What is Revenue Cycle Management? A Comprehensive Guide by NCDS Medical Billing
By: Mick Polo | Read Time: 13 minutes
With about half of patient care physicians working in small medical practices, harnessing the ability to effectively manage the revenue cycle can make a substantial difference in healthcare. We're going to delve into what is revenue cycle management and what you can do to fully optimize this process
Unraveling RCM’s complexities and optimizing the cycle based on your unique practice’s challenges, goals, and needs can make a massive impact on your practice’s financial health. In this guide, NCDS Medical Billing provides our expertise on the world of revenue cycle management (RCM) and how small practices can leverage this knowledge.
This all-encompassing guide is essential for understanding what healthcare revenue cycle management is and unlocking its potential for your physician practice. Use the below tips to enhance your medical billing process and boost your bottom line.
What is Revenue Cycle Management?
Revenue cycle management (RCM) is the entire process of organizing healthcare practice finances. The revenue cycle is how healthcare practices generate revenue and receive payments for services provided.
RCM is comprehensive of all activities related to revenue, including processes like insurance claims processing and billing patients for payments.
The RCM process begins when patients schedule appointments and ends with the final payments of balances due. Overall, RCM is what keeps practices operating and functioning by billing and receiving payments for services due.
What are the Stages of Revenue Cycle Management?
The three main groups involved in RCM include the patient, the provider, and finally the payers - which could be either insurers or patients.
To ensure all parties are on the same page, there are multiple stages in the revenue cycle that ensure effective communication and action.
Depending on the situation, the patient and provider relationship, and their needs, not all 11 steps below are always mandatory to the RCM process but rather outline all steps that could occur throughout RCM.
Indeed identifies the revenue cycle management steps
The revenue cycle begins with an appointment. Patients kick off the cycle by getting an appointment on the books with a provider for a medical service. Once an appointment is scheduled, the provider will input the appointment into their RCM platform.
Once an appointment is scheduled, patients typically go through registration. Registration collects all the important information about the patient such as insurance information and medical history.
Registration is an invaluable part of the process, as key details will be provided for accurate payment processing.
Providers verify patients’ eligibility after they have registered. This eligibility check confirms insurance coverage, any potential fee waivers or payment assistance, and other important details. This stage cannot be skipped, as it helps paint a full picture of precisely how and how much will be paid and eliminates any surprises down the line in the cycle.
The utilization review typically confirms prior to an appointment what the necessary type of care is for the patient’s needs and situation. It is another part of the verification process that helps confirm that the payment will be paid for by an insurance company or other means.
There are certain instances where patients pay prior upfront with the intention of receiving reimbursement for healthcare or pay a copay at the beginning of their appointment.
These initial payments begin the process of collecting financial information and also processing transactions. This limits missed payments and also keeps a record of contributions to avoid patient overcharging.
The charge summary stage is a fundamental step that opens the door for clear communication between provider and patient to understand costs and records. The summary shares itemized details on what each procedure costs, creating transparency.
Medical coding is an invaluable stage of RCM where providers or their teams use medical coding to build an insurance and billing document.
Coders assign medical codes to all actions that were taken with the patient and help reconfirm eligibility and speed up the insurance review process.
Once the medical coding of a patient’s procedures is complete, the provider submits the coded information to the insurer which begins a new case file.
Upon submission, the claim must be formatted and meet the requirements of the insurer in order to receive approval. Accuracy is absolutely crucial to submitting clean claims.
Once a claim is approved, an insurer will send a healthcare provider the money that they are owed. A remittance statement will be sent by the insurer that shares how much is covered and why those procedures were covered.
In instances where insurers do not respond to claims, providers need to conduct follow-up actions to ensure that payments are received in full. Discrepancies must be identified and collections need to be enforced.
Additionally, providers can inquire about denied claims and potentially request to overturn the denial and seek the payment that is due. With 69% of providers seeing an increase in denials in recent years, third-party follow-up has proved to be a mandatory RCM stage.
Patient Payment Collections
The final step of RCM is patient collection. This could be through charging patient accounts via online portals, mail transactions, or if necessary through a collections agency for medical debt.
