Master the Revenue Cycle Management Process for Your Healthcare Practice
Although the ultimate goal of any healthcare organization is to provide patient care, effective revenue cycle management (RCM) is the key to a practice’s financial health and helps providers keep their doors open.
Revenue cycle management is the multistage process by which healthcare providers receive accurate reimbursement for the services they provide. However, it is not simply a back-office task; each step of the RCM process impacts the other, requiring careful attention and management to avoid pitfalls that could lead to revenue loss.
Proper revenue cycle management is the key to maintaining a healthcare practice’s financial viability. In an era of increasing cost pressures and ever-changing healthcare system regulations, the ability to manage the revenue cycle efficiently is not just beneficial — it’s essential.
In this article, we’ll take a comprehensive look at the healthcare revenue cycle management process, offering insights into each stage and providing strategies to optimize operations and maintain a strong financial foundation for your healthcare practice.
How does the healthcare revenue cycle management process work?
Revenue cycle management consists of all the steps that go into getting claims paid. That starts with pre-registration and registration, when administrative staff find appointment times that work with patient schedules, collect patient information, and obtain authorization for services from the patient’s health insurance company. These steps bring in business and lay the foundation for how quickly healthcare providers will be able to get claims reimbursed later.
During the appointment, clinicians participate in the healthcare revenue cycle via charge capture, or documenting all diagnoses and services rendered. Accurately capturing charges is crucial to a healthcare organization’s revenue cycle, since this step documents what providers will be reimbursed for.
After a patient visit, medical billing and coding staff complete the rest of the revenue cycle management process. They submit claims to health insurance companies, follow up to ensure reimbursement, then send bills for outstanding balances to patients.
What are the stages of the healthcare revenue cycle management process?
The healthcare revenue cycle goes far beyond submitting claims to health insurance companies. There are intersecting administrative and clinical functions, such as medical billing and coding, that are important both for providing quality care and for ensuring that healthcare providers get paid for their services. Here’s a step-by-step breakdown of the healthcare revenue cycle management processes.
Pre-Registration
During pre-registration, administrative staff contact patients to schedule appointments and collect basic demographic details such as the patient’s name, address, phone number, and insurance information. The primary focus is insurance eligibility verification and obtaining pre-authorization for services. This step helps determine the patient’s financial responsibility, including deductibles, co-pays, and coverage limitations.
It’s important to verify insurance eligibility beforehand so patients can plan for any out-of-pocket expenses. Accurate verification also reduces the chances of claims being denied later by a patient’s health insurance company, helping healthcare practices receive maximum reimbursement from insurance payers.
Registration
Registration takes place when the patient arrives at the healthcare facility or at the time of the scheduled appointment. Administrative staff gather more comprehensive patient intake details such as medical history, current symptoms, allergies, and any other information necessary for providing appropriate patient care. Patients also sign consent forms, privacy notices such as HIPAA disclosures, and other legal documents that outline the healthcare organization’s policies and procedures.
During registration, it is important for healthcare staff to confirm the patient’s financial responsibility, such as co-pays or deductible amounts. Patients may need to make payments up front or agree to payment arrangements.
Charge Capture
During the appointment, clinicians participate in the healthcare revenue cycle via charge capture, which is the process of accurately recording and capturing the medical services, procedures, medications, and supplies provided during a patient visit. It involves documenting the specific details of the patient care delivered, including any professional fees and facility charges associated with the patient’s visit or procedure.
Accurately capturing charges is crucial for ensuring that all billable items are recorded for proper reimbursement. After healthcare providers render all medical services, medical coders translate the documentation into standardized medical codes recognized throughout the healthcare industry.
Two of the most important coding systems for healthcare providers are the Current Procedural Terminology (CPT) and the International Classification of Diseases, Tenth Revision (ICD-10).
Together, these codes indicate to insurance payers why patients received the treatments and medical services for which providers are seeking reimbursement. It is important to use the correct medical codes for claims processing; improper coding can result in denied claims and lost patient service revenue for a healthcare organization.
Claim Submission
Medical billers use the medical codes that represent a patient visit to generate itemized claims for reimbursement by insurance companies or government payers. The claim then undergoes a process called claim scrubbing, where it is checked for errors and missing information. Automated systems or billing software perform these checks to ensure the claim is clean and accurate, reducing the likelihood of claim rejection or denial.
Once the claim is reviewed and deemed accurate, a medical biller submits it to the relevant payer. Most claims are transmitted securely using standard electronic data interchange (EDI) formats, which help ensure delivery in a timely manner and mitigate formatting issues.
Remittance Processing
There is more to reimbursement than receiving payments from insurance companies. Remittance processing also entails tracking and monitoring payments across dozens of patient accounts. If a claim is approved, the insurance company sends the final payment amount to the healthcare provider.
The payment is posted to the patient’s account, and adjustments or write-offs are made based on the contractual agreements with the insurance company.
