What is revenue cycle management in healthcare?

June 19, 2020 ABILITY

Revenue cycle management (RCM) in healthcare is the fiscal process that guides the identification, management and collection of payments for patient services. The process begins with patient pre-registration, is followed by claims submission, and concludes with remittance processing. We understand hospitals, physician practices and other healthcare operations want to prioritize their limited funds to improve facilities for patients and retain caring, skilled staff. Revenue cycle management in healthcare can help you do just that by streamlining and automating the process of receiving timely payments. The objective of RCM is to generate a system that helps you get paid the full amount for the care provided as quickly as possible. Successful implementation of your revenue cycle management is what pays the bills. Learn more about the healthcare revenue cycle and the seven basic steps your RCM process should focus on.

Step 1: Patient pre-registration

Your revenue cycle management process starts when the patient makes his or her appointment. To successfully collect patient payments, healthcare organizations must engage the patient throughout the process. The best way to start is during the first contact with your patient. You’ll establish the patient’s account and collect as much information as possible during this step, including payer information (insurance or other payers such as Medicare/Medicaid), and the medical history you’ll need later in the cycle. Next, you’ll distribute information to the appropriate doctors, nurses and administrative personnel to enable the best possible care.

Step 2: Pre-authorization

In the next step, staff will schedule visits and verify insurance eligibility. Confirming that the service is medically necessary according to the plan’s agreement (assuming it is not a medical emergency) will confirm benefits and help determine payment options. This process can be trying and time-consuming for healthcare staff. Often, organizations employ software that assists in checking patient eligibility electronically, which can expedite the process.

Step 3: Submitting claims

A claim is used by healthcare providers to submit and receive funds from insurance companies or other payers. A “clean claim” that gets reviewed and paid by a payer upon initial receipt expedites reimbursement and improves your cash flow. It’s very important that the physician records information accurately. Without accurately documenting the clinical service provided and attaching the correct code(s), the claim could be denied, or you could receive an incorrect reimbursement. Good software can submit claims electronically, helping to avoid human error.  It’s best if a charge capture system can interface with the electronic medical record (EMR) to optimize identification and capture of charges for more complete billing. You may also want to consider centralized charge standards across all departments to improve consistency. ABILITY Network has several RCM applications to help you streamline your claims management and billing and ensure compliance with CMS guidelines.

Step 4: Posting of the payment

Once you receive the insurance payment and it is posted to the account, you can submit the balance to the patient for payment. Once you have developed a relationship with the patient and gathered contact information, you should be able to use automation tools to send billing statements via mail and/or secure electronic data interchanges (EDI). You could also implement text message reminders. The easier you make it for patients to pay during this step, the faster you will receive payment.

Step 5: Managing and re-submitting denied claims

Tracking your denied claims is an important part of revenue cycle management in healthcare. Claims can be denied for various reasons, such as improper coding, missing items in the patient chart or incomplete patient accounts. Having a process to manage denials can help you recover revenue that might otherwise have remained overlooked because of insurance being filed incorrectly. Properly executed denial management will boost earnings if cash flow has been slow because of problematic claims. You might uncover denial patterns or trends, whether from human error or billing problems for certain types of procedures or members of your patient population. For anything that is not covered by insurance, healthcare organizations must notify and collect payments from the patient. It’s essential that providers help patients understand what they owe and why, identify primary or secondary insurance, consolidate bills, and be able to set up payment plans.

Step 6: Processing payments

Accounts receivable staff should verify all claims payments and process them as quickly as possible. The goal should always be to collect the maximum revenue in the shortest amount of time. You may need account specialists to help identify problem claims and to work with patients on collecting balances due.

Step 7: Financial reports

No automated RCM process is complete without the capability and processes needed to prepare valuable financial reports. Using custom software to develop the financial and management reports you need is key, along with reports on key performance indicators (KPIs) to track whether or not your team is meeting their defined goals.

Let ABILITY simplify your healthcare revenue cycle management

No doubt many medical practices, hospitals and other healthcare providers want to focus more on treating patients than ensuring the financial viability of their company. However, your revenue cycle management process is crucial to running your organization successfully. Without this key financial process, providers cannot keep their doors open to treat patients. That’s where ABILITY can help. We put systems in place to streamline claims management and billing, increase the flow of income, improve the care of your patients and reduce provider costs. Find out how we can help by reaching out via phone at 888.858.0506 or requesting an online quote. We look forward to helping you simplify and optimize your RCM process.

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