If you are a healthcare provider, then you know that managing your revenue cycle is essential to the overall success of your business. Only by optimizing the revenue cycle management, you can improve the financial health of your practice. However, revenue cycle management isn’t just a simple process. It’s a very comprehensive process that involves various steps and all the steps are equally important. To help you understand the main steps and benefits of revenue cycle management, we bring you this guide in which we will discuss every aspect of it in detail.
Only by understanding each step of revenue cycle management, you will be able to ensure that your healthcare practice is going well while being financially viable.
What Is Revenue Cycle Management?
In the healthcare domain, revenue cycle management is a critical process for any healthcare business. Revenue cycle management, also known as RCM, is a management process that helps healthcare practices receive timely reimbursement for the care services, they offer to their patients while managing their accounts receivable.
What Are The Main Steps of Revenue Cycle Management in Healthcare?
While healthcare practices can have their own revenue cycle management process that may slightly differ in steps. In general, healthcare revenue cycle management has five basic steps, and below we have discussed each one of them in detail.
1- Pre-Authorization and Registration:
Pre-authorization and registration are two of the initial steps of the revenue cycle management process in Healthcare.
Pre-authorization is the process by which a healthcare provider verifies that a given medical service or treatment is covered under an individual’s health insurance policy. This step protects both the patient and provider from unexpected costs due to non-covered services or treatments.
On the other hand, patient registration involves verifying the patient’s identity, insurance information, and other pertinent information needed for billing purposes. Patients should present valid identification when registering with a healthcare facility so that their personal information can be verified by staff.
Proper registration ensures that patients receive accurate bills after receiving care which also reduces delays in payments due to incorrect details recorded during patient admission.
2- Charge Capture:
Charge capture is the second step in revenue cycle management. It involves creating a record of all the treatments and care services provided to a patient and entering them into the billing system. Accurate charge capture ensures that medical providers are properly compensated for their services while eliminating costly mistakes or delays in processing payments.
Adopting modern technology, automation, and EHRs (Electronic Health Records) can greatly improve the accuracy of charge capture by reducing manual errors, streamlining data entry, and automating updates on billing software systems.
3- Claim Submission & Denial Management:
After charge capture, the next revenue cycle management step is claim submission and denial management. This step involves the timely submission of accurate claims to insurance companies or government payers. Moreover, the claim management process includes tracking denials and appeals processes when submitted claims are rejected by the payer.
Properly managing claim submission and denial requires a comprehensive understanding of coding protocols and billing compliance standards set by these third-party payers. This information must be constantly monitored to ensure accuracy in all submitted claims and to avoid unnecessary denials due to incorrect information or coding errors.
Moreover, healthcare organizations need to have a system for tracking denied claims and appealing those decisions with supporting documentation if necessary.
4- Payment Processing:
The second last step in revenue cycle management is payment processing. This is the step where a healthcare practice receives payment from its patient or his/her insurance companies for the treatment and care services that have been provided to him/her.
The stage of payment processing usually comes after the billing and coding stage. Once the coding and billing are done and the claim is submitted for reimbursement, the provider waits for the payment to be received from the payer. The insurance company or the payer usually processes the claim within a few days and pays the healthcare provider directly.
However, if there is a situation where either the patient does not have insurance or his/her insurance plan doesn’t cover the full cost of the care services he/she received, the patient will be billed directly.
The last step in revenue cycle management is reporting. This step involves tracking and analyzing various metrics and key performance indicators (KPIs) related to the revenue cycle. This may include metrics such as claim submission and denial rates, average payment turnaround time, and the number of errors in billing and coding.
By analyzing these metrics, practices can identify areas for improvement and implement strategies to optimize their revenue cycle which eventually helps in increasing revenue, reducing costs, and improving quality of service.
4 Benefits of Revenue Cycle Management for Medical Practices:
1- Improved Financial Performance:
The biggest benefit of having a revenue cycle management system in place is that it significantly helps in improving the financial performance of the practice. RCM not just helps in optimizing the process of billing and coding but also helps in bringing efficiency to the payment collection process.
2- Enhanced Patient Satisfaction:
Another lesser-known benefit of revenue cycle management is that it enables practices to improve the quality of their patient care services. When everything is in order from billing to financials, the practice’s staff has more time to focus on patients and ensure that they are satisfied.
3- Better Data Management:
Data management is another aspect where revenue cycle management contributes to healthcare practices. RCM ensures that all the data is effectively managed, no matter if it’s the financial data or the patient’s data. Not only does it help practices gain valuable insights about the organization’s financial health but also remains in compliance with HIPAA regulations.
4- Increased Revenue:
Last but not least, RCM helps healthcare practices in achieving growth by boosting revenue. With an RCM system in place, it’s obvious that the claim denial rate of your practice will fall significantly and that will result in increased revenue and fewer losses.
In the end, we hope that now you know the main steps and benefits of revenue cycle management. Keep following Medtech Providers for more informational blogs like this.