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Overview of Other Collection Metrics

Namitha Elizabeth Smart
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Let's explore other collection metrics.

  • Applied Payments (TXN): This metric represents the combined total of applied payments from both insurance and patients, where the application occurred within the selected transaction date range. It includes:
    • Applied Insurance Payments (excluding capitation receipts and adjustments)
    • Applied Patient Payments (excluding adjustments)
    • By summing both sources, this metric provides a complete view of gross payment activity, helping practices evaluate total collections applied toward outstanding balances within the selected period.

Note:

  • Since capitation receipts are not considered in applied payments - total applied payments would not tally with gross collection even when all collected was applied.
  • This is based on treatment location and therefore matches with income allocation report and not payment log, as payment log shows applied payment by payment location.
  • Applied Patient Payments (TXN): This metric shows the total gross amount of payments applied to patient balances, where the application occurred within the selected transaction date range. It includes applied payments from all types of patient receipts, including payments received directly from patients and via collection agencies.
    • Excludes: Adjustments, which do not reflect actual payment activity
    • This metric helps evaluate patient-side cash flow, track payment posting accuracy, and monitor revenue collection performance from non-insurance sources.
  • Applied Insurance Payments (TXN): This metric reflects the total gross amount of insurance payments applied to insurance balances, where the application occurred within the selected transaction date range. It includes payments from all types of insurance receipts, such as ERAs and manual insurance payments.
    • Excludes:
      • Capitation receipts (as they are not tied to individual claims or production)
      • Adjustments (as they are not actual payments)
    • The metric focuses purely on applied payment activity tied to insurance balances, making it useful for monitoring insurance revenue flow, payment posting efficiency, and A/R reduction trends.
  • Collection Adjustment (TXN): This metric captures the total amount of collection-type adjustments — both patient-side and insurance-side — that were created within the selected transaction date range. These adjustments typically represent amounts written off due to collection agency settlements, bad debt, or other non-payment-related reductions to balances. These are from the adjustments of collection type set in practice settings.
    • It provides insight into revenue leakage and uncollected production, helping practices monitor the financial impact of aging accounts and assess the effectiveness of their collection processes.
  • Net Applied Payments (TXN): This metric represents the combined total of net applied payments from both insurance and patients, where the application occurred within the selected transaction date range. Net Applied Insurance Payments + Net Applied Patient Payments
    • Excludes:
      • Capitation receipts (not tied to individual claims or procedures)
      • Production adjustments (as they are not payment-related)
    • Includes:
      • Collection adjustments impacting either insurance or patient balances
    • This metric provides a holistic view of total net collections, essential for tracking overall revenue health and reconciling against net production at the practice level.
  • Net Applied Patient Payments (TXN): This metric shows the total gross amount of payments applied to patient balances, where the application occurred within the selected transaction date range. It includes applied payments from all types of patient receipts, including payments received directly from patients and via collection agencies.
    • Excludes: Production adjustments (as they don’t reflect actual payments)
    • Includes: Collection adjustments (as they impact net receivables)
    • This metric provides a comprehensive view of true patient-side collections, supporting insights into front-desk efficiency, collection agency impact, and overall revenue performance from patients.
  • Net Applied Insurance Payments (TXN): This metric reflects the total net amount of insurance payments applied to insurance balances, where the application occurred within the selected transaction date range. It includes payments from all types of insurance receipts, such as ERAs and manual insurance payments.
    • Excludes: Capitation receipts (as they are not tied to individual claims or production)
    • Includes: Collection adjustments
    • This metric provides a comprehensive view of actual net insurance collections, ideal for monitoring payment accuracy, revenue integrity, and insurance A/R management.
  • Failed Payment Plan Transactions (#): This metric represents the total number of payment plan transactions that have failed to process and are still in a 'failed' status as of now. These are tokenized transactions, typically involving automated payment attempts (e.g., via saved credit card or ACH), that were declined or rejected by the processor or bank.
    • Tracking failed transactions helps practices:
      • Monitor the health of payment plan collections
      • Identify patients who may require follow-up for updated payment methods
      • Prevent an increase in outstanding balances due to uncollected installments
    • This metric reflects the current count, not the number of failed attempts over time.
  • Failed Payment Plan Transactions ($): This metric reflects the total monetary value of tokenized payment plan transactions that are currently in a failed status. These are scheduled payments — typically through saved credit card or ACH — that were declined or unsuccessful and remain unresolved as of now.
    • It provides visibility into the outstanding at-risk revenue from failed automated payment attempts and is useful for:
      • Identifying potential revenue loss
      • Prioritizing patient outreach or retry strategies
      • Monitoring the effectiveness of recurring billing systems
    • This is a real-time snapshot of failed payment value, not cumulative over time.
  • Pat. Pending Allocation: This metric reflects the total dollar value of patient receipts that remain unapplied and are pending allocation toward outstanding balances in patient accounts. It only considers cases where a patient balance is currently due, ensuring relevance for collections follow-up and payment reconciliation.
     
