Revenue Cycle Management (RCM)

Posted by: Alok Prasad

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Optimizes Patient Service Revenue and minimizes Claim Denials

Recent developments in the operating environment of medical practices have resulted in several changes that have made managing the revenue cycle even more important, including:

  1. Increased regulatory oversight: Implementing new regulations, such as the Affordable Care Act and HIPAA, have added complexity to the billing and collections process, making it more important for practices to stay compliant.

  2. Shift towards value-based care: The move towards value-based care models has increased the importance of accurate and timely billing and collections, as reimbursement is tied to the quality of care.

  3. Growing patient financial responsibility: With the rise of high-deductible health plans, patients are now responsible for a larger portion of their healthcare costs, making it more important for practices to bill and collect accurately.

  4. Technological advancements: Technology advancements have enabled practices to automate many of the manual processes involved in RCM, making it easier to manage the revenue cycle more efficiently.

To summarize, the operating environment has seen several changes that have increased the importance of effectively managing the revenue cycle in modern medical practices. Healthcare organizations and medical practices must learn to optimize their revenue cycle while delivering optimal patient care and succeeding as a business entity.

What is RCM?

The healthcare revenue cycle starts with a patient scheduling an appointment and ends when healthcare providers receive final payments from insurance payers andRevenue Cycle Management patients. This well-structured process encompasses all healthcare practice operations, from financial strategy and policy to appointment scheduling, eligibility verification, care delivery, documentation, coding, charging, billing and claim submission, denial management, and several other steps and components.

Revenue Cycle Management (RCM) is a financial process that enables a healthcare practice to optimize total patient service revenue generated by streamlining billing, accelerating the revenue cycle, and reducing billing errors and revenue leakage. RCM is crucial for improving the patient experience, ensuring accurate and timely service reimbursement, and maintaining a stable financial position.


Unlock the benefits of Revenue Cycle Management (RCM) and experience a positive impact on your practice.

  1. Improved Cash Flow: By reducing the time it takes to receive payment for services, practices experience improved overall cash flow.

  2. Increased Revenue: By ensuring that claims are processed accurately and efficiently, practices reduce claim denials and improve the likelihood of full payment for services rendered.

  3. Enhanced Patient Experience: By reducing billing errors and streamlining the payment process, providers can provide a more positive patient experience.

  4. Enhanced Compliance: By ensuring that medical practices comply with healthcare regulations, they can reduce the risk of financial penalties and legal issues.

  5. Improved Efficiency: By automating many of the manual processes involved in RCM, practices can save time and resources and focus on delivering high-quality patient care.

  6. Better Data Management: By improving data accuracy and organization, practice management teams can provide valuable insights into practice performance and enable better decision-making.


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Internal and External Factors

Multiple elements influence a practice’s revenue. Some of these are internal and can be controlled by the practice. However, several are external and outside of the practice’s control.

Internal Drivers

Internal revenue drivers include the fees the practice charges for certain services, procedures, and treatments. They also include the make-up of the patient base served by the practice, such as the number of patients, health status or conditions, frequency of seeking treatment, and the physicians’ capacity to see patients and deliver the necessary care. Front and back-office workflow and staff skills also drive revenue to some extent.

External Drivers

These drivers include patient and insurance payer payments, presenting a more significant challenge. External drivers also include healthcare regulations and reimbursement schemes.


Having a process for collecting payments for services that have already been provided is a simple and intuitive way of doing business. However, practices can only sometimes successfully manage some or all aspects of this process. Real challenges exist in the effective execution of revenue cycle management, some of which are unique to the U.S. healthcare industry.

1. Healthcare regulations and reimbursement models

One of the biggest challenges in revenue cycle management is the ever-changing healthcare regulations and complex reimbursement models introduced every few years. Practices must stay abreast of these changes and ensure that their staff understands them and performs their tasks in compliance with these regulations. Expertise in all aspects of the change may take much work, especially for smaller practices.

2. Collecting payment from patients

With the new regulations and the rise of consumerism, patients are increasingly responsible for more healthcare costs. Practices must master the balancing act of collecting patient payments while not resorting to “high-pressure sales tactics” that may turn off patients and cause them to seek care elsewhere. This situation can be avoided by continuously educating staff and patients regarding payment workflows and expectations and establishing alternative payment methods, including payment plans and online payment.

3. Tracking a claim through its entire cycle

If a process is not established for monitoring claims, errors or delays may not be easily identified and resolved, resulting in lost revenue.

