Revenue Cycle Management: Steps, Factors and Benefits

Although medical facilities, small offices, and bigger healthcare systems are recognised for helping people and healing patients, each healthcare company must have effective financial procedures and policies. This is where revenue cycle management in medicine kicks in.

 

The economic process that facilities utilize to handle the operational and academic tasks connected with transaction processing, reimbursement, and increasing revenue is known as revenue cycle management. The procedure includes identifying, monitoring, and collecting income from patient services.

 

The financial process is critical to ensuring that healthcare organizations continue to operate in order to serve patients. Healthcare revenue cycle management is used by facilities to earn profits and then keep up with costs.

 

Revenue cycle management has taken a move in most sectors. So, let’s dive deep into this topic to get a better understanding of it.

 

What is Revenue Cycle Management?

 

Revenue cycle management is pretty self-explanatory like a method used by medical providers to regulate the operational and academic components of their revenue cycle. The revenue cycle begins when a patient contacts a healthcare practitioner to plan a consultation. When all fees for the visit and medication have indeed been received, the cycle comes to an end.

 

The purpose of revenue cycle management is to determine and address any sources of resistance in the company's revenue cycle. Healthcare practitioners may maximize claim reimbursements and improve income with efficient revenue cycle management.

 

Also Read | Revenue Marketing

 

Steps in Revenue Cycle Management

 

There are several steps in the medical revenue cycle. As a result, there are numerous possibilities for mistakes to arise. Any faults in the revenue cycle might cause the provider's compensation from insurance and customers to be delayed or halted entirely.

 

Let's take a good look at the processes in the healthcare financial statements to have a better grasp of where mistakes might arise and how RCM can minimize them:

 

1. Pre-Approval and Eligibility Verification

 

When a patient schedules a consultation, the healthcare practitioner gathers information to produce a diagnosis account. This involves gathering the patient's supporting documentation and validating their entitlement for coverage.

 

Even when a patient seems to have an account with the clinic, revenue cycle management prioritizes precisely completing this stage. Incomplete or insufficient coverage will only result in a claim being refused later in the revenue cycle. 

 

This indicates that the provider's compensation payment will be delayed. It also implies extra work for the practitioner, who will have to go through the medical health again to fix any inaccuracies.

 

2. Capturing & Coding of Charges

 

The process of converting patient treatments into deductible costs using generally agreed medical codes is known as charge capturing. Insurers use these codes to calculate repayment rates.

 

The insurance provider may refuse the participant's payment if the medical coding is incorrect. As a result, provider repayment is delayed. It also takes time and money for the carrier to analyze and appeal refused claims. Effective revenue cycle management assures coding accuracy, reducing the likelihood of rejections.

 

3. Receiving Payments

 

The insurance provider ends up paying the provider depending on the patient's entitlement once the request has been authorized. If there is indeed a balance due after the health insurance, the service providers are responsible for contacting the client to recover the difference.

 

By optimizing claims processing, revenue cycle management speeds up the patient payment process. 

 

Furthermore, because RCM places a greater emphasis on front-end processes like program conditions verification, consumers will know upfront what out-of-pocket payments they would be liable for. This, once again, aids in the collection of the final settlement.

 

4. Submission of Claims

 

The claim is forwarded to the insurance carrier for authorization once the patient's medication has already been correctly coded. RCM guarantees that the claim is submitted swiftly by monitoring and maintaining it from the beginning.

 

5. Review of Medical Services

 

Care providers are encouraged to assess diagnosis and treatment data via effective revenue cycle management. By analyzing this data, providers may determine specific points in the cycle when mistakes occur and find solutions to cut costs. As a result, provider income will rise and patient satisfaction will improve.

 

Also Read | AI in Revenue Cycle Management

 

Factors Affecting Revenue Cycle Management

 

The providers have limited influence on the reimbursement that results from the request evaluation and denial procedure. Long wait times for billing and claiming to be finalized for providers' reimbursements may occur as a result of claims being refused to owe to availability and reliability concerns and the increased efforts to prevent fraudulent actions.

 

However, the supplier may have some influence over some internal aspects. Productivity, visitor volume, and extracting payments for services are all areas where providers may enhance their RCM. 

 

The following issues can stymie the RCM process:

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Factors Affecting Revenue Cycle Management

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1. Collecting Payments From Patients

 

The patient's budgeting for healthcare premiums is increasing. If patient payments are gathered either before or during their operation, the possibility of non-payment is fully eliminated. 

 

Although this is frequently a difficult process because many individuals are unable to afford large deductibles and are uninformed of their financial responsibilities.

 

Patient pre-registration is critical for obtaining a much more accurate medical background and insurance information upfront in order to prevent claiming cancellations. 

 

This allows for the payment process to be front-loaded by obtaining information on insurance coverage, extra insurance, the patient's minimum authorized visits, and establishing the patient's financial liability.

