The 5 billing KPIs therapy practice owners should track, from uncollectable denials to secondary claim speed, whether billing is in-house or outsourced.
How do you know if your billing specialist is actually doing a good job?
For most therapy practice owners, the honest answer is a feeling. Deposits seem okay. Nobody is complaining. The monthly report has a lot of numbers on it. But a feeling is not a measurement, and billing problems rarely announce themselves. They show up months later as written-off claims, aging balances, and revenue that never matched your schedule.
Whether your billing is done by an employee down the hall or by an outsourced partner, you should hold it to the same standard. In our experience, the debate over in-house versus outsourced billing matters far less than the quality of the people doing the work. And the only way to judge quality is to measure it.
Many billing reports lean on vanity metrics, like total charges submitted or a gross collection percentage, that look impressive and reveal very little. Below are the five KPIs we believe every practice owner should use to measure their billing specialist, what each one tells you, and how to calculate it.
What it is: Of all the dollars that were denied, what percentage was ultimately written off and never recovered?
How to calculate it: Denied dollars written off, divided by total denied dollars, times 100.
Measure it by date of service and give claims enough time to be worked, for example looking at services from three to six months ago, so you are measuring outcomes rather than work in progress.
Why it matters: Every practice gets denials. Payers deny claims for eligibility, authorization, coding, documentation, and dozens of other reasons. A denial by itself is not a failure; it is a task. What separates a great biller from an average one is what happens next.
A strong biller investigates, corrects, appeals, and recovers. An average biller lets denials sit until they pass timely filing, then writes them off. Those write-offs are pure lost revenue for care you already delivered.
What to watch for:
Why we prefer this over denial rate alone: Your denial rate is influenced by payers, front-desk processes, and documentation. The percentage of denials that are never collected shows whether your biller turns a denial into a paid claim. That is the result you are paying for.
What it is: The difference between what you were entitled to collect, the insurance allowable, and what you actually collected from both the payer and the patient.
How to calculate it: Total collected from payer and patient, divided by total insurance allowable, times 100. The differential, allowable minus collected, is the money your practice earned but did not receive.
Why it matters: Many billing reports show a gross collection rate: collections divided by your billed charges. That number is close to meaningless, because your charges are set by you and your contracts determine what you are actually paid.
The allowable is the real target. It is the amount your contract says you are owed for a service, split between what the payer pays and what the patient owes in copays, coinsurance, and deductibles. If your collections fall short of the allowable, that gap is made up of things like:
What to watch for:
The goal: Close the gap between the allowable and what lands in your bank account. This is the single best measure of whether your billing team is capturing the revenue you earned.
What it is: Of the money ultimately collected for services provided in a given period, what percentage arrived within 30, 60, and 90 days of the date of service?
How to calculate it: Dollars collected within 30 days of the date of service, divided by total dollars collected for those dates of service, times 100. Repeat the calculation for 60 and 90 days.
Why it matters: Speed is cash flow. Money collected in 30 days pays this month's payroll. Money collected in 120 days is a loan you made to an insurance company, and the older a claim gets, the less likely it is to be paid at all.
This KPI measures the full chain of billing discipline:
Why measure from date of service: Many billers measure from the date a claim was submitted, which hides delays in getting claims out the door. Measuring from the date of service holds the whole process accountable, including the days before submission.
What to watch for:
What it is: On average, how many days does it take from the date of service until the patient's portion of the bill is paid?
How to calculate it: Sum of days from date of service to patient payment for each paid patient balance, divided by the number of patient balances paid.
Why it matters: Patient responsibility is a large and growing share of revenue for therapy practices, driven by high-deductible plans, coinsurance, and copays. Yet patient A/R is often the most neglected part of billing, because it requires coordination between the billing team, the front desk, and the patient.
The longer a patient balance sits, the harder it is to collect. Patients forget, plans of care end, families move on, and small balances quietly turn into write-offs or collection accounts that damage relationships.
What drives a strong result:
What to watch for:
What it is: Of the secondary claims submitted in a period, what percentage were paid within 45 days of submission?
How to calculate it: Secondary claims paid within 45 days of submission, divided by total secondary claims submitted, times 100.
Why it matters: Secondary claims are where billing teams cut corners. After the primary payer pays, the remaining balance often needs to go to a secondary insurance, such as a Medicaid plan, a supplemental plan, or a second commercial policy. These claims are smaller, require the primary payer's explanation of benefits, and often need extra coordination of benefits work. So they get pushed to the bottom of the pile.
In pediatric therapy especially, secondary coverage is common, and neglected secondaries add up fast. Worse, if a secondary claim is not submitted and worked promptly, the balance may wrongly fall to the family or be written off entirely.
What to watch for:
Why it reveals so much: A biller who keeps secondary claims moving is a biller who works the whole claim lifecycle, not just the easy parts.
These five metrics apply the same way no matter who does your billing. To get real value from them:
If your current billing team cannot produce these numbers, that is itself an important finding.
At Wellness Works Management Partners, we believe these are the metrics any billing team should be held to, including ours.
Our medical billing program gives you a team that functions like your own Chief Medical Billing Officer and back-end billing department. Our W2 coders, billers, and auditors work your claims daily inside your own system, so your data stays yours and you can see exactly how your revenue cycle is performing. We bring tools and processes to your system, we prioritize results, and you are never stuck in a contract. We earn your business every month.
And because practice management coaching is part of our partnership, you have a COO in your pocket to help you interpret these numbers, fix front-end problems that drive denials and patient balances, and coach you through your payer rate reviews and negotiations.
We specialize in outpatient OT, PT, and SLP private practices, including pediatric and orthopedic practices. Many billing companies chase the lowest-hanging fruit. We cut down the tree for you.
If you track only one, track optimized net collections: what you collected compared with the insurance allowable. It shows whether you are capturing the revenue your contracts say you earned.
Gross collection rate compares collections to your billed charges, which you set. Net collection rate compares collections to the allowable amount you are contractually owed, which makes it a far more meaningful measure of billing performance.
Denial rate is influenced by payers and front-end processes. The share of denials that are never collected shows whether your biller turns denials into paid claims, which is the outcome that affects your revenue.
Monthly, with trends tracked over time and broken down by payer.
Yes. The same KPIs, formulas, and targets should apply regardless of where your biller works. What matters is the result.
Ask why. A billing partner focused on results should be able to define, report, and stand behind these numbers, ideally from data you can verify in your own system.
You can't manage what you don't measure. Track the percentage of denials never collected, optimized net collections, collections within 30, 60, and 90 days of service, the average time to collect patient A/R, and the percentage of secondary claims paid within 45 days. Together, they show whether your billing specialist is truly protecting your revenue.
In-house or outsourced, the question is the same: who are you hiring, and can they prove their results?
Want to see how your billing measures up? Schedule a consultation with Brandon Seigel and the Wellness Works team to review your billing KPIs and talk through your practice's revenue cycle.