Collecting payments from patients could utilize discounts, credit, or payment plans to make payments feasible for patients. Policies for payment also vary by provider.
Why is Healthcare Revenue Cycle Management Important?
Physicians in private practices build strong and meaningful relationships with their patients and their communities over the years and maintain a strong sense of autonomy. However, they also experience many challenges.
With increasing financial challenges and expenses outpacing patient volumes, focusing on optimizing the revenue cycle is now more important than ever. Additionally, physicians spend nearly 2 hours daily working with electronic health records (EHRs) outside of work hours.
A well-managed RCM process increases provider revenue while improving both the patient and physician experiences. The patient will receive the dedicated care they deserve with decreased administrative staff headaches on both ends.
The benefits of optimizing the RCM process include:
- Increased efficiency
- Improved communication between providers, payers, and patients
- Healthier cash flow
- Decreased denials
- Higher clean claims rate
- More physician time spent with patients than on process
Key benefits of revenue cycle management according to SelectHub
Healthcare providers are seeing the value in focusing on RCM and making efforts to improve their revenue cycle management process. During the COVID-19 pandemic, 75 percent of hospitals and health systems across the country deployed revenue cycle management technology.
What are Common Revenue Cycle Management Challenges for Physician Practices?
Inefficient processes in the revenue cycle lead to staggering collective losses throughout the healthcare industry. The United States healthcare industry lost $16.3 billion in 2020 on revenue cycle inefficiencies.
These losses make a significant impact on physician practice financial health. The following examples are typical challenges that physician practices encounter throughout the revenue cycle.
Unsatisfactory Workflow and Communication Processes
Disorganized workflows when managing any stage of the RCM process lead to errors, missed steps, and lost payments. Forgotten tasks and simple mistakes are completely avoidable when an airtight RCM process is in place.
Building a team that can keep your revenue cycle solid is one of the biggest impacts to your practice’s success. When asked to identify their top staff training challenges, medical leaders identified RCM-related tasks as three of the top four (scheduling, payments, and EHRs respectively.
Top front desk training challenges shared by MGMA Stat
Human error leads to denied claims and lost revenue. Inadequate training leads directly to lost time and money for practices, highlighting how important it is to spend the time upfront with staff to train and create clear processes.
Shifts in Regulations
On top of providing excellent care for patient needs, attracting new patients, and staying on top of medical industry changes and breakthroughs, there are also regular shifts in regulations. For example, ICD-10 medical billing codes change frequently to reflect different procedures.
Being unaware of any changes to codes and regulations can cause lost revenue and denied claims due to being incompliant or providing inaccurate codes.
How Can Physician Practices Improve the Revenue Cycle?
A well-managed and optimized RCM cycle keeps a physician's practice running smoothly. As identified by the AMA’s 8 keys to succeeding as a physician in a private practice, four of the eight tips can be bolstered through an effective RCM system.
Simplify Appointment Scheduling
The revenue cycle starts with a booked appointment - so start by making sure the appointment scheduling process is as easy as possible for your front desk and your potential patients.
By ensuring the appointment booking process is seamless and sending out reminders to reduce no-shows for appointments, your practice’s overall number of booked and attended appointments will begin to show improvement.
Measure Your Current RCM Process
Identifying key performance indicators (KPIs) and seeing where your strengths and weaknesses are throughout your revenue cycle will create insight into where you can improve. A few examples of KPIs that can be tracked include:
- Denial rate
- Clean claims rate
- Days in accounts receivable
- Net collection rate
- Total reimbursement collected
Tracking KPIs and taking an analytical look at your RCM process will ultimately lead to an optimized cycle and improved cash flow.
Partner With an Expert
A guaranteed way to improve your healthcare revenue cycle management and overall medical billing practices is to partner with a medical billing organization.
Teaming up with an expert who will work with your practice to learn your needs, and specialties, and take the struggles of medical billing off of your to-do list is an excellent way to stay on top of regulations, improve your practice, and stay focused on patient care.
For a partner who will go above and beyond, contact NCDS Medical Billing to see how we could work together to improve your practice!
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