HEALTHCARE REVENUE CYCLE MANAGEMENT

What is Revenue Cycle Management?

Revenue cycle management is exactly what it sounds like—a strategy healthcare providers can use to manage their revenue cycle's administrative and clinical functions. The revenue cycle begins when a patient contacts the healthcare provider to schedule an appointment. The process ends when all payments for the appointment and treatment have been collected. 
Revenue cycle management aims to identify any friction points in the provider's revenue cycle to resolve them. Care providers can maximize their claim reimbursements and increase their revenue with proper revenue cycle management. 

Why is the Revenue Cycle important? 

 The Revenue Cycle is important because it is how a company generates income and is essential for the company to operate and stay financially healthy. It involves a series of activities, such as billing customers, collecting payments, and managing accounts receivable, that are necessary for a company to receive payments from customers in exchange for goods or services. The Revenue Cycle is a key indicator of a company's financial performance and can provide insights into a company's overall efficiency and effectiveness. It also helps the company create budgets and forecasts to ensure the company's future financial health.

The healthcare revenue cycle consists of many steps. This means that there are many opportunities for errors to occur. Any errors in the revenue cycle can delay the provider's reimbursement from insurers and patients or halt reimbursement altogether. 

For a better understanding of where errors can occur and how RCM can prevent them, let's look at the steps included in the healthcare revenue cycle: 

• Pre-authorization and eligibility verification – When a patient makes an appointment, the healthcare provider collects information to establish a patient account. This includes managing the patient's insurance information and verifying their insurance eligibility. 

Revenue cycle management emphasizes accurately completing this step, even if a patient already has an account with the provider. Inaccurate information or ineligible insurance will only result in a denied claim later in the revenue cycle. This means a delay in the provider's reimbursement payment. It also means more work for the provider, who must comb through the patient's information to correct the errors.

• Charge capturing and coding – Charge capturing transcribes patient services into billable charges using universally accepted medical codes. These codes are how insurers determine reimbursement amounts.

The insurance company may deny the patient's claim without proper medical coding. This results in delayed provider reimbursement. It also costs the provider time and money as denied claims must be investigated and appealed. Effective revenue cycle management ensures accuracy in coding so that denials can be avoided altogether.

• Claims submission – Once a patient's treatment has been properly coded, the claim is sent to the insurance company for approval. RCM ensures this submission happens quickly by tracking and managing the claim. 
• Payment collections – Once the patient's claim has been approved, the insurance company reimburses the provider based on the patient's eligibility. If there is any remaining balance after the insurance reimbursement, the provider is responsible for contacting the patient to collect the remaining payment. 

Revenue cycle management expedites this patient payment process by streamlining claims processing. Plus, because of the increased focus RCM puts on front-end tasks, such as insurance eligibility verification, patients will know from the start what out-of-pocket expenses they're responsible for. Again, this helps to avoid any delays in collecting the final payment. 

• Medical service review – Thorough revenue cycle management encourages care providers to analyze clinical treatment data. Analyzing this data allows providers to pinpoint steps where errors are being made and identify ways to lower their expenses. In turn, this will help increase provider revenue and improve the patient experience. 

Effective revenue cycle management ensures that these steps are performed thoroughly and accurately to help providers avoid delayed or lost revenue. 

Although the primary goal of RCM is to increase provider revenue, it delivers other benefits in the process. These benefits serve the providers and patients, giving revenue cycle management even greater value.