What Is Revenue Cycle Management?
What Is Revenue Cycle Management?
By: Mick Polo | Read Time: 6 minutes, 42 seconds
Health care providers are tasked with safeguarding the general population’s health. Though it is essential for them to do everything that guarantees the health of their patients, they should also protect their financial health. Understandably, a decline in the financial health of healthcare providers distracts them from focusing on their work and consequently the quality of care their patients receive.
To guarantee the optimal financial health of your private practice or clinic and be sure of the highest quality of care, consider investing in revenue cycle management. A revenue cycle comprises a series of steps between the time a business gets materials it will sell to generate a profit and the time it completes a transaction.
Unlike other industries, the workers in the healthcare sector do not know how much they expect to make from their services. Besides, there is often a lag between the payment and service delivery, so managing your accounts receivable is not as easy as it might be in another sector. In studies published during 2015, 95.0% of independent physicians acknowledged that outsourcing revenue management is right decision.
Healthcare revenue cycle management is the organization of the financial processes in your practice, like those related to revenue generation, insurance claims processing, and making payments. The process starts with the registration of your clients and ends with the payment of their final balances. Simply put, a revenue management cycle solution like NCDS is what will help your practice keeps its revenue flowing.
The article below will give you detailed answers to some fundamental questions surrounding revenue cycle management.
The Challenges of Healthcare Revenue Cycle Management
There are several challenges in the healthcare revenue management systems that have seen hospitals lose millions of dollars annually. This lost revenue is one of the causes of the high medical costs passed onto consumers as practices struggle to stay afloat. The following are the typical challenges in the revenue management cycle of healthcare institutions.
Some seemingly minor human errors like misspelt names or wrong codes are among the contributors to the slowly increasing claim denial rate that stood at 23% in 2020. If anyone with inadequate training in the billing department makes a mistake, this affects the rest of the process.
The government regulations like the ICD-10 codes on medical billing constantly change to reflect different issues. Failure to change your practice to keep up with these changes might lead to a loss of patient service revenue.
Lack of adequate communication in billing departments
Though your medical practice might be busy, the billing department needs to meet periodically to review the accounts receivables, revenue, and collections. Without adequate communication in the department, you will only realize mistakes long after they occur and can do little to minimize the impact of human error.
How do the workers in your billing department handle a patient when they walk in up until they pay for the service rendered? Missing any of the steps in the flow of a patient through different stages often ends in forgotten tasks that result in revenue loss or delay payments. This also affects the correct and timely completion of clinical documentation for payment.
Here is an image summarizing the above challenges according to a study by the Medical Group Management Association conducted among healthcare leaders:
The Steps Involved In Revenue Cycle Management
An effective billing cycle and healthcare revenue management system centers on three main players; the patient, health care provider, and the payers (insurers or patients). To ensure effective communication among these players, there are several steps involved in the revenue management cycle. The following are the typical steps in this revenue cycle.
- Insurance eligibility verification: Here, a patient arrives at the hospital, and their insurance eligibility is verified before their information is recorded in your EHR (Electronic Health Record) system.
- Charge capture and coding: Once the patient receives services, the visit will be coded into a bill according to ICD-10 coding standards.
- Patient payments: Patients can pay their co-pay according to their insurance payment plans before accessing services or when leaving the hospital at the end of their care.
- Claim submission: A coded bill is sent to a payer, often through a clearinghouse. In most cases, the employees in your billing department have to follow up with insurers to ensure timely reimbursement.
- Reimbursement: After a payer has reviewed your claim, he/she will send a payment for the services a client has received.
- Denial management: At times, your claim is denied because of an error or giving insufficient information, among other reasons. In this case, your office staff will make the appropriate corrections on the billing forms then resubmit the claim
- Patient collections: If your patient has received services that an insurer does not cover, your administrative staff will send them a bill for these services and follow up with payment reminders until the patient settles this balance. Unfortunately, it is a challenge to get outstanding payments after a patient leaves your practice. According to an industry report in 2015, only 66.7% of patient balances above $200 are settled.
