Net Collection Rate (NCR)
Net Collection Rate is the percentage of collectible revenue actually collected after accounting for contractual adjustments, calculated as collections divided by charges minus contractual allowances, with a benchmark target of 95–98%.
What is Net Collection Rate?
NCR is calculated as: Collections / (Charges − Contractual Allowances) × 100. The denominator excludes contractually negotiated reductions from gross charges, leaving only the revenue that was genuinely collectible — the amounts payers and patients were obligated to pay. This is the critical distinction from the gross collection rate (collections divided by total gross charges), which is meaningless because chargemaster rates bear no consistent relationship to actual contracted reimbursement. An NCR below 95% signals revenue leakage; above 98% is excellent performance. Factors that pull NCR below benchmark include bad debt write-offs (patients who do not pay their responsibility), timely filing denials (claims submitted after the payer's deadline — typically 90 to 365 days from the date of service depending on the payer), unworked denials that age past appeal deadlines, and billing errors that result in underpayment without adjustment. NCR should be analyzed segmented by payer class (commercial vs. Medicare vs. Medicaid vs. self-pay), by provider, by CPT code cluster, and by denial write-off category to isolate the specific revenue leakage source. For a $20 million practice, a 1% improvement in NCR recovers $200,000 in annual revenue.
Why It Matters for Healthcare Analytics
NCR is the definitive measure of revenue cycle effectiveness — it captures both the quality of claims submission (first-pass resolution) and the effectiveness of denial follow-up and patient collections. Practices with NCR below 95% are leaving material revenue on the table; understanding exactly which payer and procedure combinations are driving the gap determines where to focus recovery efforts.
How Vizier Tracks Net Collection Rate
Upload your billing and remittance data, then ask "What is our NCR by payer and which payers have the highest denial write-off rates?" — Vizier calculates NCR by payer, provider, and procedure cluster, and quantifies the revenue recovery opportunity from reducing denial write-offs and timely filing failures.