Revenue Cycle Management
Revenue cycle management is the financial process that healthcare providers use to manage the clinical and administrative functions associated with claims processing, payment, and revenue generation.
Every successful healthcare organization needs to develop processes and policies to stay financially sound. That is where healthcare revenue cycle management from Coding & Billing Solutions comes in. Our experts will help you to create a revenue cycle that maximizes the patient outcomes and financial success of your organization.
What is Revenue Cycle Management?
Revenue Cycle Management (RCM) is the comprehensive management of financial processes in the healthcare industry, starting from the moment a patient schedules an appointment to the final collection of all claims and payments. However, the journey of a patient’s account is more complex than it appears.
Initially, when a patient makes an appointment, administrative staff are responsible for managing the scheduling, verifying insurance eligibility, and establishing the patient’s account. Pre-registration plays a crucial role in optimizing RCM by creating a detailed patient account that includes medical histories and insurance coverage.
After a patient’s visit, the healthcare provider must submit claims and fulfill charge capture duties. The provider or coder identifies the appropriate ICD-10 code for the treatment, determining the reimbursement amount from the patient’s health plan. Selecting the most suitable code helps prevent claim denials. The charge capture process records the services provided as billable fees.
Once a claim is created, it is sent to the relevant private or government payer for reimbursement. At this point in the process, revenue cycle management isn’t completed for healthcare systems. They still need to manage back-end office tasks related to claims reimbursement, such as payment posting, statement processing, payment collections, and claim denials.
After evaluating the claim, the insurance company typically reimburses healthcare organizations based on the patient’s coverage and payer contracts. Occasionally, claims may be denied due to reasons like incorrect coding, missing information in the patient’s chart, or incomplete patient accounts. Any expenses not covered by insurance must be communicated to the patient, and healthcare organizations must collect the payments.
The goal of healthcare revenue cycle management is to establish a process that enables organizations to receive full payment for their services as quickly as possible. However, the billing and claims processes in revenue cycle management often take a significant amount of time. Claims can go back and forth between payers and providers for months until all issues are resolved. During remittance processing, the payer either approves and pays the provider or denies the claim.
Additionally, revenue cycle management can be prolonged because patients may not have the immediate funds to pay their medical bills.
The Keys To Successful Revenue Cycle Management
Just like any other business, healthcare organizations need to be financially viable to sustain their operations and meet the needs of their patients. There are several key strategies that can be employed to ensure timely payments and optimize the revenue cycle. One crucial aspect for successful revenue cycle management is prioritizing patient access and front-end optimization. Front-end tasks play a significant role in keeping the claims process smooth, and any errors at this stage can disrupt claims reimbursement. Tasks such as verifying insurance eligibility hold particular importance as they ensure facilities receive reimbursement from health plans. Front-end errors, including issues with eligibility verification, registration, and authorization, remain among the top causes of claim denials.
Efficient management of claim denials is also essential, and healthcare organizations must establish streamlined procedures to address reimbursement issues promptly. Claim denials can occur due to technical or clinical problems, ranging from improper ICD-10 coding to missing signatures on patient charts. In fact, claim denial rates have been increasing steadily, with hospitals experiencing a 23 percent rise in claim denials from 2016 to 2020. To mitigate denials, organizations can provide staff training on coding and billing processes, educate patients about medical costs, and invest in software that automates coding and insurance verification. Regularly monitoring claims and leveraging data analytics can also help identify trends and address potential issues proactively.
Many healthcare providers utilize data analytics to drive successful revenue cycle management programs. As payments increasingly align with value-based care models, organizations must report on various measures of quality care, patient satisfaction, and healthcare costs to receive full reimbursement rates from payers. Data analytics also facilitates improved care coordination and the implementation of value-based care initiatives. Leveraging analytics enables healthcare organizations to effectively manage large volumes of information and communicate revenue cycle management goals to their employees through dashboards and alerts. Moreover, analytics can aid in predicting claim outcomes by tracking the entire lifecycle of each claim.
By implementing these strategies, healthcare organizations can enhance their revenue cycle management practices, optimize reimbursement processes, and ultimately improve their financial sustainability.
Overcoming Challenges in Healthcare Revenue Cycle Management
Many patients struggle to pay medical bills upfront, often due to high deductibles and financial constraints. Healthcare organizations must strike a balance between effectively collecting payments on time and avoiding alienating patients.
Coding and charge capture also present challenges in revenue cycle management. Errors in coding can lead to issues with claims reimbursement. To address this, healthcare organizations should invest in regular employee education programs that focus on proper coding techniques, comprehensive chart documentation, and reminders about financial policies. These training sessions have been proven to yield positive returns on investment, such as lower turnover rates and reduced medical errors.
The prior authorization process poses another challenge for providers in revenue cycle management. When providers face prior authorization requirements, they and their patients must wait for the health plan to authorize a service before proceeding with treatment. This waiting period can cause delays and impact revenue cycles.
The implementation of the surprise billing rule under the No Surprises Act has also presented challenges for revenue cycle management leaders. This policy safeguards patients from unexpected billing by restricting out-of-network providers from charging more than the in- network cost-sharing amount. It effectively eliminates balance billing. Since its enactment on January 1, 2022, providers have had to adjust their revenue cycle workflows to comply with the new regulations.
Navigating these challenges requires healthcare organizations to stay updated on evolving regulations, adapt their revenue cycle management processes, and explore innovative strategies. By addressing these hurdles effectively, organizations can optimize revenue cycle management and ensure financial stability in an ever-changing healthcare landscape.
If you are interested in learning how the Coding & Billing Solutions Team can help your organization with its revenue cycle management, contact us today!