  • Pat. Over Payment: This metric represents the total dollar value of unapplied patient payments or credits in accounts that currently have no outstanding balance. These overpayments often arise from excess payments, insurance over-adjustments, or duplicate payments, and can be candidates for refund, reallocation, or future use.
    • Use Case: Tracking overpayments is essential for maintaining financial integrity, issuing timely refunds, and preventing patient dissatisfaction due to unresolved credit balances.
    • This is based on regular receipts alone and any unapplied credit over the patient's balance will be taken as their patient overpayment.
  • Same Day Allocation: This metric measures the efficiency of collecting and applying patient payments at the time of service. It is calculated as the proportion of patient balance (from procedures completed on a specific transaction date) that had corresponding payments applied on that same day.
    • A high same day allocation rate indicates strong point-of-service collection practices and reduces the risk of outstanding balances and collection delays.
    • Formula: (Same Day Applied Patient Payments / Same Day Net Patient Production) × 100
    • Use Case: Used to assess front desk efficiency, optimize cash flow, and minimize A/R aging by encouraging timely patient payments.
    • Based on treatment location and treatment provider

Note:

  • For Same Day Applied Payments, applied transaction date should be same as completed code transaction date. 
  • For Same Day Net Patient Production, migrated codes are not considered, production and collection adjustments are considered. Production is based on the code value at the end of that date transactionally.
  • Unapplied Advance Payments: This metric reflects the total unapplied credit balance originating from advance payments. These are funds collected before services were rendered and have not yet been allocated to any production or outstanding balance. This is based on receipts that are created with type as advance payment.
    • The value represents the current state of unapplied advance payments and is not tied to a specific date range.
       
  • Unapplied Collection: Calculated as the sum of all unapplied credits from patient, insurance, and collection agency receipts. These are amounts that have been received but are currently not applied to any claim, or balance.
    • This is a point-in-time metric that reflects the current unapplied total, helping monitor revenue posting completeness across all sources.
       
  • Unapplied Collection Agency Collection: Calculated as the sum of unapplied credits from all collection agency receipts. These are funds received from third-party collection partners that have not yet been matched to any patient balance.
    • The value reflects the current unapplied state and is not time-specific, supporting reconciliation of outsourced collections.
       
  • Unapplied Insurance Collection: This represents the sum of unapplied credits from all insurance payments, including ERAs and manual insurance receipts. These are amounts that have been collected but are yet to be applied to specific claims or procedures.
    • The total reflects the current unapplied balance and is not bound by any date range, aiding in identifying gaps in insurance payment posting.
       
  • Unapplied Patient Collection: Calculated as the sum of unapplied credits from all patient payments, including in-office, online, and financing receipts. These funds have been received but are not yet applied to any services or open balances.
    • This is a current-state metric, useful for tracking front-desk payment activity and ensuring timely application to patient accounts.