- Reporting: Routine assessment of what has worked in your revenue cycle management and what needs honing is essential. Getting software that helps you generate customized reports is an excellent way of gaining insight into the crucial data that will guide decision-making.
Benefits of Revenue Cycle Management in the Healthcare Sector
Some healthcare leaders see little need for investing in a revenue cycle management system, assuming their billing departments are well able to handle their revenue collection. However, consider these 7 benefits that the system will actualize that few human workers will:
1) Improved patient satisfaction and experience
With an effective revenue collection system, you will eliminate redundant processes, streamline your payment process and simplify complexities. In turn, these allow your employees to focus on delivering quality care and processing timely payments. This means you will improve the patient experience in your practice or healthcare organization.
2) Reduced administrative burden
When you eliminate the redundant processes in your revenue collection, this reduces the administrative work that your employees have to handle manually. Therefore, you can expect them to focus more on the other beneficial tasks of your healthcare practice.
3) Eliminated billing errors
Most of the revenue collection solutions have coding and medical billing services. Medical coding denotes a process by which you will turn your services into billable profits, with each service corresponding to a specific industry-regulated code. Error-free billing will reduce the denial of medical claims, optimize workflow and maximize your revenue.
4) Simplified revenue collection
Automating your revenue collection will simplify your back and front-end financial process. It also removes workflow complexities, thus ensuring that you meet your revenue targets while improving your operational efficiency by automating the manual processes involved in collecting revenue.
5) Quick collection of payments
By automating the tasks involved in collecting fees for medical services in practices and reducing your administrative tasks, a revenue collection system will quicken collection. Revenue cycle management software can also send your patient billing reminders via text messages or emails to speed the collection of fees.
6) Increased security of patient health information (PHI)
While technology has undoubtedly eased access to patient information, there are increased attacks on PHI platforms by hackers who want to access private data. The increase is shown in this bar graph:
Effective revenue cycle management solutions include PHI security that keeps your patient data beyond the reach of people who should not access it.
7) Identification of problem points in revenue collection
You can hardly improve something when you do not know the problems in it. Revenue cycle management software can help pick the bottlenecks that affect your profits, including waste, abuse, fraud, and unnecessary procedures. In doing so, you can rectify these issues and boost your earnings.
What Is The Future Of Healthcare Revenue Cycle Management?
You might be skeptical about investing in revenue cycle management for your medical organization because you are unsure of its future. Fortunately, you cannot go wrong with your investment. According to a report in Global Market Insights, the revenue cycle management sector was worth more than $51 billion in 2018 and has an expected CAGR of above 12.3% until 2025.
These statistics prove that revenue cycle management is here to stay. Furthermore, the future of this technology is driven by healthcare consumerism, wherein the patient population is now slowly inclined towards self-service through the use of mobile devices and apps. As such, the revenue cycle management sector that has traditionally been manual is evolving and making the right step towards automation.
Consider Contracting NCDS: The Medical Billing and Coding Industry Experts
With most of the questions you have had on revenue cycle management for your medical practice now answered, it is time to get the best solution for you. Though there are many companies in the industry managing healthcare revenue, it is prudent to partner with one that is experienced and guaranteed to be there for the long run.
NCDS is your best choice for revenue cycle management. Our approach is to streamline the experience our our valued clients. We are dedicated to forming long-term mutually beneficial relationships and committed to serving all medical practices and organizations, irrespective of their size or type.
Unlike other companies, NCDS provides customized solutions and resources for its clients. Some of the features of our premier services include electronic health records, insurance company eligibility verification, manual payment posting, and patient statement processing. You can also improve your financial performance and outcomes by taking advantage of our offerings such as electronic funds transfer payments, security, patient statements processing, electronic claim processing, and coding. Visit our website today for scheduling a free consultation.
Sign up to receive our insights straight to your inbox!