Revenue Cycle Management (RCM) is a financial process that unifies the clinical delivery side with the business side of a healthcare organization by managing, collecting, and optimizing the revenue generated by the patient services provided. It includes the whole spectrum of an organization’s operations, from financial strategy and policy to appointment scheduling, eligibility verification, care delivery, documentation, coding, charging, billing and claim submission, denial management, and multiple steps and components in between.
Healthcare organizations are most effective when they are in good financial health. However, increased internal and external pressures pose serious challenges to their survival. In an era dominated by high deductibles and tightening payer reimbursements, optimal focus on revenue cycle management has become more important than ever. Healthcare organizations and medical practices must learn to optimize their revenue cycle while continuing to deliver optimal patient care and succeeding as a business entity.
The Healthcare Revenue Cycle is defined by the Healthcare Financial Management Association (HFMA) as "all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue." This dynamic process essentially encompasses the entire life of a patient account.
Successful healthcare revenue cycle management involves establishing a streamlined and efficient process. Although practices have differences in their workflows, the Revenue Cycle Management process’s main components are the same. They include:
Demographic and insurance information can be collected from patients when they schedule an appointment. The revenue cycle starts here with an opportunity to gather the necessary information needed for the next steps of the cycle.
Both eligibility verification and prior authorization should happen before services are rendered, ensuring that the correct amount is billed to the proper payer. And, the patient is made aware of out-of-pocket costs. A verification checklist can be a great tool to ensure that all vital information is collected and considered.
High-quality patient outcomes and excellent customer service are essential in the revenue management cycle. These two aspects ensure that patients are satisfied with the treatment and services provided. This results in patients who return the next time they need care and expands the practice’s patient base.
The clinical documentation of the patient visit and services rendered must be timely, accurate, complete, and comply with regulatory standards. EMR templates help clinicians achieve those goals and streamline the revenue cycle process by capturing clinical data that payers may require.
Whether done manually or with the aid of software, efficient charge capture and charge entry ensure that the documented services are translated into billable charges.
Proper coding of diagnoses and procedures ensures accuracy and maximizes reimbursement. Experienced and knowledgeable coders optimize this process.
Submitting accurate and timely claims maximizes the revenue collected and prevents delays. Medical billing solutions that consider the whole revenue cycle with claim submissions right from the first step help boost the practices’ ability to collect the full payment amount.
The endpoint of the revenue cycle management is when payment is received, based on the patient’s coverage and any existing contracts with payers. Payments made by the patient for services not covered by insurance payers are included.
Claim denials represent a significant challenge to a practice’s income stream. An effective denial management process can appropriately address denials and recover revenue that may have been otherwise lost.
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 revenue drivers include the fees that 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 skill of the staff also drive revenue to some extent.
These drivers include patient and insurance payer payments and present a much greater challenge. External drivers also include healthcare regulations and reimbursement schemes.
Having a process for collecting payments for services that have already been provided appears to be a simple and intuitive way of doing business. However, practices are not always able to 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.
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 be hard to attain, especially for smaller practices.
With the new regulations and the rise of consumerism, patients are increasingly responsible for more of their healthcare costs. Practices need to master the balancing act of ensuring that they collect patient payments while not resorting to “high-pressure sales tactics” that may turn off patients and cause them to seek care elsewhere. By continuously educating staff and patients regarding payment workflows and expectations and establishing alternative payment methods, including payment plans and online payment, this situation can be avoided.
If a process is not established for monitoring claims, errors or delays may not be easily identified and resolved, resulting in lost revenue.
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 already rendered. The high percentage of denials (14%) and claims that are never refiled (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 the chances of being paid.
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 pays off when knowledgeable staff members know their roles and functions and perform them correctly and efficiently.
Given the challenges mentioned above, these key elements boost the success of an organization’s revenue cycle:
High-quality patient outcomes, which result from exceptional care delivery and patient engagement, help expand the patient base and lower costs, thus increasing revenue.
Having financial policies and procedures that address issues such as unpaid balances helps guide both staff and patients. This policy emphasizes pre-registering patients and 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 office, 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 with no errors or delays allows practices to collect the cash they need and deserve.
The appropriate and effective use of technology solutions improves patient care, enhances accuracy, automates and streamlines repetitive or tedious processes, and increases staff productivity.
Here are some ways that technology supports and enables an effective revenue cycle management process.
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 revenue cycle management. 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 its financial aspects.
Train your front staff to gather all the necessary demographic and insurance information from the patient during appointment scheduling. Use “communication scripts” to help staff explain 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.
Automating insurance eligibility verification helps both the practice and the patients. It has the dual advantage of preventing claim errors and making patients aware early on regarding any payment responsibilities. The increased transparency helps patients plan for out-of-pocket payments and more readily respond when front-office staff collects these payments.
Use and customize EMR templates to efficiently capture both clinical documentation and charge data. Remind clinicians to document clearly, completely, and accurately, and set up a review process to help them identify areas for improvement.
When possible, use an EMR/EHR that is integrated with your revenue cycle management system. Data can be pushed automatically and seamlessly downstream, which helps reduce errors and delays.
Healthcare regulations, reimbursement models, and technology have been changing at an increasingly accelerated pace. These present formidable challenges for healthcare organizations to maintain their financial viability. A well-thought-out and robust revenue cycle management strategy can mean the difference between practices that are struggling to survive and those that succeed and prosper.
Practices that automate where appropriate and streamline when necessary gain an advantage over those that are mired in tedious and time-consuming tasks that do not provide the desired outcome—maximum payment for rendered services at the soonest possible time.
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 revenue cycle management needs. We offer individual or integrated tools that support your overall revenue cycle management strategy. Contact us today to discuss how we can help.
When thinking about Revenue Cycle Management, it would be helpful to know some commonly-used terms: