For the past few years now, favorable Medicare and Medicaid federal regulations have led to more health care providers implementing electronic records for processing claims and receiving payments. This has seen institutions improve their efficiency and strengthen their financial accounts.
Health care providers who choose to integrate revenue cycle management (RCM) in clinical applications have benefited greatly as well. This integration has bridged the gap between clinical care issues and health IT. Today, you are likely to notice patient care applications intertwined with an element of RCM, ranging from typing procedure codes to billing codes, among other elements.
This guide will help you understand all the aspects of revenue cycle management systems. We dive deep into what RCM is, how it works, why it is beneficial, and RCM best practices, to name but just a few.
Would you like to learn more? Let’s get right into it.
What Is Revenue Cycle Management?
Revenue cycle management (RCM) is an institutional financial process that uses medical billing software. It enables health care providers to track patient care procedures from the moment of registration all the way to appointment and the final payment of balance after service delivery.
The process is intended to link the clinical and business elements of a health care institution. It is achieved through the integration of administrative information that bears patient’s data, insurance policy with the actual treatment received by these patients.
Why Is Revenue Cycle Management Important?
Effectively managing your revenue cycle is a crucial aspect of your health care institution’s operations. The overall goal of RCM is to increase your revenue. This is achieved by identifying and fixing points of revenue leakages.
The leakages may be as a result of waste, misappropriation such as unnecessary procedures or tests and fraud. An efficient hospital RCM takes care of both the security of patient financial information and PHI. Lastly, health care providers need to adopt RCM processes for safe automation of the institution’s process so that more time can be spent on patient care.
How Revenue Cycle Management Works?
To understand how the RCM process works, these are the steps taken from the beginning to the end.
- Patient Eligibility: Upon arriving at the healthcare provider, a patient’s eligibility for insurance is verified first and information stored in the facility’s EHR.
- Charge capture and coding: Here, the patient’s visit and service received is coded using ICD-10 standards into a bill.
- Patient co-payments and deductibles: The patient makes any co-payments before leaving the facility. Deductibles are the fixed charges in a health plan that you have to pay before the insurance company starts paying for those health care services received.
- Submission of claims: The bill is submitted to the insurance company through a clearinghouse.
- Reimbursement: Based on the patient’s insurance coverage, the payer(insurer) determines and reimburses what the healthcare provider should receive.
- Denials: The RCM process cannot be complete without the management of denied claims. When this happens, the hospital’s billing department makes necessary amendments and resubmits the claim. This may involve reviewing patient records, scrubbing code errors, and direct consultation with the payer.
- Patient collections: In case the patient receives services beyond their coverage, the extra amount not paid after reimbursement is billed to the patient directly. Billing services commence through prices to recover the balance.
How to Improve Revenue Cycle Management
The RCM process can be improved if the hospital gets a better understanding of patient financial responsibility. This helps to devise a streamlined payment collection method that ensures they maintain financial stability.
Moreover, improving RCM requires providers to implement a competent billing infrastructure that includes both software and staffing. Best RCM billing practices are discussed in detail below.
Revenue Cycle Management Benefits
There are multiple benefits to a healthcare provider who implements an effective RCM system. Let’s take a look at some of the value-adding benefits of a revenue cycle management services.
- Saves time: An effective RCM should be designed to save the time taken between the provision of service and receipt of payment. Time is also saved by the automation of duties that were previously handled manually.
- Saves money: Revenue cycle management systems provide insights into denied claims. Besides, by providing a straightforward claim filing process, it helps to cut down on denied claims.
- Provides a secure revenue monitoring system: With RCM, a healthcare provider can use software to set and monitor their revenue goals. This helps them to visualize possible areas that need improvement.
- Makes inter-system communication easier: With the help of a compatible RCM, communication between the EHR and accounting systems becomes easier and more reliable.
- Links the institution’s clinical and business sides: It bridges the gap between the business and clinical sides of healthcare.
- Secure storage of health billing records: Healthcare providers utilize RCM systems for preserving and managing patients’ billing records.
- Lessens administrative duties: A robust RCM takes care of most administrative tasks such as alerting patients of their scheduled appointments. It also reminds payers and patients of outstanding bills as well as questioning insurers during claim denial.
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Revenue Cycle Management Challenges
Billing and claim collections errors
Errors in billing have resulted in millions of losses for health care providers. There have also been cases where patients are shocked with huge outstanding balances that they cannot pay. Many providers are yet to master efficient revenue collection. 85% of them admit that it is difficult to collect once patients leave the facility.
Health information technology challenges
RCM necessitates the use of IT to track the lifecycle of all claims for collection of payments and denied claims. Some health institutions do not have the right technology and billing software in place for the successful management of claims.
Lack of staff training
Healthcare providers may not have their staff well trained to use the latest RCM systems in billing or charge capture. If the staff responsible cannot correctly capture demographic data on the front-end and translate it into undeniable claims, then the institution will be facing a huge problem.
