Revenue cycle management (RCM) is a step-by-step financial process that healthcare facilities follow to manage the various functions associated with claims processing, payment, and revenue generation. In simple terms, RCM involves identifying, collecting and managing revenue for services provided to patients. Experienced medical billing companies in the U.S. provide comprehensive RCM solutions to ensure providers earn maximum return on investment (ROI).
RCM – Frequently Asked Questions
- What is the Revenue Cycle in Healthcare?
The revenue cycle makes up all the administrative as well as clinical processes involved in the capture, management, and collection of revenue for patient services. It comprises all the functions from the creation of patient accounts to collection of payment.
- What is Revenue Cycle Management?
Revenue cycle management is the process of keeping track of billing, coding, accounts receivable and revenue. Patients and their insurance companies must be billed for services in accordance with the terms of their health insurance coverage and using the correct billing code that accurately describes the treatment or service that was performed. Most facilities hire medical billing services to manage the complexity of the billing cycle and maintain cash flow, while delivering optimal patientcare.
- Why is RCM important in Healthcare?
RCM plays a key role in the day-to-day operations of a healthcare organization and can break or make the business. RCM ensures that providers have proper policies and practices in place to streamline the billing and collection cycles and stay financially fit, and by accurately managing patient registration, appointment scheduling, billing and coding, and claims submission. To ensure maximum reimbursement, providers should integrate best practices in medical billing and collection of payments from insurers and patients. This will bridge the gap between the business and clinical sides of healthcare.
- What are the Steps in the RCM Process?
Healthcare RCM involves several steps:
- Patient enrollment/registration: The first step in the RCM process is capture of patient demographic information for medical billing. The billing team reviews all information in patient intake forms enters it into the Electronic Health Records system or Practice Management system. Accurate demographic entry in the provider’s online portal is critical for clean and complete patient information which is critical for a smooth pre-registration and process and for filing compliant claims.
- Insurance eligibility verification and prior authorization: This step is part of the front-end billing process. It involves confirming the patient’s insurance coverage before the office visit and getting the necessary preapprovals from the payer. It is necessary to submit clean claims.
- Prompt and accurate determination of the patient’s eligibility provides the provider a clear idea about the patient’s coverage, out-of-network benefits, and payment responsibility before services are provided. During the process, staff will informs patients of any costs they are responsible for and can collect any copayments from the patient at the appointment.
- Certain medications, imaging studies, etc. require prior authorization or pre-approval from the patient’s health plan before the payer will cover the cost of the service. Experienced insurance verification specialists will verify patient eligibility and obtain preauthorization to reduce delays in providing care and prevent claim denials and payment delays.
- Medical coding: Submitting claims with the correct ICD-10, CPT and HCPCS codes is essential to obtain reimbursement for services delivered. Expert medical coders will review the physician’s documentation and medical record carefully to extract billable information and assign the correct codes related to a diagnosis, procedure, charge, and professional and/or facility code. They will leverage technology to ensure accurate and complete coding which is essential for optimal reimbursement.
- Medical billing: Medical billing involves preparing and submitting claims to payers and billing patients for their financial responsibility. Medical billing specialists and coders work together to use patient information and the correct codes for services rendered to prepare a super bill and create a claim. The charge entry process in medical billing involves assigning an appropriate fee based on the fee schedule, based on the medical codes that describe the patient’s visit. Claims are scrubbed to ensure that the procedure, diagnosis, and modifier codes are current and accurate and that necessary patient, provider, and visit information is complete and correct. Claims are submitted on payer-specific forms. The provider’s notes and comments may be included along with the claim to justify medically necessary care.
- Payment posting: Paid claims must be correctly posted in patient accounts. This step in the RCM process provides an overview of the payment details and the practice’s revenue stream and financial health. Accurate payment posting can promptly identify potential issues so that corrections can be made. For instance, if a claim is denied, the biller can correct and resubmit it, depending on the reason for the rejection/denial. After payments are received, billers will create statements for patients, which inform them of their financial obligation. Patients are usually billed for the difference between the rate on their chargemaster and what the insurance paid.
- Accounts Receivable (AR) management: This phase of the medical billing process involves identifying accounts that need follow-up with insurance companies and patients. Monitoring AR to understand money owed to the healthcare provider and work with insurance to ensure that these payments are appropriately processed and received.AR management is all about reducing days in AR and improving cash flow by getting money owed as soon as possible.
- Reporting: Reliable medical billing companies also create various medical billing reports to help their clients track the financial health of their business. These include but are not limited to the AR aging reports, key performance indicators (KPI) reports, payment trend and collection reports, and insurance/payer analysis reports.
- What is Accounts Receivable (AR) Management?
AR management involves collecting amounts that have been billed. Efficiently monitoring and measuring AR performance or AR follow-up is essential to recover overdue payer or patient payments. The A/R Aging Report that a medical billing company creates will show how long insurance claims and patient balances have been outstanding, expressed both as a dollar amount as well as a percentage. Improving A/R means understanding your current state and conducting a gap analysis to compare your performance with industry peers, competitors and best practices. This will enable you to identify the steps you need to take to close those gaps.
- What Factors are Critical for RCM Success?
Key factors for RCM success include:
- Use of automated software can reduce errors and streamline the process
- Providing web-based services to meet patient demands and improve billing and payment processes
- Insurance verification services to inform providers and patients as to what procedures and services insurance plans cover. Real-time insurance eligibility verification will save time, reduce risks on denial, and improving patient-provider communication.
- Staying up-to-date with ever-changing healthcare regulations
A successful RCM process will enable you to better manage transactions with payers and patients, earn profits, maintain financial viability, and provide quality patient care.
- What are the Benefits of Outsourcing RCM?
With multiple processes, each involving unique challenges, RCM can be complex to handle in-house. Moreover, trends such as aging populations, new, complex treatments and technologies, changing industry policies and public health emergencies like COVID-19 have made RCM more complex than ever. Navigating the field would be much easier with expert support.
The Key Benefits of Outsourcing RCM are:
- Reduces operational costs
- Reduces risk of medical billing errors
- Improved regulatory compliance
- Streamlines financial processes and improves efficiency
- Cuts denials/rejections
- Timely and optimal reimbursement
- Boosts collections and cash flow
- More time to focus on patient care
Regardless of whether RCM is done in-house or outsourced to a medical billing company, handling the processes efficiently is essential to improve your bottom line.