In addition to sending payment, insurance payers will provide a corresponding document of remittance advice, also known as an explanation of benefits. The remittance advice provides details about the payment, including the medical services covered, adjustments, and denials.
Healthcare staff review the remittance advice to ensure proper tracking of payments, accurate revenue reporting, and effective management of accounts receivable.
Insurance Follow-Up
When healthcare billing staff encounter denied claims, their first step is to analyze the denial notification and remittance advice received from the payer. They carefully review the reason provided for the denial, which could be related to coding errors, lack of medical necessity, missing documentation, or other billing issues.
As part of insurance claim follow-up, billing staff may do the following:
- conduct a thorough review of the original claim and supporting documentation
- review the assigned codes for accuracy and adherence to coding guidelines
- update coding or adding missing information
- submit to the insurance payer again for reconsideration
If the denial appears to be unjustified or based on an error, billing staff may initiate an appeal process. They gather supporting documentation, such as medical records, test results, or physician notes, to substantiate the medical necessity of the services provided.
They also prepare a written appeal outlining the reasons why the claim should be reconsidered and provide any additional information requested by the insurance payer.
Patient Payment Collections
After insurance payouts, healthcare providers bill patients for the remaining balance on their accounts. Billing staff need to remain vigilant and follow up on unpaid patient payments. It’s critical to send reminders, make phone calls, or utilize automated messaging systems to prevent lost revenue. Staff members should be proactive communication with patients to address payment inquiries, provide assistance, and resolve outstanding balances.
Healthcare organizations may offer financial assistance programs to patients who are unable to afford their medical bills. These programs can include sliding scale fee structures, charity care initiatives, or assistance in connecting patients with external resources for financial support.
How long does the healthcare revenue cycle management process take?
Clean claims can be paid as quickly as 14 days. If the claim has issues, resolving that can potentially go on for months depending on the payer. For that reason, the more electronic enrollments you have with your payers, the better.
That is because electronic remittances tend to be faster and easier to track. In certain cases, unresolved claims can still go on for four, five, or even six months depending on the reason for that original denial.
What are some ways to optimize the revenue cycle management process?
Streamline Patient Registration and Check-In
Software can help healthcare organizations verify insurance coverage beforehand, reducing administrative and time costs in the office and improving accuracy. For example, many RCM technologies include electronic health record systems to manage patient schedules and documentation. These systems allow patients to save time by scheduling appointments online and completing patient intake forms ahead of their appointment.
Optimize Billing and Coding Practices
Implementing revenue cycle management software can streamline the entire medical billing process, from patient registration to claim submission and follow-up. These software solutions automate tasks and offer centralized visibility over the revenue cycle, enabling proactive management and optimization.
Some healthcare organizations can consider outsourcing revenue cycle management to specialized companies. Outsourcing allows access to expertise, dedicated resources, and advanced technology without the burden of in-house management. It can improve coding accuracy, reduce denials, enhance revenue collection, and free up internal staff for other critical tasks.
Federal and state compliance regulations for medical billing are constantly evolving, making it difficult for healthcare professionals to keep up with the latest guidelines. To avoid denied claims or legal penalties, healthcare providers must stay up to date on coding standards, billing rules, documentation requirements, and reimbursement policies.
Monitor and Manage Claims Processing
The key to improving revenue capture over time is to identify patterns in denied claims. Revenue cycle management technology can help healthcare organizations analyze denial patterns, identify trends, and implement corrective measures to address common issues. Software solutions can also provide a centralized platform to track the status of claims, make batch changes, and identify bottlenecks.
Implement Effective Collections Strategies
For the best chances of timely patient collections, communicate transparently with patients from the start. Explain insurance coverage, deductibles, co-pays, and any non-covered services up front, enabling patients to be aware of their financial obligations before receiving services.
Make the payment process easy and convenient by providing patients options for online, credit card, or automatic payments. If patients need financial assistance, consider offering a sliding scale structure or payment plan. Though perhaps not ideal, partial payment is better than none at all. These approaches enhance revenue collection, improve patient satisfaction, and contribute to a financially stable healthcare organization.
The bottom line for improving healthcare revenue cycle management processes
An effective revenue cycle management process is crucial for accurate billing and optimizing income streams. Smooth financial interactions and clear communication about a patient’s financial responsibility also enhance patient satisfaction. And it gives your staff more time to focus on providing quality healthcare.
Revenue cycle management permeates every aspect of a healthcare organization. Booking appointments enables future revenue from patient visits. Comprehensive, accurate documentation helps providers get paid for their services.
Automated claims scrubbing increases a provider’s rate of clean claims. Although there are many moving parts to the process, effective revenue cycle management keeps a healthcare business going.
Are you ready to see how revenue cycle management software can help boost your practice’s bottom line and patient satisfaction? Get started with a free demo of DrChrono today!