In a perfect world, the art of providing healthcare would involve nothing more than a series of one-on-one interactions between a physician and a patient. The patient would pay for the services rendered, the physician would use the payment to purchase goods to continue his practice, and the cycle would begin again. Of course, this scenario is little more than an overly simplified view of our current healthcare system that hasn’t existed for hundreds of years.
Today – whether by necessity or by design – providing medical care isn’t just about the doctor-patient relationship anymore. On the contrary, we’ve instituted government programs and insurance companies to allow providers to extend care to individuals who may not otherwise be able to afford it as well as to ensure physicians receive payment for their services. Meanwhile, technological innovations have allowed us to provide a greater standard of care and more intricate procedures than ever before; others have become a key repository for patient data, including health records, treatment information, and more.
These instances, along with many others, have transformed healthcare into the huge yet intricate system we experience today. While many of these measures were developed to provide security, necessary oversight, and accessibility for patients and providers alike, they’ve also combined to add a series of additional steps to the process of receiving care. The result is an increasingly complicated – and increasingly expensive – healthcare system in the United States.
With a total healthcare spend expected to reach $6.0 trillion by 2027 according to the CMS, it’s no surprise that the costs of receiving healthcare and the cost of providing healthcare have risen in conjunction. While medical costs to consumers have risen by 4.6%, a key question remains – how do healthcare operations manage the delicate balance between the fact that they’re handling more procedures, more providers, more regulations, and more money than ever before, all while keeping a handle on expenditures coming from inside the office? The answer is revenue cycle management.
What Is Revenue Cycle Management?
Revenue cycle management, or RCM, is a term used to define the process healthcare organizations use to track each patient care case through each and every step of the relationship. Beginning with the initial registration and appointment scheduling through the actual care and service provided, then through the billing cycle, revenue cycle management aims to centralize all financial data related to each patient into one place. As such, RCM merges both the clinical and business sides of a practice by providing a platform to manage treatment and healthcare data with administrative information like their name, billing information, insurance provider, and more.
This brief FAQ addresses some common questions regarding the nature of RCM and how it is used in healthcare organizations:
A: For providers, a key function of RCM is facilitating communications with patient insurance companies and other payers. From scheduling to determining necessary care and billing, all measures of communication between the providing office, payer, and patient can be handled with RCM information. Without RCM, individual communications between all three parties are subject to error.
A: As mentioned, the revenue cycle incorporates all functions from both the administrative and clinical parts of a healthcare organization to allow the process to continue efficiently. The revenue cycle includes:
Pre-registration – The process of collecting initial patient and insurance information before the patient arrives
Registration – The process of collecting additional information from the patient at appointment time to satisfy regulatory requirements, including establishing a medical record number
Review – Determining which medical services are necessary
Coding – Using CPT and ICD codes to properly code diagnoses and procedures
Charges – Converting each code into billable charges
Claims submission – Sending claims to the insurance company
Third-party claims – Receiving payments from third-party insurers
Patient collections – Billing patients for copays or the remaining percentage of fees not covered by insurance
Remittance – Processing, applying or rejecting payments
A: Most healthcare organizations purchase an RCM software platform built to store and categorize patient information. Whether billing procedures are handled in-house or by a third-party provider, the centralization of information is key to efficiency. In the digital age, patient electronic health records, and the healthcare billing system and other IT platforms can all interact with RCM to streamline the process of moving patients through the care system.
A: One of the key advantages of RCM is its ability to automate many administrative and billing duties once handled by entire departments. For functions from reminding patients of appointments, to calculating existing balances, to handling claims denials, RCM can minimize administrative overhead by reducing necessary employees.
Another distinct advantage of RCM is that automated functions tend to result in fewer errors that result in claims denials. Denied claims result in higher payments for patients as well as delayed or missing reimbursements for providers. With approximately 80% of medical bills containing at least one error, error reduction is a key item of attention for any healthcare company.
How to Be Successful at Revenue Cycle Management
Since the point of revenue cycle management is to provide clarity and accessibility at all points of the revenue cycle, allowing you to glean crucial information about gains and losses upon each step of the way, you’ll want to ensure you do it well. For all the reasons listed throughout this guide so far as well as factors that may be localized to your organization such as increased competition and state laws, good RCM can mean the difference between a profitable establishment and a struggling practice. It costs the healthcare industry over $250 billion each year to bill and collect funds, and RCM can help tighten the budget and check for leaks.
Following is a list of actionable steps you can take to move towards successful RCM:
Provide digital touchpoints. Your RCM platform should make obtaining patient information easier, not more difficult. If your patients can input crucial information themselves to request an appointment, provide demographic changes, or make other changes to their record before the revenue cycle begins, you’ll increase engagement and ease the workload on your staff.
Administer a thorough pre-registration. Before the appointment, make contact with each patient via phone or email. Request a full slate of contact information, request insurance information, and – if you’ve encountered the patient before – request updates for any information that may have changed since the last encounter. If there is a copay associated with the upcoming visit, remind the patient payment is expected at the office.
Develop a registration checklist. On appointment day, give the patient another opportunity to make changes to the information your office has on file. Preventing insurance holdups now will save you valuable time and denials later. Some of these key items for your registration checklist can include verifying the patien’ts identity and demographic information at every visit, keeping a copy of the patient’s insurance card on file and asking the patient if insurance information as changed at every visit.
Institute a claims re-check policy. Each denied claim, regardless of the reason, halts your revenue stream for an indefinite period of time while the claim is re-submitted, appealed, and finally paid. Although RCM and billing platforms are advantageous in that they reduce input errors, train staff to re-check each claim before it is submitted. Similarly, periodically check contracted rates for all major payers to ensure each is up to date.
Address denied claims immediately. Set a timeline to handle all claims denials. Most contracted payers have their own timelines for filing appeals or amended claims and missing a deadline can result in yet another denial. These secondary refusals are often difficult to overturn.
Utilize electronic payment. In the digital age, organizations that are unable to remit and accept electronic payments are well behind the curve. While 17% of practices pay fees to adopt an electronic payment system, some payers mandate the practice. An additional benefit is the ability to ease patient remittance, and the immediate formation of a paper trail for payment information within your CMS or RCM platforms.
The key to good RCM is recognizing the areas of overlap where your clinical and administrative practices merge. Forward-thinking management of each step in the cycle will help tighten your system and allow you to extract every last dollar of revenue from the process. For many organizations, this sort of closely-held, comprehensive management is best achieved through outsourcing.