4. Denial management

Having claims denied is frustrating and impacts a practice’s bottom line. Each denial increases the risk of a practice not getting paid for services rendered. The high percentage of denials (14%) and never refiled claims (50%) represent a significant chunk of revenue that practices are leaving on the table. An effective denial management plan involves insurance follow-up services and AR (accounts receivable) management to improve payment chances.

5. Staff training

Each staff member involved in the revenue management cycle must be properly trained in the policies, procedures, and workflow. Adequate, effective staff training might be time-consuming and involve costs, but it pays off when knowledgeable staff members know their roles and functions and perform them correctly and efficiently.

How to Optimize the Healthcare Revenue Cycle?

Given the challenges mentioned above, these key elements boost the success of an organization’s revenue cycle:


High-quality patient outcomes resulting from exceptional care delivery and patient engagement help expand the patient base and lower costs, thus increasing revenue.


Financial policies and procedures addressing issues such as unpaid balances help guide both staff and patients. This policy emphasizes pre-registering patients, posting charges as soon as possible, and other matters.


A well-trained staff provides the backbone for a successful practice. The team includes front and back offices, clinicians, certified medical coders, and others. In addition to proficiency in their specific jobs, the staff needs to understand their role in the revenue cycle process and how they can enhance and improve the process.


An efficient process that moves the claim through its life cycle without errors or delays allows practices to collect the cash they need and deserve.

Technology Products

Appropriately and effectively using technology solutions improves patient care, enhances accuracy, automates and streamlines repetitive or tedious processes, and increases staff productivity.

Here are some ways technology supports and enables an optimized revenue cycle process.

1. Front Office

  • Patient scheduling and registration, as well as patient reminders, can be done via a patient portal.
  • Insurance eligibility verification can be automated.
  • Practices can accept and process credit cards, HSAs, and FSAs for co-pays, co-insurance, and deductibles.

2. Patient visit

  • Clinical care delivery, charge capture, and charge entry are documented in the EHR/EMR

3. Back office

  • Medical transcription, medical coding, and claim submissions are enabled by technology.
  • Reports and analytics provide insights into how well a practice performs in terms of key performance indicators.
  • Patient payment can be made online via a payment portal.
  • Posting of payments can be automated.

Best Practices

Ever-changing healthcare regulations and reimbursement models have made it incumbent upon medical practices to be increasingly responsible for optimizing payment collections and all other aspects of healthcare RCM. While there are indeed many significant challenges, implementing best practices maximizes collections. Further, it reduces costs at each phase of the revenue cycle and helps small practices better understand, measure, and control their financial aspects.

1. Optimize front office processes and collections

Train your front staff to gather the patient's demographic and insurance information during appointment scheduling. Use “communication scripts” to help staff explain the co-pay collection and the various payment methods or plans available to patients. A well-trained front office staff contributes to both revenue optimization and patient satisfaction.

2. Automate insurance eligibility verification

Automating insurance eligibility verification helps both the practice and the patients. It has the dual advantage of preventing claim errors and informing patients early on regarding payment responsibilities. The increased transparency helps patients plan for out-of-pocket payments and more readily respond when front-office staff collects these payments.

3. Customized EMR Templates

Use and customize EMR templates to efficiently capture clinical documentation and charge data. Remind clinicians to document completely and accurately and set up a review process to help them identify areas for improvement.

4. Integrated EHR and Practice Management Software

Use an EMR/EHR integrated with your practice management system when possible. Data can be pushed automatically and seamlessly downstream, which helps reduce errors and delays.

5. Back Office-Related Best Practices

  • Use technology to automate key aspects of your claim submission process. Use e-remittance to speed up payment turn-around time.
  • Provide an online payment portal allowing patients to make payments not collected during an in-person visit conveniently.
  • Improve cash flow by effectively managing your insurance follow-up and claims denial processes.
  • Use reports and data analytics to monitor revenue goals and visualize areas for improvement.
  • Evaluate and implement software solutions for various aspects of revenue cycle management that meet the practice’s needs. The right software solution for the right process enables physicians to focus on patient care instead of worrying about payments.
  • Consider outsourcing your RCM processes to a comprehensive and integrated solution vendor. Practices that don’t have the time or staffing resources to internally acquire the necessary knowledge and expertise of all the aspects of revenue cycle management may find this option feasible and advantageous. According to Becker’s Hospital Review, “seventy-two percent of hospital CFOs consider end-to-end RCM outsourcing the best option until value-based payment models are better established.”

