Teachers focus on fluency, expression, phonics knowledge, and comprehension when determining a child's level at our school.
That said, a higher level isn't the goal of a child's reading. She'll develop better expression as the reading becomes more automated. If she's decoded a lot verbally still, that breaks the flow. More practice will help her decode more quickly in her head and eventually help her automatically recognize the words so that she doesn't need to decode any longer.
The best way to improve is then indeed to practice, practice, practice. My kids love library books, so they have a continual supply of new books, which they enjoy looking through. My youngest gets blue books at school, so not far off from yellow, and he looks at pictures and reads bits to himself.
Another idea is to let her help out while listening to you read to her. My kids would help me with the titles of books, or chapter headings, or with speech bubbles in funny books. Of course, this wasn't to detract from reading out loud, but to just add a bit of extra practice in.
Can you write her notes to find? Let her help you reading recipes? Any opportunity for reading helps, and if you can find more time in the day (I know, it's hard) to listen to her read books on her level, that would be ideal.
I wouldn't focus on improving any aspect of reading unless the school is weak. Practice, practice, practice is what will develop her reading skills more than anything.