What is healthcare revenue cycle management? (and other FAQs)
Everyone talks about healthcare revenue cycle management, but what exactly is it? And why is it so important for today’s medical practices? In this primer, we’ll answer these common questions and more.
What is healthcare revenue cycle management?
Healthcare revenue cycle management—sometimes referred to as healthcare RCM—is the process healthcare providers use to identify, manage, and collect revenue. RCM is important because it helps medical practices promote revenue integrity and prevent revenue leakage. It also enhances the patient financial experience and can even help mitigate compliance risk.
The RCM process begins the moment a patient schedules an appointment, and it ends when the provider collects all the revenue to which they’re entitled. This includes any amount owed from the payer and increasingly from the patient as well. Twenty-nine percent of covered workers are enrolled in a high deductible health plan (HDHP). Some sources estimate this number is well above 30%.
What are the basic steps in healthcare revenue cycle management?
When it comes to healthcare revenue cycle management, medical practices may have different workflows. However, the basic steps are the same: Patient scheduling and registration, eligibility verification and prior authorization, patient visit and care delivery, clinical documentation, charge capture and entry, coding, claim submission, payment posting and reconciliation, and denial management.
Each step in this medical billing and collections process is equally important. When medical practices omit or overlook one of them, the entire medical billing process can fall apart, resulting in costly payment delays and even denials. In contrast, when medical practices devote time and attention to their RCM, they’re better able to set, meet, and even exceed revenue cycle goals.
What are the benefits of healthcare revenue cycle management?
When medical practices have formal processes in place to manage revenue, they experience these benefits:
Better data management.
Enhanced compliance thanks to more accurate medical coding and medical billing.
Improved cash flow and RCM efficiency.
Revenue integrity.
Stellar patient financial experience.
What role does healthcare revenue cycle management play in a provider’s overall operations?
Healthcare revenue cycle management plays a critical role in helping providers get paid under fee-for service as well as value-based payment models. That’s because it imposes a formal structure on an otherwise complicated workflow. It ensures there are policies and procedures in place to manage the administrative and clinical functions associated with processing claims and collecting revenue. Without it, medical practices run the risk of leaving money on the table or overbilling for services rendered.
What are some of the biggest challenges in healthcare revenue cycle management?
Today’s medical providers face many challenges in terms of managing revenue. Some of the biggest ones include:
Patient collections. As healthcare costs continue to increase, patients enrolled in HDHPs must often pay the bill before insurance coverage kicks in. It can be challenging to help patients understand their financial responsibilities and collect money owed.
Denials. Medical coding is complex, and it’s easy to make mistakes that can cause significant rework and even put medical practices at risk for costly recoupments. Sixty-nine percent of healthcare leaders say their organization’s denials increased in 2021. Only 60% of medical practices actually met their revenue goals.
Prior authorizations. During a time when staffing shortages are at an all-time high, time-consuming prior authorizations can delay care. The good news? Increased awareness of the administrative burden that prior authorizations can cause. UnitedHealth Insurance, for example, recently announced it will cut prior authorizations by 20% for some non-urgent surgeries and procedures. Proposed regulations may also reduce the burden and streamline the process for certain payers.
Price transparency. The No Surprises Act requires medical practices to provide patients with a good faith estimate to prevent surprise billing.
How can technology help with healthcare revenue cycle management?
Technology helps in a variety of ways: Permitting patients to self-schedule appointments, enabling mobile check-in, performing real-time eligibility, estimating out-of-pocket costs, scrubbing medical claims for errors, sending patient statements, promoting online bill pay, tracking claims throughout their lifecycles, trending denials, and so much more.
How can medical practices improve healthcare revenue cycle management?
There are many strategies to consider. Consider the following:
Automate insurance eligibility verification.
Consider outsourcing your healthcare RCM to improve revenue integrity and compliance.
Engage patients in the financial experience to enhance patient collections.
Leverage dashboards and customized reports to monitor denials and prevent them proactively.
Perform frequent medical coding and medical billing audits.
Prioritize patient access.
Provide ongoing education about denials and how to avoid them.
Conclusion
Healthcare revenue cycle management is inherently complex. Add to that the challenges associated with staffing shortages and the need for continued patient engagement, and it’s not surprising why many medical practices struggle with compliance. Fortunately, the right combination of people, processes, and technology can help. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