6. Electronic Prior authorization

Prior authorization ensures that a patient's insurance plan covers the proposed medical services before they are provided. This helps to avoid denied claims, reduce payment delays, and improve overall financial stability for healthcare providers. Pre-authorization also helps maintain compliance with payer requirements and enhances patient satisfaction by clarifying coverage and costs upfront.

How can Artificial Intelligence Improve RCM?

Artificial intelligence (AI) is revolutionizing Revenue Cycle Management (RCM) by automating and optimizing various processes to enhance efficiency, accuracy, and profitability.

  1. One critical improvement AI brings to RCM is the automation of claims processing. By utilizing advanced algorithms and machine learning models, AI systems can swiftly and accurately process claims, reducing the chances of human error and significantly decreasing the time required for claim adjudication. This leads to faster reimbursements and improved cash flow for healthcare providers.
  2. AI is also making a substantial impact in reducing claim denials. AI-powered systems can analyze vast amounts of data to identify patterns and predict potential issues that may lead to denials. By flagging these issues before claims are submitted, healthcare providers can take corrective actions, increasing the likelihood of successful claim approvals. This proactive approach reduces the administrative burden associated with reworking denied claims and ensures a steady revenue stream.
  3. AI can also enhance the accuracy of coding and billing processes. Natural language processing (NLP) and machine learning techniques can extract relevant information from clinical documentation and ensure the correct codes are assigned. This minimizes coding errors and ensures compliance with regulatory requirements, reducing the risk of audits and penalties.
  4. AI-driven analytics also play a crucial role in strategic decision-making. By analyzing historical data and identifying trends, AI can provide actionable insights into revenue cycle performance, helping organizations optimize processes, allocate resources more effectively, and make informed financial decisions.

In summary, AI can transform RCM by automating routine tasks, improving accuracy, reducing denials, and providing valuable insights, ultimately enhancing healthcare organizations' financial performance.


Healthcare regulations, reimbursement models, and technology have been changing rapidly. This presents formidable challenges for healthcare organizations to maintain their financial viability. A well-thought-out and robust revenue cycle management strategy can differentiate between practices struggling to survive and those that succeed and prosper.

Practices that automate where appropriate and streamline when necessary gain an advantage over those mired in tedious and time-consuming tasks that do not provide the desired outcome—maximum payment for rendered services as soon as possible.

It is more crucial than ever for practices to assess their need for robust and reliable revenue cycle management solutions. RevenueXL has flexible solutions for a variety of needs. We offer individual or integrated tools that support your overall revenue cycle management strategy. Contact us today to discuss how we can help.

Commonly Used Terminology

When thinking about the Revenue Cycle, it would be helpful to know some commonly-used terms:

  • ACO - CMS defines an Accountable Care Organization (ACO) as a group of doctors, hospitals, and other healthcare providers who come together voluntarily to give coordinated, high-quality care to their Medicare patients. Coordinated care aims to ensure that patients get the right care at the right time while avoiding unnecessary duplication of services and preventing medical errors.
  • Alternative payment models (APMs) – APM is a model of payment that gives incentives for high-quality care instead of the number of services or treatments provided
  • Bundled payments – These payments are either “fixed-rate” or “flat-rate” pricing structures for treating certain conditions based on the expected costs of associated services.
  • MACRA - The Medicare Access and CHIP Reauthorization Act of 2015 is a law signed on April 16, 2015, and replaces the Sustainable Growth Formula. It rewards clinicians for value over volume, streamlines multiple programs under MIPS, and gives bonuses for participation in APMs.
  • Medicare Shared Savings Program – This program is a voluntary CMS program that offers providers and suppliers such as physicians, hospitals, and others involved in patient care an opportunity to band together as an ACO.
  • MIPS – The Merit-Based Incentive Program began in 2019. MIPS streamlines three independent programs to work as one to ease the clinician’s burden. It also adds a fourth component to promote ongoing improvement and innovation in clinical activities. It allows clinicians to choose the activities and measures most meaningful to their practice to demonstrate performance.
  • Value-based reimbursement – This refers to payments that Medicare, Medicaid, and other payers tie to the quality of care provided or patient outcomes. They are intended to incentivize care providers to focus on quality, lower costs, and inefficiencies.

Topics: Medical Billing, Consultant, Practice Manager

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