How revenue cycle management works: Key components, strategies for medical practices
When most of us think about healthcare, we tend think about clinical care and our clinical experience—the direct interactions we have with providers and staff. We often don’t think about what goes on behind the scenes to enable payment. However, that ‘administrative’ side of healthcare—often referred to as healthcare revenue cycle management or RCM—is equally as important. It’s what keeps medical practices in business so they can continue to provide high-quality patient care. While some medical practices thrive financially, others struggle from a financial perspective. Sixty percent of medical practices, for example, failed to meet their revenue goal in 2022. That’s why it’s important to understand how revenue cycle management works, including all revenue cycle management process steps.
Healthcare revenue cycle management includes several steps that happen before patients see their providers, others that happen during the visit, and some that occur after the patient leaves. Let’s dive a bit more deeply into each step and provide a few tips to improve all components of the healthcare revenue cycle.
Front-end revenue cycle management process steps
When thinking about healthcare revenue cycle management step by step, scheduling is the first thing that often comes to mind. Patients call for an appointment, and a registration staff member finds a suitable time for them to come in. Sounds simple, right? It is, but there are also challenges—patients forget about their appointments, they cancel at the last minute, or they become frustrated when they can’t get through to someone on the phone. Consider these tips to improve the scheduling process:
Let patients self-schedule appointments online.
Prioritize staff retention to decrease wait times and improve patient access.
Send electronic appointment reminders to decrease no-shows.
Patient registration comes next. This is the step when registration staff collect demographic and insurance information to ensure clean claim submission and payment. As you can imagine, there are countless opportunities for errors and omissions. The best way to address this? Provide ongoing training. Also leverage mobile patient check-in so patients can enter information themselves.
Next are eligibility checks to ensure the patient’s coverage is active and gain insight into their specific benefits. This, too, can be cumbersome and time consuming, and some medical practices don’t do it until after services are rendered. At that point, it’s too late—and practices may not be able to collect. The best strategy? Verify primary and secondary coverage information via a single point platform in real time immediately prior the appointment.
The final step in the front-end revenue cycle process? Upfront patient collections, a step that has only become more complicated with the rise of high deductible health plans (HDHP). Twenty-nine percent of covered workers, for example, are now enrolled in a HDHP. Some sources estimate this number is well above 30%. Here are a few ways to handle this step effectively:
Develop payment plans that allow patients to pay off balances over time.
Implement credit card readers at the front desk.
Provide patients with financial estimates prior to rendering services.
Mid-revenue cycle management process steps
The ‘middle’ of the healthcare revenue cycle is the time when physicians provide clinical documentation in the electronic health record (EHR). This documentation is what ultimately drives the medical codes used for billing and reimbursement. That’s why it’s important to get it right. Here are a few ways to do that most efficiently and effectively:
Create a workflow for clinical documentation improvement queries.
Invest in physician education regarding the importance of clinical documentation.
Leverage specialty-specific, customizable templates to promote accurate and complete clinical documentation that drives revenue integrity.
The mid-revenue cycle is also a time when physicians assign codes in the EHR. The most important step you can take is to ensure your EHR vendor’s drop-down list of codes is accurate and complete. Then instruct physicians to choose the most specific codes possible.
Back-end revenue cycle management process steps
Now comes the back-end of the healthcare revenue cycle, the first step of which is claims management. This is when medical coders validate the ICD-10-CM diagnostic and CPT procedure codes physicians assign and make any necessary changes. It’s also when medical billers assign HCPCS codes for any additional charges. Here’s how to improve back-end revenue cycle management:
Enter charges daily.
Hire dedicated staff to focus on and address claim edits (or work with an outsource vendor to ensure compliance).
Leverage a claim scrubber and work claim edits daily.
Prioritize contract management to ensure you’re paid correctly and according to your contract.
Submit claims to the clearinghouse daily.
Work denied claims daily.
Patient collections is the final step in back-end revenue cycle management once payers adjudicate claims. This is when medical billing staff create and send statements to patients indicating any remaining amounts they owe. Here are a few ways to improve the patient collections process:
Offer electronic payment options through the patient portal.
Promote patient-friendly, easy-to-understand billing statements that clearly outline what patients owe for what specific services and why.
Importance of communication
To enable an efficient revenue cycle, all staff involved in front-end, middle, and back-end revenue cycle management processes understand how revenue cycle management works in healthcare. This requires ongoing education and communication regarding revenue cycle management step by step, helping everyone acknowledge their role in the bigger picture. When an outsource partner is part of the team, medical practices must involve them as well. It truly takes a village to promote revenue integrity, and when everyone pitches in and strives for compliance, medical practices will see a significant impact on their bottom line. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
