How Much of What You’re Owed Do You Actually Collect?
Gross collection rate flatters everyone because it counts charges no payer will ever pay. Net collection rate strips out contractual write-downs and asks the only question that matters: of the money your contracts say you are owed, how much reached your bank account?
- Calculated the way MGMA and HFMA define it
- Benchmarked against the 95–97% healthy practices hit
- Shows the annual dollar value of every point you gain
Runs entirely in your browser — nothing you enter is stored or sent anywhere.
Your collections, one period at a time
I know my…
Numbers cover one…
Patient + payer payments posted in the period, net of refunds.
Contracted write-downs only — not bad debt.
Net collection rate
91.5%
You are collecting 91.5% of what you are owed. Closing the gap to 97% is worth about $279K a year.
Owed, not collected
$432K
per year at this rate
Gap to 97%
$279K
recoverable per year
Each 1 point
$51K
of NCR, per year
Use a period that is at least 90 days old so most claims have finished adjudicating — a recent month always looks worse than it will end up.
How It Works
The One Revenue Cycle Number That Can’t Hide a Problem
Net collection rate (also called adjusted collection rate) measures collection effectiveness after contractual adjustments are removed. Because those adjustments are set by your payer contracts, everything left between “allowed” and “collected” is money your billing process should have recovered — denials never worked, underpayments never caught, patient balances never pursued, and timely-filing write-offs.
The formula
NCR = Payments ÷ (Charges − Contractual Adjustments) × 100
Charges minus contractual adjustments equals your total allowed amount. Bad-debt and small-balance write-offs are NOT subtracted — they are exactly the leakage this metric is meant to expose.
95%+
Healthy
MGMA data puts the family-medicine median at 97.1%. Practices above 95% have a functioning denial, underpayment, and patient-balance process — the remaining gap is mostly true bad debt.
90–95%
Leaking
Usually one broken link rather than a broken system: a payer underpaying against contract, a denial category no one appeals, or patient balances that go to statements and stop.
Below 90%
Structural problem
At this level, revenue is being written off as a matter of routine. The fastest fix is an A/R and denial audit by payer and reason code, then a hard look at adjustment codes being used to clear balances.
How the main collection metrics differ
| Metric | What it divides | Why it matters |
|---|---|---|
| Gross collection rate | Payments ÷ gross charges | Mostly reflects your fee schedule, not performance — a high chargemaster makes it look bad. |
| Net collection rate | Payments ÷ allowed amount | The true measure of collection effectiveness. Target 95%+. |
| Days in A/R | A/R balance ÷ average daily charges | How fast you collect, not how much. Target 30–40 days. |
| Initial denial rate | Denied claims ÷ submitted claims | The leading indicator — denials today become NCR losses next quarter. |
Questions
Frequently Asked Questions
What is a good net collection rate for a medical practice?
95% or higher is the commonly used benchmark, and MGMA’s 2025 Financials and Operations survey put the family-medicine median at 97.13%. Specialty, payer mix, and patient responsibility levels move the number, so compare yourself with practices like yours and watch your own trend quarter over quarter.
What should count as a contractual adjustment?
Only the difference between your billed charge and the payer’s contracted allowed amount. Bad debt, small-balance write-offs, timely-filing write-offs, and courtesy discounts should not be booked as contractual adjustments — doing so inflates NCR and hides exactly the losses the metric is meant to reveal.
Why is my net collection rate low for the most recent month?
Claims from recent dates of service are still in flight. Calculate NCR on a period that ended at least 90 days ago so most claims have been paid, denied, or adjusted — otherwise the number is artificially depressed.
Can a net collection rate be over 100%?
Briefly, yes — collecting old A/R during a period with low new charges can push it above 100%. A rate consistently above 100% usually means adjustments are being posted to the wrong period or allowed amounts are understated.
How do billing companies improve net collection rate?
By working every denial to resolution, comparing every payment against the contracted rate to catch underpayments, following up A/R before timely-filing limits, and collecting patient balances at or before the visit. The gains come from process discipline, not from billing more.
Is gross collection rate useless?
Not useless, but misleading on its own. It mostly tells you how high your chargemaster is relative to payer rates. Two practices with identical collections can show very different gross rates purely because of their fee schedules.
Sources
- [1]Forvis Mazars, “Know Your KPIs, Cash Flow and Claims Optimization” (Kansas MGMA, April 2026), citing MGMA DataDive
- [2]MGMA — Financial and operations benchmarking (DataDive)
This is an independent planning tool built by MedVersify from published methodology. It is not an official CMS, payer, or clinical tool, and results are estimates — confirm decisions against your own reports, payer contracts, and clinical judgment.
Keep Going
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Free Revenue Review
Below 95%? Let’s Find Where It’s Going.
A free review breaks your gap down by payer and denial reason, so you know exactly which fixes are worth the most.