Revenue cycle management (RCM) isn’t as simple as claim out and money in. As a healthcare organization, you deal with the complexities of increased regulation, coding requirements, managing claims, value-based reimbursement, and skyrocketing patient financial responsibilities. All of these play a role in the effectiveness of your RCM and ultimately the financial health of your organization.
Here, we’ll take you through Revenue Cycle Management 101 to give you a solid foundation to either build or modify your RCM processes.
So, what is healthcare revenue cycle management?
Revenue cycle management encompasses “all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue,” according to the Healthcare Financial Management Association. It’s the soup to nuts process a healthcare organization uses from patient registration all the way through to the final patient payment.
The term “medical billing” is often interchanged with revenue cycle management, though they are not synonymous. Medical billing is a key part of the RCM process, but the complete cycle involves more than simply healthcare billing and billing collections.
What are the steps in revenue cycle management?
There are four key steps in the healthcare revenue cycle management process. Each step is equally important in the end result of quality patient care and profitability for your organization.
Patient Pre-Authorization and Registration
This is the first step in the patient experience and also the point at which insurance coverage and financial information are gathered. A tight pre-registration process can positively affect the rest of the revenue management cycle. During patient registration, a medical practice documents a patient’s address and insurance coverage and whether or not a referral is needed for care. This is an opportunity to communicate the practice’s financial expectations to the patient, including time of payment and no-show or cancellation policy.
Establishing Charges
Also known as Charge Capture, this is the step where medical codes are documented either manually or automatically. Whether your system is set up to receive coded services directly into the practice management billing system or your administrative team enters the information manually, mistakes can be made leaving revenue on the table. Capturing charges correctly is vital to ensure your organization receives payment for services.
Submitting Claims
After services are coded, this information is sent to the patient’s insurance carrier for payment. The carrier will assess the CPT code and the diagnosis code to determine if the diagnosis supports the procedure performed.
Claims management also involves claim scrubbing to ensure a claim is error-free before being sent to the insurance carrier. Clean and correct claims are paid faster so double-checking the coding and billing information before submitting is imperative to a healthy and efficient revenue cycle management system. It also helps to prevent claims denials that require time and energy correcting and resubmitting claims.
Receiving Payment
The process of receiving payment consists of several steps depending on your providers. You may go through a remittance review process where your medical billing team reviews the services the insurance company has agreed to pay for and the fee they will pay. If your organization is not reviewing remittances, you could be missing out on significant revenue.
Following up with insurance companies to review what has been and has not been paid is essential. An accounts receivable report during the medical billing process is an easy way to see what insurance claims need to be followed up on.
Collecting on patient responsibility is the final step in receiving payment. The optimal time to collect patient payments is when the patient is in your office so training the front desk to collect payments is beneficial. Also, this goes back to the patient registration process when you set the financial expectations by communicating the standard policy for collecting copayments and deductibles.
What are the Benefits of Revenue Cycle Management?
By incorporating a revenue cycle management process into your medical practice management strategy, you can expect to reap these benefits:
- An increase in average percent of claims paid after 1st submission
- An increase in the average percent of current claims (0-60 Days)
- Fewer denied claims
- Increased net revenue
- A higher percentage of clean claims
- Lower outstanding accounts receivables
- Faster claims payment
- Most importantly, improved quality of patient care
What does a Revenue Cycle Management Company Do?
A revenue cycle management partner can help ensure every step within the RCM process is working as efficiently as possible. Your dedicated RCM team performs audits, then reports on any issues within the system and helps correct those issues. This results in increased collection and revenue rates.
Revenue cycle management software works in conjunction with a dedicated RCM team to eliminate errors, automate processes and ultimately accelerate the cycle. In addition, a software solution’s advanced reporting tools provide analytics into every area of your operations. Data analysts review the data, prepare custom visualization for your leadership, and provide actionable insights that allow you to make well-informed, fact-based decisions about your management processes.
Revenue Cycle Management plays a vital role in the financial health of your organization. Even if you are the best in your area of care, without a well-thought-out and properly executed RCM, your organization may not be profitable.
Understanding Healthcare Revenue Cycle Management