: Your first 90 days on How We Help
Definitions are general information. Billing rules vary by payer and state.
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