What Is the Overall Goal of Revenue Cycle Management?
Revenue Cycle Management (RCM) is the process of identifying, collecting and managing revenue practices from different payers, depending on the type of services being offered. A successful RCM process is key for any healthcare institution that wants to maintain viability while providing quality care to its patients.
RCM entails the entire spectrum of a provider's healthcare operations, from compliance, financial planning and policy to scheduling appointments, care delivery, eligibility verification coding, documentation, billing and claim processing, among other steps and components. The revenue cycle management software helps healthcare providers correctly bill patients and insurance companies for the services they offer. The software also allows them to address any denials and lets them use deep analytics to detect any revenue leakage.
Revenue cycle management is also a crucial component when it comes to communicating with health insurance companies. For example, when patients schedule an appointment, the doctor or hospital employees can check the insurance coverage of those patients before they arrive. After receiving treatment and drugs, a physician or hospital staff will classify the types of treatment as per the Current Procedural Terminology(CPT®) codes or Healthcare Common Procedure Coding System (HCPCS) codes. The healthcare facility will then a claim/bill with the CPT/HCPCS codes and patient's diagnosis codes (International Classification of Diseases aka ICD-10), to the patient's insurance company to determine which part will be paid by the insurer and which part will be the patient's responsibility.
In other words, revenue cycle management links business and the clinical part of the healthcare system by integrating administrative data — names of patients, insurance companies as well as other personal info — with the type of treatment a patient receives.
Why Is Revenue Cycle Management Important?
Besides offering the highest quality care, a well-implemented revenue cycle management is essential to the fiscal health of an organization. Hospitals and other healthcare providers should be fully aware of how RCM works, how to improve it and how to deal with challenges in an increasingly changing environment. A successful and healthy RCM process ensures timely revenue collection as well as financial viability in a company. Revenue cycle management is distinct to every organization, but regardless of the size of a healthcare facility or hospital, the main objective is always to maximize revenue and minimize expenses and debts.
With revenue cycle management, healthcare providers can ensure they are reimbursed quickly and accurately for services rendered. While this may appear beneficial to the service provider, it is also advantageous to the patient. The main objective of RCM is to ensure the provider is properly reimbursed, which leads to a greater benefit for the patient through access to care and services from the provider.
Here Is Why RCM Is Important to Healthcare Providers
- Reduced error and redundancy: RCM can help detect errors in advance and give time to rectify those mistakes quickly.
- Reduced time commitment: RCM helps streamline processes, from early patient registration to appointments and payment reminders.
- Reduced costs: With the minimal likelihood of errors and reduced time commitment, organizations can reduce the costs related to the management of their revenue.
- Fewer denials: By minimizing errors in payment claims, revenue cycle management can also lower the denial rate and speed up payments to organizations.
What Is the Overall Goal of Revenue Cycle Management?
Although the primary objective of revenue cycle management is to maximize profits for healthcare providers, patients also stand to benefit a lot.
A successful RCM strategy goes beyond increasing an organization’s revenue. It also involves improving communication between patients and healthcare providers. The healthcare industry is drastically changing, and the aspect of price transparency has become more important than ever before. There’s no better way of retaining patients and gaining their trust than allowing them to know all their expenses in advance. This helps clarify expectations and avoid surprises on the side of the patient. It also helps them make financial arrangements on time.
As per the industry standards, revenue cycle management is not only about the primary functions of billing. It also covers claim processing and denial management, medical coding and revenue collection. (See Medical Billing Services vs. Revenue Cycle Management: What's the Difference below).
The improved revenue stream mainly relies on time management as well as the practice workflow that begins at the time of registration. The registration period is where the eligibility for patient insurance is determined. The process ends with accurate coding and documentation with the help of CPT/HCPCS and ICD-10 codes. An effective billing system can also be a great way to benchmark successful revenue cycle management. This is possible through the implementation of proper EHR and Practice Management systems.
What Are Revenue Cycle Management Systems?
Healthcare providers usually buy and implement specific revenue cycle management systems in order to keep and manage their patient’s billing records. A good RCM system has the capacity to reduce the time between offering a service and getting paid. This can be achieved through Electronic Health Records (EHR) and billing systems as patients move from one stage of treatment to another.
