What is Revenue Cycle Management?
Simply put, the Revenue Cycle includes all administrative and clinical functions that contribute to the capture, management, and collection of patient encounter revenue. The Revenue Cycle begins the moment a patient calls to schedule an appointment, and ends upon receipt of the final payment for all services rendered, with a slue of other critical tasks in between to reach the final payment.
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Revenue cycle management (RCM) services help healthcare organizations optimize their revenue generation processes by streamlining administrative and financial functions. This includes activities such as patient registration, insurance claim submissions, payment collections, and denied claim appeals. The goal of RCM services is to ensure that healthcare providers receive timely reimbursement for the services they provide, and that administrative costs are minimized. RCM services typically include software solutions, such as electronic health record (EHR) systems, to automate and manage these processes. These services can be provided by healthcare-specific consulting firms or by third-party vendors. With these services, healthcare organizations can focus on delivering quality care to their patients without worrying about the financial and administrative aspects of their business.
The Revenue Cycle
What does Revenue Cycle Management actually mean? In order to fully understand the concept, we can break the process out into 7 steps to gain insight into a practice’s reimbursements, and determine which aspects of the Revenue Cycle require optimization, to maximize potential revenue.
Step 1: Scheduling
As the first part of the process, it is imperative to collect, and verify, the patient’s insurance and demographic details accurately. Get those wrong, and claims will be rejected immediately.
Step 2: Benefits & Eligibility
Since the patient’s insurance information was successfully captured at the time of scheduling, a good practice is to verify that patient’s insurance benefits and eligibility prior to that initial visit to determine coverage guidelines. Certain health plans may require a practice to submit a prior authorization request for approval to be reimbursed for services rendered and it is important to be aware of such a requirement prior to the patient’s visit.
At this stage, if it is determined that specific procedures are not covered under a patient’s health plan, a practice may be able to provide the patient with financial accommodations for services rendered.
Step 3: The Patient Encounter
The patient encounter begins with new patient intake conducted by a practice’s administrative staff when the patient arrives for his or her scheduled visit. At this time, a good practice would be to make digital copies of a patient’s insurance cards and driver's licenses. Another best practice would be to collect patient cost shares as a part of the check-in process.
During the encounter, the provider and the patient will discuss specific healthcare needs, and develop a plan of care, as well as deliver any necessary treatment. The details of this encounter must be captured in the patient’s chart electronically via Electronic Medical Record (EMR) software. This includes confirming all patient demographic, insurance information, and relevant medical history.
Step 4: Coding the Claim
All clinical documentation should be completed in accordance with CMS guidelines. Coding consists of reviewing clinical documentation from the patient encounter, and translating that information into procedure codes and diagnosis codes. Current Procedural Terminology (CPT) codes are 5-digit codes that represent services that can be rendered by a medical provider. Diagnosis codes (ICD-10) are the disease classifications that document the conditions or illness that brought the patient in for treatment.
Many healthcare practices will choose to outsource this step to experienced medical coders. Revenue of a practice is dependent on the acceptance of clean claims. Accuracy is of utmost importance to avoid processing delays.
Step 5: Claim Processing
Claim processing is at the core of the Revenue Cycle. All services rendered that have been translated into the appropriate CPT and ICD-10 codes are combined with the corresponding patient demographic and insurance information as well as the rendering provider and facility information to create a claim that is submitted to an insurance company for payment.
If a patient has multiple insurances, once the primary insurance has adjudicated the claim, the remaining balance is transferred to the secondary insurance for payment. Many insurance payers also automatically cross over the balance to a secondary or tertiary payer if they have the information in their system.
Step 6: Accounts Receivable
Accounts Receivable are the outstanding amount that is pending / not yet paid to a provider for the services they have rendered in the past. It is a measurement of charges not yet collected. The purpose of having a dedicated AR team is to be able to collect partly / underpaid, pending, or denied insurance claims.
The key to AR is follow up, which can take on two forms:
Insurance follow up—which consists of collecting any outstanding payments from insurance companies.
Patient follow up—which consists of collecting any outstanding payments that is the patient's financial responsibility.
Step 7: Denial Management
Denials are a serious concern that many providers face. Denials will delay reimbursements and can weigh heavily on a practice’s financial stability. If a claim adjudication results in a denial, an experienced medical biller will review the explanation of non-payment and take the necessary steps to appeal the decision and have the claim re-processed.
Step 8: Final Payment Received
The final step in the Revenue Cycle is when payment is received by paper check, or Electronic Funds Transfer. The payment is then posted to the patient’s account either automatically through an Electronic Remittance Advice (ERA), or manually by referencing an Explanation of Benefits provided by a payer.
As the first part of the process, it is imperative to collect, and verify, the patient’s insurance and demographic details accurately. Get those wrong, and claims will be rejected immediately.
Step 1
Step 2
Since the patient’s insurance information was successfully captured at the time of scheduling, a good practice is to verify that patient’s insurance benefits and eligibility prior to that initial visit to determine coverage guidelines. Certain health plans may require a practice to submit a prior authorization request for approval to be reimbursed for services rendered and it is important to be aware of such a requirement prior to the patient’s visit.
At this stage, if it is determined that specific procedures are not covered under a patient’s health plan, a practice may be able to provide the patient with financial accommodations for services rendered.
Step 3
The patient encounter begins with new patient intake conducted by a practice’s administrative staff when the patient arrives for his or her scheduled visit. At this time, a good practice would be to make digital copies of a patient’s insurance cards and driver's licenses. Another best practice would be to collect patient cost shares as a part of the check-in process.
During the encounter, the provider and the patient will discuss specific healthcare needs, and develop a plan of care, as well as deliver any necessary treatment. The details of this encounter must be captured in the patient’s chart electronically via Electronic Medical Record (EMR) software. This includes confirming all patient demographic, insurance information, and relevant medical history.
Step 4