Revenue Cycle Management (RCM) in healthcare encompasses all the steps a practice follows to get paid. This process begins when a patient schedules an appointment and comes to an end with final payment for services rendered. RCM is a benefit not only to the organization, but also the patient.
The importance of effective revenue cycle management can’t be overstated. It includes all administrative and clinical aspects of the patient-practice interaction—leaving lots of room for error. If handled incorrectly, the RCM in healthcare can negatively impact patient satisfaction and the practice’s reputation.
With a sound RCM process in place, a practice will notice: enhanced patient experience, fewer denials (favorable cash flow), improved data management, and streamlined procedures.
The objective of revenue cycle management is:
- Determine where in the revenue cycle improvements can be made and methodically work through those items.
4 Key Components of Healthcare Revenue Cycle Management
There are a few critical phases of revenue cycle management for healthcare practices. They are:
- Patient registration and scheduling
- Charge capture and coding
- Billing and claims processing
- Payment posting and denial management
To better understand revenue cycle management and avoid as many errors or friction points as possible, let’s take a closer look at each part of the cycle.
Patient Registration and Scheduling
As soon as a patient reaches out to a healthcare practice, the revenue cycle begins. It is critical in this early phase to capture accurate patient information. This includes gathering their health history,insurance information, and verifying their benefits. (It’s critical to also confirm the accuracy of this information for all existing patients with each visit.)
If the wrong information is captured or entered, this could result in a denied claim. Which then costs the practice time, money, and effort because additional administrative work must take place to correct the claim and the patient’s file.
In recent years, it’s become possible to use one technology platform to seamlessly combine revenue cycle management billing, coding, and reporting. One key way this helps in RCM is that coders are able to understand digital provider notes more easily than hand-written ones. The advancement of technology allows practices to centralize all necessary information and greatly improve efficiency.
Charge Capture and Coding
Charge capture is the process by which medical practices get paid for providing services. It starts with recording accurate patient notes and requires the use of universally accepted medical codes. These codes signify how much a health insurance company will reimburse the provider.
The correct codes must be gathered and charged or a practice runs the risk of under- or over-coding. Under-coding negatively impacts a healthcare practice’s cash flow. Over-coding is unethical and can result in costly audits.
Common coding challenges in healthcare RCM include:
- Complex coding systems
- Frequent updates
- Documentation quality
- Complex cases
- Manual errors
- Compliance and regulations
- Claims denials
Billing and Claims Processing
Billing procedures go as follows:
- Superbill creation
- Claim generation
- Claim submission
Providers use the correct and updated patient data to properly document the patient visit. Which then enables the medical biller and coder to use accurate codes to create a Superbill. The Superbill is the foundation for the practice’s reimbursement claim. It’s a combination of patient information, provider information, and documentation of what occurred during the visit.
The level of completion and accuracy of the Superbill can lead to what’s known as a “clean claim.” A “clean claim” is when a claim is accepted on the first pass. It can be one of the best indicators of efficiency in a healthcare revenue cycle assessment.
Revenue cycle risk assessment in billing
Practices can take a proactive approach in identifying possible issues by conducting a revenue cycle risk assessment and correcting errors. By eliminating these risks, healthcare practices improve their efficiency and the effectiveness of their revenue cycle management system.
When it comes to assessing risk in the revenue cycle assessment in billing, practices should look for a few gaps in the process. These include:
- Locating recurring manual errors or bottle necks
- Automating tasks where possible to reduce these errors
- Restructuring staff to improve efficiency and accuracy
- Analyzing data (e.g., past denied claims) and identify patterns that could leave a practice vulnerable
- Implement positive feedback and accountability
Payment Posting and Denial Management
Efficient payment posting is not just important for a healthcare practice—it’s critical. It enables providers to make the best use of their time (helping patients), allows administrative staff to not take time away from tasks that need their more immediate attention, and of course keeps the practice continuously generating revenue.
Should a claim be denied (which is bound to happen), there are effective strategies for denial management.
- First, thoroughly review all denial codes and reasons.
- Determine if an appeal is appropriate.
- Finally submit corrected or supplementary documentation for a claim appeal in a timely fashion.
Even though it is time-intensive work, healthcare practices are often able to reverse claim denials through the appeals process.
Mitigating Revenue Cycle Risks in Payment Processing
It is possible to mitigate revenue cycle risks in payment processing. Consider the following:
- Use the right software to seamlessly automate and integrate different parts of the claims and billing process.
- Monitor claims data (i.e., clean claims rates) and develop process improvements to avoid revenue leakage.
- Setup protocols for billing secondary payers and patients to reduce the likelihood of delayed cash flow.
- Understand and verify your contracted rates for all codes for all payors
Challenges and Solutions in Healthcare Revenue Cycle Management
Common Challenges in RCM
Healthcare revenue cycle management doesn’t come without its challenges. Many practices find themselves struggling with RCM in these ways:
- Not collecting payment in a timely manner
- Spending too much time on RCM
- Handling too many coding errors
- Lacking a deep understanding of the revenue cycle
Billing Errors and Rejections
It’s time consuming enough to file a claim the first time, but when billing errors and rejections occur it’s not only frustrating, it’s costly to the practice. Staff must then take the time to review the claim denial, consult with the physician, and submit the corrected information. And the practice continues to wait for reimbursement.
Compliance Issues and Regulatory Changes
Keeping up with compliance issues and regulatory changes also slow practices down. It’s a vital part of running a healthcare practice, but it takes time and expertise to stay current with the constant revisions.
The Need for Revenue Cycle Assessment
Tracking revenue has become increasingly complex and the need to effectively manage revenue cycles is imperative. A revenue cycle assessment can reveal systematic problems in processes and procedures and reduce the risk of lost revenue. By conducting a revenue cycle assessment, it ensures physicians can remain focused on patient care without worrying about sustainability.
At Complete Healthcare Business Consulting, our consulting teams offer a comprehensive, focused or a quick assessment of your revenue cycle process to help you better understand the underlying causes of concern or poor performance.
Revenue Cycle Management assessment and assistance from Complete Healthcare Business Consulting
Many healthcare providers and practices trust Complete Healthcare Business Consulting. With our tools and support you’ll have everything you need to create a streamlined revenue cycle.
Working with Complete Healthcare Business Consulting gives healthcare practices:
With a properly executed Revenue Cycle, the organization will have improved efficiency and will be able to collect the maximum amount of revenue for the services they provide, as well as:
- A customized Performance Improvement Roadmap
- Upgraded tracking and results
- Reduced patient bad debt
- Accelerated cash collections
- Decreased patient billing and collections costs
- To set clear financial expectations with patient-friendly estimates
- Customized payment policies based on a patient’s propensity to pay medical bills
- Improve positive feedback and accountability “Can’t fix what you don’t know”
- Maximize Financial Stability