Organizations can also use an RCM system to save time by automating most of the tasks that were initially performed by staff. Such duties may include alerting patients of their upcoming appointments, reminding patients and other payers of their existing balances and engaging insurance companies with specific questions, especially when claims are declined.
Additionally, healthcare providers can also use RCM systems to save money by obtaining insights as to why claims have been denied. More specifically, an RCM system is able to reduce the number of denied claims by triggering healthcare staff to input all necessary information needed for a claim to be processed. This prevents the need for them to later revise or resubmit claims. It also helps providers better understand why their claims have been declined and give them an opportunity to correct the mistakes. This also helps ensure that providers are well paid for handling Medicare patients.
A company can buy data analytics software and use it to monitor revenue goals. This will help the organization have a rough picture of where its revenue cycle needs improvement by classifying billing data and generating corresponding reports. Today, revenue cycle management systems also involve technologies like cognitive computing to ensure only accurate medical data codes are issued to the right patients.
What Are the Steps of the Revenue Cycle in Healthcare?
- Patient intake: The cycle starts when a patient books an appointment with a healthcare provider or facility. This includes taking personal information of the patient such as date of birth, home address, insurance information, phone number, underlying conditions and more.
- Charge capture: After offering treatment services to a patient, the charges are captured in a secure database to be used later for billing purposes.
- Coding: Billable charges like treatments, diagnosis, and procedures are then classified by coders or service providers with the help of industry-accepted medical codes. Assigning codes helps insurance companies refer back to the patients' details when reimbursing them.
- Claim submission: After the patient has been examined, healthcare providers are supposed to submit a claim comprising a detailed report of services rendered for reimbursement to insurance companies.
- Insurance review: The insurer will then determine the exact amounts to be paid to the service providers vs. what the patient is responsible for paying the service provider.
- Billing and collection: As soon as the claim has been reviewed, verified and processed, the patient will need to pay for their patient responsibility amount (e.g., deductible, copay, co-insurance balances) and for any other remaining services that are not covered in his or her policy document. Such costs are usually discussed and agreed upon during the first appointment. This helps the provider to receive payment much faster.
- Revenue cycle review: Revenue cycle management software and reports can make a huge difference at this stage of the cycle. After making all the payments, the next thing is to analyze how the entire process unfolded. What were the bottlenecks? Is there a way of altering the process to make it seamless for the patients?
Medical Billing Services vs. Revenue Cycle Management: What's the Difference?
Revenue cycle management has billing components, it goes beyond the submission of claims and the posting of payments. Most medical professionals use healthcare revenue cycle management solutions to track, assess and manage the status of patient claims.
Medical billing services deal with the submission of claims for all the services offered to patients. The insurance companies will then offer coverage based on these claims.
Revenue cycle management contains more information and processes as opposed to what is involved in billing services. RCM has everything to do with administering different financial transactions that emanate from medical encounters. These encounters are between patients and medical suppliers, health providers or hospitals.
The transactions include billing, coding, compliance, policies & procedures, data analytics, management duties, collections, payer contracting and healthcare provider enrollment. This shows how complex revenue cycle management is. RCM tasks begin immediately after a patient calls to book an appointment with your staff. That’s the time to conduct verification of benefits and eligibility with the insurance company, which can be done over the phone, online, through a provider portal, or through a verification module within the EHR/Practice Management System. After that, your staff can then explain to the patient his responsibilities in terms of paying bills.
What Are the Benefits of RCM?
1. Identifying and Resolving Errors
By implementing revenue cycle management, organizations and healthcare providers will be able to easily pinpoint errors in a revenue cycle. Doing so reduces the likelihood of claim denial by approximately 90%.
2. Reduced Administration Burden
Minimizing claim denials also reduces the administrative burden. Your employees will have more energy and time when there are no investigations or appeals on denied claims. Besides, the focus on front-end tasks makes interactions simple between patients and the administrative staff.
3. Preventing Health Fraud
Another major benefit of RCM is the prevention of healthcare fraud. The healthcare industry loses billions of dollars every year to healthcare fraud. Investigating healthcare fraud can also cost healthcare providers a lot of money as well as their reputation.
4. Increases Revenue for Healthcare Facilities
By avoiding claim denials, technical errors and fraud investigation, organizations can easily get reimbursements for services rendered. They can also save money by avoiding spending a lot of funds appealing claims, investigating fraud and resolving errors.
Contact The Honest Approach if you need revenue cycle management today!