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What Are the Key Metrics to Measure Outsourced Pharmacy Billing Success

When long-term care (LTC) facilities outsource pharmacy billing, tracking measurable outcomes is crucial to assess the effectiveness of the partnership. But which metrics truly matter? Monitoring the right performance indicators helps facilities ensure their outsourcing provider delivers value, improves revenue cycles, and aligns with operational goals.

In this guide, we’ll explore the key metrics LTC facilities should use to evaluate the success of outsourced pharmacy billing services.

Key Takeaways

Claims acceptance rate is a critical metric for evaluating billing accuracy.

Time to reimbursement directly impacts cash flow and financial stability.

Cost savings validate the financial benefits of outsourcing.

Denial rates and resolution time reflect the provider’s effectiveness.

Regular reporting ensures transparency and continuous improvement.

Top Metrics to Measure Success

Claims Acceptance Rate

This metric tracks the percentage of claims accepted on the first submission, highlighting the accuracy and efficiency of the billing process.

Why It Matters:
A high acceptance rate indicates that claims are submitted with correct coding, complete documentation, and compliance with payer guidelines.

What to Look For:

• Target Benchmark: 95% or higher for first-pass acceptance rates.
• Impact: Reduces rework and accelerates cash flow.

Time to Reimbursement

Also known as days in accounts receivable (AR), this measures the average time it takes to receive payment for submitted claims.

Why It Matters:
Shorter reimbursement times improve cash flow and financial stability for LTC facilities.

What to Look For:

• Target Benchmark: 30–40 days or fewer in AR.
• Impact: Reflects how efficiently claims are processed and paid.

Denial Rate

This metric shows the percentage of claims denied by insurers and provides insight into the effectiveness of the billing provider in avoiding errors.

Why It Matters:
A low denial rate signals strong attention to detail and effective claims management.

What to Look For:

• Target Benchmark: Denial rates under 5%.
• Impact: Fewer denials mean fewer appeals and less revenue loss.

Denial Resolution Time

This measures how quickly denied claims are corrected and resubmitted for payment.

Why It Matters:
Delays in resolving denials can disrupt cash flow and increase administrative burdens.

What to Look For:

• Target Benchmark: Resolutions completed within 15–30 days.
• Impact: Faster resolutions reduce financial strain and administrative workload.

Cost Savings

A key reason for outsourcing pharmacy billing is to reduce operational expenses. Measuring cost savings helps facilities confirm the financial benefits of outsourcing.

Why It Matters:
Tracking cost reductions ensures outsourcing delivers the expected return on investment (ROI).

What to Look For:

• Target Benchmark: Savings of 50–70% compared to in-house billing.
• Impact: Validates outsourcing as a cost-effective solution.

Reporting Accuracy and Transparency

Frequent and detailed reports from the outsourcing provider are essential for assessing performance and making informed decisions.

Why It Matters:
Transparent reporting fosters trust and allows for continuous improvement in billing practices.

What to Look For:

• Target Benchmark: Regular, accurate, and actionable reports delivered monthly.
• Impact: Promotes accountability and data-driven adjustments.

What Did We Learn?

Evaluating the success of outsourced pharmacy billing requires tracking key metrics like claims acceptance rate, time to reimbursement, denial rate, and cost savings. These metrics provide a clear picture of the outsourcing provider’s impact on revenue cycles and operational efficiency. Partnering with a trusted provider like Staffingly, Inc. ensures your LTC facility meets performance benchmarks and achieves measurable results.

FAQ

How can LTC facilities monitor billing provider performance?

Facilities should request regular reports detailing key metrics like claims acceptance rate, denial rates, and cost savings to evaluate performance.

Why is claims acceptance rate important?

It reflects the accuracy of claims submissions and the provider’s ability to meet payer requirements, reducing delays and rework.

How do cost savings validate outsourcing success?

Cost savings confirm that outsourcing is more affordable than in-house operations, ensuring a strong return on investment.

Disclaimer

The information in our posts is meant to inform and educate both healthcare providers and readers seeking a better understanding of the prior authorization process. However, it is not a substitute for professional advice. Insurance requirements, policies, and approval processes can vary widely and change over time. For accurate guidance, healthcare providers should consult directly with insurers or use professional resources, while patients should reach out to their insurance providers or healthcare professionals for advice specific to their situation.

This content does not establish any patient-caregiver or client-service relationship. Staffingly, Inc. assumes no liability for actions taken based on information provided in these posts.

For tailored support and professional services,

please contact Staffingly, Inc. at (800) 489-5877

Email : support@staffingly.com

About Content: This Blog is brought to you by Staffingly, Inc., a trusted name in healthcare outsourcing. The team of skilled healthcare specialists and content creators is dedicated to improving the quality and efficiency of healthcare services. The team passionate about sharing knowledge through insightful articles, blogs, and other educational resources.

Reference:

https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/HealthCareFinancingReview/Downloads/01Springpg71.pdf?utm_source=chatgpt.com