function calculateNCR() {
// Get input values
var charges = parseFloat(document.getElementById('totalCharges').value);
var adjustments = parseFloat(document.getElementById('contractualAdjustments').value);
var payments = parseFloat(document.getElementById('totalPayments').value);
// Get result elements
var resultSection = document.getElementById('resultSection');
var ncrDisplay = document.getElementById('ncrResult');
var potentialDisplay = document.getElementById('adjustedPotential');
var uncollectedDisplay = document.getElementById('uncollectedRevenue');
var benchmarkMsg = document.getElementById('benchmarkMessage');
// Validation
if (isNaN(charges) || isNaN(adjustments) || isNaN(payments)) {
alert("Please enter valid numbers for all fields.");
return;
}
if (charges < 0 || adjustments < 0 || payments < 0) {
alert("Values cannot be negative.");
return;
}
// Calculate Adjusted Collection Potential (Denominator)
var adjustedPotential = charges – adjustments;
// Check for division by zero or invalid potential
if (adjustedPotential = 95) {
benchmarkMsg.innerText = "Excellent: Your practice is performing at a high level (95%+).";
benchmarkMsg.classList.add("status-good");
} else if (ncr >= 90) {
benchmarkMsg.innerText = "Average: Performance is acceptable but there is room for improvement (90-95%).";
benchmarkMsg.classList.add("status-warning");
} else {
benchmarkMsg.innerText = "Below Average: Significant revenue leakage detected (<90%).";
benchmarkMsg.classList.add("status-poor");
}
// Show Results
resultSection.style.display = "block";
}
Understanding the MGMA Net Collection Rate
The Net Collection Rate (NCR), often benchmarked against data from the Medical Group Management Association (MGMA), is one of the most critical Key Performance Indicators (KPIs) for medical practices. Unlike the gross collection rate, which can be skewed by high insurance write-offs, the net collection rate reveals the true effectiveness of your revenue cycle management (RCM).
It specifically measures what percentage of reimburseable dollars you actually collected after contractual adjustments are removed from the equation. This calculation answers the question: "Of the money we are legally owed and allowed to collect, how much did we actually get?"
The Calculation Formula
To accurately calculate your Net Collection Rate, you must exclude the amounts that insurance contracts require you to write off. The formula is:
Total Charges: The total amount billed for services rendered.
Contractual Adjustments: The portion of the bill that the provider agreed not to charge in their contract with the payer (e.g., insurance write-offs).
Total Payments: The actual cash received from payers and patients.
Benchmarking Your Performance
According to MGMA standards and general industry best practices, the Net Collection Rate offers a clear view of your practice's financial health:
95% – 99%: Excellent performance. Your revenue cycle is efficient, and denials are being managed effectively.
90% – 95%: Average performance. While sustainable, there are likely inefficiencies in denial management or patient collections that are costing the practice money.
Below 90%: Poor performance. This indicates significant revenue leakage, often due to timely filing issues, unworked denials, or poor upfront patient collections.
Why Is My Rate Low?
If your calculator result is below 95%, consider investigating the following areas:
Unworked Denials: Claims that are denied and never resubmitted are lost revenue.
Patient Collections: Failure to collect copays and deductibles at the time of service.
Credentialing Issues: Claims denied because a provider wasn't properly credentialed with the payer.
Bad Debt Write-offs: Classifying collectible revenue as bad debt prematurely.
Net Collection Rate vs. Gross Collection Rate
It is vital not to confuse the Net Collection Rate with the Gross Collection Rate. The Gross Collection Rate (Total Payments / Total Charges) does not account for insurance adjustments. Because fee schedules vary widely, a low Gross Collection Rate might simply mean you have high charges relative to Medicare rates, whereas a low Net Collection Rate always indicates money left on the table.