Medical healthcare providers are obligated to provide medical healthcare services to the patients, which often begin with regular checkups and end with complex surgeries. This is where healthcare providers collect revenue. But to efficiently run the revenue cycle management for hospitals or for private clinics, healthcare providers need to work with the doctors, patients, and insurance companies collectively. The process by which healthcare organizations collect revenue is known as Revenue Cycle Management.
Efficient and uninterrupted revenue cycle management is vital for the comprehensive success of a healthcare provider in the long run. With this, they can boost the financial well-being of their practice and remain focused on providing proper care for patients.
How does revenue cycle management for hospitals work?
RCM- Revenue Cycle Management is the cycle that starts from the healthcare system claim for the rendered services to stimulate revenue generation. It always begins with the first appointment of the patient and goes all the way to claim submission and ends with the acceptance of the claims and reimbursement.
The steps that are involved in the RCM specifically are listed below but they may vary according to the practice and circumstances where a claim gets rejected;
- Clearinghouses – Claims are first submitted to clearinghouses to check the errors and to see if the proper documentation is made and then they are submitted to insurance companies
- Coding – Checking the medical CPT and ICD-10 codes assigned to every medical procedure and treatment
- Charge Capture – Turning services rendered into chargeable entries
- Collection – Collecting payments from patients for unpaid bills.
How RCM is different from medical billing
Medical billing may limit itself to managing the major components of the healthcare industry but RCM refers to a collective process that is involved in maintaining and managing providers’ revenue efficiently and timely by receiving reimbursements on time.
In addition, it is important to understand that maintaining the revenue cycle can be for both in-house patients or outpatient settings for the range of services provided by healthcare providers. This is why it is important for the success of a healthcare provider to maintain a smooth RCM. Not just providers but healthcare organizations working across the US and the respective countries are obligated to maintain and manage RCM effectively to manage their finances.
Steps involved in Revenue Cycle Management
The following steps are outlined in order to understand the end-to-end process of revenue cycle management;
1. Patient appointment
RCM begins with the first encounter with the patient at their appointment. In the optimal scenarios, patients schedule the appointments in advance except in the situations where they need to be admitted to the Emergency Department or Urgent Care settings.
2. Insurance verification
At the very first time when a patient schedules an appointment with the healthcare provider, the information of primary and secondary healthcare insurance provider(s) is captured to evaluate the eligibility and the coverage of the certain treatment and up to what extent the patient can pay out-of-pocket.
In the case where insurance doesn’t cover the treatment, a financial planning engagement is taken into account in advance before the services are rendered. Also, patients are also obligated to provide their contribution at the time of service. On the other hand, if the treatment is covered by the insurance company, a process called pre-authorization substep would be applied.
During this verification process, when the insurance payer is contacted, the insurance carrier will inform the provider about the submission of a pre-authorization subset in order to receive reimbursement for the service provided. The authorization documents consist of the claim submission requests and the Medical Records to evidence the reimbursement of the services provided, the number of visits, and the associated labs and tests processed for the patient’s care.
3. Patient Encounter
Once the patient arrives at the hospital or clinic, their demographic details, insurance information, and healthcare history has been taken at the front desk. The patient encounter is the first thing when a patient meets the healthcare provider. In this encounter, they both discuss the healthcare needs and the procedure of the treatment as the care will be delivered. A provider is obligated to record all the information about the patient’s health and their data electronically in the patient’s chart over EHR-electronic health records side by side.
4. Medical coding
Medical coding is the next step after the patient encounters and arranges the medical data in EHR. Through coding the healthcare treatment prescribed and the healthcare conditions are translated in the form of Diagnostic and Procedure codes. The codes are of two forms i.e., ICD-10 and CPT codes. CPT codes are represented by five alphanumeric expressions and show the type of services rendered by the healthcare provider. Diagnostic codes ICD-10 represent the classification of the disease that brought the patient to the provider for treatment.
Medical coding is a difficult process and the research says more than 50% of the rejected claims are due to coding errors. For this, many healthcare providers outsource the coding process to medical billing service providers.
5. Claim submission
Claim submission is one of the essential processes of RCM which demands inclusive consideration from both payers and providers. In claim submission, providers need to ensure that the claim has complete and accurate information about;
- Demographics of the patient
- Services rendered by the provider(s)
- Insurance plans and coverage
- Insurance provider and
- Facility information
Once all the information is gathered, the claim is created and submitted to the insurance company for the billed reimbursements.
6. Payment posting
Payment posting refers to the communication that shows the decision that insurance providers make regarding reimbursement. It shows the services they cover and the ones they don’t, so if they are subjected to be paid by the patient, then there will be a creation of a patient statement to be sent to the patient by the provider or facility to collect payment.
This happens when a patient has one insurance provider. If a patient has more than one insurance provider, then there will be primary and secondary payers covering different services. Once the primary payer makes the payment posting, the remaining claim is sent to the secondary payer. They will list down the services they cover and mention the services to be paid by the patient out-of-pocket.
7. Statement processing
If the medical claim gets denied, it is stamped on the claims and will be sent to a medical billing expert. Here, the medical billing expert will have all the rights to review the claim and identify the errors and reasons for the rejection. Then he has to take the next step to reprocess the claim and make arrangements for appropriate resubmission. The process is called statement processing or patient billing in medical terms.
8. Outstanding cost of services
Outstanding services are also referred to as accounts receivable – AR, which is the amount that is payable by the patient for the services they have taken in the past. It is part of those non-reimbursed charges that the insurance companies denied covering.
Providers have their own AR team that follows up and collects underpaid/partially paid, denied, or pending insurance claims.
9. Denial Management
The denial management process starts with the claim denial receipt which remains underpaid or unpaid due to errors in coding. The denial process follows payment posting/ statement posting and is processed by taking follow-ups with the patients or insurance carriers digitally. At this time of the denial management, medical billers are also obligated to perform some more tasks mentioned in the above steps as well.
How do revenue management cycle metrics work?
Efficient revenue cycle management means that your revenue generation should be performing beyond almost all the core metrics of RCM. The core RCM metrics that a provider should care for include;
- The number of claim reimbursement (weekly & monthly)
- Average paying days
- Denial rate
- Outstanding balances from patients or insurance
Proper maintenance of RCM dashboard for medical billing
A visualization of the progress will always help you identify the changes and improvements you need in the revenue cycle management. RCM Dashboards help you see the significant red flags in the systems that you should care for on priority and in real time.
Certain visualizations such as healthcare providers, clearinghouse, claims, insurance companies, payers, and patient data will keep your focus intact in real-time. Also, you will have all the ideas in hand on how to improve the reimbursement process of your healthcare practice.
Revenue cycle management is an essential part of a successful healthcare organization or practice. There’s a no-brainer that it is hard to cover all the steps of RCM successfully by yourself whether you are a healthcare practitioner running a practice or a hospital. This is where Clinicast can help you get through smoothly by allowing you to have an efficient revenue cycle management service.
With a team of experts, we provide top-notch service that not only works to manage but maximizes your revenue by delivering actionable results.