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!