When it comes to running your practice more efficiently, maintaining a steady cash flow and driving revenue, you must make healthcare revenue cycle management a priority.
Healthcare revenue cycle management (RCM) is the medical billing cycle that physicians, hospitals, and healthcare systems use to manage the administrative and clinical aspects of processing claims, payments and generating revenue. RCM includes submitting and following up on medical claims with health insurance companies in order to receive timely payment for the services you provide.
Benefits of healthcare revenue cycle management (RCM)
Without revenue cycle management, healthcare providers would not be able to generate enough revenue to keep their doors open. Revenue cycle management:
- Connects the clinical and business sides of the business.
- Simplifies the medical billing process by keeping track of episodes of care and following each step required for payment.
- Allows patient data and health insurance information to be linked to the treatment.
- Seamlessly integrates with the electronic health record (EHR).
- Saves time between when treatment is provided, and payment is collected.
- Is an automatic system that saves time and cost on duties previously performed manually.
- Reduces denied claims and re-submissions and allows patients to pay bills online.
- Increases patient satisfaction.
- Allows providers to purchase analytics software and use dashboards to understand cash flow and revenue goals.
The revenue cycle management process in medical billing
The revenue cycle management process in healthcare starts the moment a patient makes an appointment and ends when all claims are processed, and payments are collected.
When a patient initially contacts a provider, the staff schedules the appointment, verifies insurance eligibility, and establishes their account. Pre-registration is also a crucial step in RCM because it lays the foundation for claims to be processed and payments to be collected efficiently. This step requires the staff to input information about the patient’s medical history and insurance coverage either before the date of the appointment or when the patient arrives.
After the patient’s appointment, the provider, or a charge capture specialist, must record procedures and diagnoses as ICD-10 and CPT codes, respectively. Then the claim is coded appropriately and submitted to the payer for reimbursement. The billing department must also post payments, process statements, handle claim denials and collections.
When the healthcare insurance company evaluates the claim, providers are reimbursed for their services. Claims can often be denied because of incorrect coding or a lack of information in a patient’s record or account, for example. If services aren’t covered by the health insurance company, the provider must notify the patient and collect payment.
Challenges of revenue cycle management
Although it seems like a linear process, the process is typically marked by plenty of detours and bumps in the road.
A well-designed healthcare revenue cycle management ensures that providers are paid the entire amount promptly. Bills and claims often take time to process, and it’s not unusual for claims to be shuffled between providers and payers over a series of months until the problems are resolved. Since patients may not be able to pay their bills immediately, the RCM process doesn’t always run as smoothly. In fact, according to a 2016 report by Instamed, 70 percent of providers say it takes a month or longer to receive payments from patients.
Another bottleneck to the RCM process is the tracking of claims. If claims are not monitored closely throughout the entire cycle, providers could lose revenue from errors or issues that are not resolved immediately.
What’s more, a lack of education and training for staff could affect reimbursement since staff often make errors when verifying insurance eligibility and coding and fail to gather and input sufficient information into a patient’s record.
How to have a successful healthcare revenue cycle management
To ensure the financial health of your business, it’s essential to optimize your medical billing process to be as efficient as possible. Here are some tips for successful healthcare revenue cycle management.
1. Verify insurance eligibility
According to a 2016 study by Change Healthcare, the top reason for denied claims stem from registration and eligibility issues. When a patient makes an appointment, whether they’re a new or existing patient, it’s vital to verify their insurance coverage. With Zocdoc’s Insurance Checker, both providers and patients can verify their insurance coverage, eligibility, and in many cases, their deductibles and co-pays within minutes.
2. Offer education and training
Employee programs that educate and train staff on factors such as proper coding techniques, charting and providing patients with financial policies can reduce errors, reduce staff turnover and ensure a consistent cash flow. The American Association of Healthcare Administrative Management or the American Institute of Healthcare Compliance both offer training programs and certification.
3. Hire a director of revenue cycle
Having a director of revenue cycle will ensure you have a dedicated staff member to lead the revenue cycle operations. The director of revenue cycle develops, plans, organizes and implements current and future strategies to bill patients, process payments, minimize bad debt, improve cash flow and manage the overall health of the company’s receivables.
This person manages the day-to-day operations including patient intake, billing, collections, accounts receivable and patient financial planning. The director of revenue cycle can also train staff on efficient pre-registration and intake, and communicating the financial policy, for example.
4. Outsource revenue cycle management
According to a 2016 report by market research firm Black Book, nearly 88 percent of medical groups with 100 or more providers are outsourcing their revenue cycle management.
A revenue cycle management software vendor can help your organization implement policies and procedures for handling pre-registration, automate coding and insurance eligibility verification, tracking claims, resolving denials and managing reimbursement issues. A health IT solutions provider can also help your organization use big data analytics to run a successful revenue cycle management model.