Rates

  • Collection Rate: This metric is a key financial performance indicator that measures how much of the practice’s net production has been successfully collected, using the transaction date as the reference. It reflects the effectiveness of revenue cycle management, from billing to payment application.
    • Formula: (Net Collections (TXN) ÷ Net Production (TXN)) × 100
    • Where: Net Collections (TXN) = Gross Collection (TXN) + Collection Adjustments (TXN) + Transfer - Refunds.
    • Net Production (TXN) = Gross production (TXN) + Production Adjustments (TXN)
    • A higher collection rate indicates strong financial performance and efficient follow-up, while a lower rate may signal issues in billing, collections, or patient communication.
  • Patient Collection Rate (TXN): This metric evaluates how effectively patient-responsible revenue is being collected. It considers all applied patient payments, including adjustments and refunds, within the selected transaction date range, and compares it to the net value of procedures that are the patient’s responsibility. A strong patient collection rate reflects efficient front-desk processes, clear financial communication, and successful payment capture at or after the time of service.
    • Formula: (Net Patient Collection (TXN) / Net Patient Production (TXN)) × 100
  • Insurance Collection Rate (TXN): This metric is a key performance indicator that evaluates how effectively the practice is collecting from insurance payers. It measures the ratio of collected insurance payments to the net insurance production, using the transaction date for both.
    • Formula: (Net Insurance Collection (TXN) ÷ Net Insurance Production (TXN)) × 100
    • Definitions:
      • Net Insurance Collection (TXN): Total insurance payments, including refunds and adjustments
      • Net Insurance Production (TXN): Gross insurance production including write-offs/production adjustments, all based on transaction date
      • This rate helps gauge the efficiency of insurance billing and follow-up processes, with a higher percentage indicating better collection performance. A consistently low rate may highlight issues like underbilling, denied claims, or slow payer response times.
  • Collection Adjustment Rate: This metric measures the impact of collection-related adjustments relative to the total gross collections (i.e., total payments from both insurance, patients and collection agency), using the transaction date as the reference point.
    • Formula: (Collection Adjustment TXN ÷ Gross Collection TXN) × 100
    • Where: Collection Adjustment Amount includes all patient and insurance collection adjustments (TXN). Gross Collection TXN = All type of payments excluding virtual payment types. See definition of Gross Collection (TXN) for more details
    • This percentage highlights the portion of total collections that were written off due to collections, and is a key indicator of revenue loss tied to aging or uncollected accounts. A lower rate generally reflects stronger financial health and collection performance.
  • OTC Rate: This metric measures the effectiveness of collecting payments from patients at the time of their visit, specifically comparing collected balance to same-day net patient production.
    • OTC Rate = Collected Balance from Collectable Balance / Same-Day Net Patient Production
    • Same-Day Net Patient Production refers to the total patient-responsible production completed for the patient on that transaction date, including adjustments (both production and collection).
    • Collected Balance from Collectable Balance represents the payment collected on that same day considering true unapplied credits, calculated as:
      • Collected Balance = Same-Day Applied Payments + True Unapplied Credits
    • True Unapplied Credits are considered only if they can be attributed to the current visit and not required to cover past patient balances:
      • True Unapplied Credits = Unapplied Credits − Past Patient Balance
      • If this value is negative, it is treated as 0.
      • Past Patient Balance refers to outstanding balances excluding any production from that date of selection.
    • The OTC Rate is a key performance indicator for front-desk collection effectiveness, ensuring that patients are paying their share during the visit and reducing the need for post-visit collection efforts.
    • A high OTC Rate reflects strong point-of-service collection practices, which positively impact cash flow and reduce outstanding A/R.
  • Insurance Receipt Transfer Rate: This metric measures the proportion of insurance payments that were transferred to patient credits, indicating scenarios where insurance overpayments or misallocations led to balances being moved to the patient side.
    • Formula: (Total Insurance Receipt Transfers to Patient Credit ÷ Gross Insurance Collections) × 100
    • Key Points:
      • Based on transaction date
      • Insurance Receipt Transfers include amounts moved from insurance payments to patient accounts as credit.
      • Gross Insurance Collections includes all insurance receipts posted during the selected date range.
    • A high transfer rate may signal issues with:
      • Overestimation of insurance payments
      • Incorrect claim processing
      • Poor coordination of insurance and patient responsibility
    • Benchmark: Ideally, this rate should be less than 1%, indicating accurate claim adjudication and payment allocation.

Practices can use this guide to learn all about gross and net collection metrics.

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