Failure to monitor the claims process
The claims process is important in the institution's revenue cycle management and thus should be monitored all the way. Failure to do so will result in the inability to detect when, how, and by whom errors were made.
Lack of a financial policy
We have healthcare providers without a documented financial policy; yet these policies are essential, especially in the management of revenue. Employees should be able to access these policies in print and electronically.
Factors That Can Affect RCM
Patient experience
The experience of your patients with regards to awareness of what their responsibilities are plays a huge role in the RCM process. Informed patients will be more useful to the process. This is why patients must be aware of their responsibilities from the very beginning of the RCM process.
Patient's Insurance Eligibility
A patient without an insurance policy or one whose cover provider refuses to reimburse for treatment received will be required to foot the entire bill. In such cases, patients may find such bills too high and may not be able to pay up. This will negatively affect the RCM process and result in losses. This is why verification of insurance eligibility comes at the top of the RCM process.
Patient Collections and Billing
The payment collection process can be quite tedious and often time-consuming. Billing errors are common, especially where there there is a lack of an organized and well-consolidated RCM system. The result is that patients will end up being frustrated with delayed.
EHR Technology
EHR technology is a huge factor in the revenue cycle management process because it is slated to promote accurate data processing. The EHRs streamline the coding and claim processes, which go a long way in ensuring no claims are denied and no revenue lost. Through the EHR system, codes are captured and passed to the billing system.
The Impact Of Healthcare Regulations
The hospital’s revenue cycle management process has been affected by several healthcare regulations.
The HITECHI Act, for instance, provides that eligible healthcare institutions receive financial incentives through Medicaid and Medicare programs. The incentive cushions their investment in health IT such as EHRs that would eventually see their RCM get better.
Many providers have moved to take advantage of this IT incentive program. This will help them transition to an integrated patient accounting and EHR. Besides, it will have a considerable impact on hospital revenue cycle management, according to the Healthcare Information and Management Systems Society (HIMSS). New accounting systems that include changes in registration and scheduling can affect preauthorization procedures.
Another important aspect of the health regulations was announced way back in 2013, and it touched on ICD-10 codes. From October 1st 2013 onwards, any claims that were incorrectly used would automatically lead to a claim denied. Some charge capture systems may still not be able to support ICD-10; hence its transition will require new training.
Revenue Cycle Leakage Points
Health revenue leakage points include:
- Incompetent billing staff
- Payer contracting that offers low rates of reimbursement
- Missed charges that lead to unbilled claims
- Fee scheduling for every procedure and service you offer can be too detailed and demanding thus leaving out some details
- Credentialing issues especial in denied claims management
- Inadequate management of patient balance
- System errors and deficient software issues
- Frontdesk customer support issues
- Porous management of denied claims
- Insufficient and poor reporting
Professional Billing & Collection Best Practices
Health revenue leakage points include:
Conduct Financial Clearance
Conducting a financial clearance puts in place plans that should be followed when claiming payments for services rendered. This includes a patient's financial responsibility where patients will be footing the entire bills for services received. If there is an insurance company to submit claims to, then this will be determined upfront. This prevents any frustrations during the actual payment collection and reimbursements.
Streamlined Check-In & Check-Out Process
Streamlining the check-in process ensures patients submit correct information, which is helpful during the payment collection process. This is especially important where the billing staff has to follow up on patients for any balances. The check out process is critically important. It enables healthcare providers to clear payments collections before the patient leaves the premises.
Charge Capture
Provide a seamless and full proof charge capture process for all the services rendered. The staff responsible should review charts and claims for any missed charges.
Charge Entry
The RCM billing process utilizes codes to record services and charge them to the patients. Care must be taken by the staff responsible for the prevention of denied claims resulting from errors at the charge entry stage.
Claims Management
Proper claim management is essential to ensure all claims are paid, and the provider receives full payment for the services rendered. This process can be streamlined by ensuring the billing staff submits claims on time and in the correct manner.
Patient Statements
Patient statements are critical in keeping a streamlined billing process. The statements should be well consolidated and reconciled to detect all the patient collections and balances.
Payment & Denial Posting
Payments received should be updated in the system to keep a traceable record. Where claims have been denied, the billing staff should post this to the payer through the clearinghouse. The staff should also prepare to consult with the payer to clear any issues for the denial.
Insurance Follow Up
Healthcare providers are encouraged to do a follow up with the insurance company to make sure the reimbursement rates are as per the current schedule. This stage is significant in the RCM billing process. It irons out any differences between the insurance company and the provider, which might lead to revenue loss.
Denial Management
Denied claims should be managed appropriately by monitoring and tracking to identify trends' primary causes. The provider should have a denials prevention program in place for standardized processes to help mitigate denials risk.
Patient Collections
Optimize patient collections by collecting deductibles or presenting payment plan options before services are rendered.
Payor Management
Payor management is an important aspect among the RCM best practices because it helps streamline the claim collection and denial management.
2 thoughts on “What is Revenue Cycle Management? The Ultimate Guide (2020)”
What a great article. Very clearly explained about the revenue cycle management.
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