The net (or adjusted) collection rate measures how effectively a practice collects what it is owed after contractual adjustments. A gap between this number and 100% is revenue lost to denials, write-offs, underpayments and unpaid patient balances.
Formula
Net collection rate = payments ÷ (charges − contractual adjustments) × 100, for the same period
Related terms
- Days in AR
- The average number of days it takes to collect payment after a service.
- Denial rate
- The share of submitted claims that payers deny.
- Underpayment
- A payment lower than the amount the payer's contract says it owes.