 

 

2. Supervisory Processes are Factionalized

 

The main and backside ends of the office sometimes have opposing priorities. Claim exclusions can occur if documentation is not provided. Effective communications about coverage suitability at patient intake can help with payer integration, claims repayment, and payment enforcement.

 

Priority should be given to front-end administrative chores in order to expedite claims and aid underprivileged patients in comprehending their coverage alternatives through insurance marketplaces. Revalidating patient insurance details are frequently neglected on future visits, resulting in eligibility denials.
 

 

3. Eligibility Issues

 

Communication with private health insurers is essential. Inability to maintain the insurance claims after filing can result in delayed, refused, or rejected allegations, as well as claims which were never submitted. 

 

Tracking claims to discover where issues start, such as whether there are difficulties with certain operations or codes, can assist in raising awareness and avoiding recurrences.

 

 

4. Lack of Digital Workflow

 

Without the capacity to simplify the technological procedure, poor quality data and potential income cycle issues might develop. Creating solid underlying healthcare IT architecture can help with RCM and the capacity to process required reports. 

 

Implementing an interactive workflow can also aid in the smooth coordination of front and back-office interactions and the elimination of lost paper paperwork.

 

Also Read | What is Hyper Automation?

 

Examining and upgrading an institution's Revenue Cycle Management (RCM) target network systems can enable the organization to commence managing the RCM procedure instead of permitting claims to damage the provider's financial sustainability. 

 

Focusing on early identification of difficulties with which was before may aid in identifying eligibility concerns and averting first claiming rejection, while integrating RCM software may aid in ensuring timely monetary compensation.

 

Benefits of Revenue Cycle Management

 

Extra revenue cycle management assures that even these processes are completed fully and precisely, allowing operators to prevent revenue delays or loss.

 

Although the primary purpose of RCM is to enhance provider income, it also provides additional benefits. These advantages benefit both providers and patients, making revenue cycle management even more valuable.

 

Let's look at some of the advantages of revenue cycle management.

 

1. Error Detection and Resolution

 

By embracing RCM, healthcare services are expected to more readily detect where mistakes are occurring in the revenue cycle. This reduces the risk of claim rejections since over 90% of claim denials are attributable to readily avoidable technical errors, such as insufficient data in the patient's file or incorrect coding.

 

When these mistakes are eliminated and claims are granted on the first attempt, earn an average payment fast. Furthermore, they do not have to pay additional funds to verify and appeal refused claims.

 

Claim denial avoidance can lead to a substantial $5 million in income for the average hospital. This figure alone would have been reason enough for healthcare practitioners to inquire about how an organization can enhance its revenue cycle management.

 

2. Preventing Healthcare Fraud

 

Another key advantage of RCM is its method to avoid fraudulent actions. Every year, healthcare fraud damages the healthcare business by billions of dollars. A fraud inquiry may cost a provider both income and reputation.

 

Incorrect medical coding, whether deliberate or inadvertent, can lead to healthcare fraud investigations. Billing for the following items is an example of a typical coding issue:

 

• Non-performance of services
• Procedures that are medically unnecessary
• Services provided by an employee who is not adequately overseen
• Poorly executed processes or tests

 

Procedures can also be upcoded by providers. Upcoding is the practice of demanding a higher payment rate for services that may not necessarily justify it.

 

With the concentration on correct information gathering, invoicing, and labeling in revenue cycle management, practitioners are far less likely to send erroneous information (if at all) to insurance carriers. 

 

Furthermore, RCM can keep caregivers up to speed on healthcare rules, ensuring that unintended fraud is never a problem.

 

Also Read | Revenue Vs Turnover

 

 

3. Patient Swindling

 

Healthcare forgery can also be caused by deception on the part of patients. This can occur in two ways:

 

• Giving incorrect information

 

An individual may falsify their healthcare insurance in order to acquire therapy that they would not otherwise have been eligible for. However, one of the first tasks in revenue cycle management is health coverage confirmation. 

 

This implies that any incorrect insurance documentation will be discovered promptly by people employed.

 

• Committing medical identity theft

 

Security of information is becoming more of a problem in the healthcare business. It costs both providers and victims. Because revenue cycle management begins with the verification of medical health, any instances of identity theft will be discovered and handled early in development.

 

 

4. Increasing Revenue from Healthcare Facilities

 

Healthcare providers can get compensation for their services more quickly if technological problems, claim denials, and fraud investigations are avoided. Furthermore, they can save thousands of dollars on correcting problems, contesting claims, and detecting fraud.

 

Providers might invest their excess revenue in acute management. After all, the primary goal of any healthcare professional is to deliver high-quality patient care.

 

 

5. Reduced Administrative Complexity

 

Eliminating claim rejections also reduces the organizational load. When administrative members of staff are not required to waste time and effort researching and contesting disallowed claims, they have had more time and attention to devote to patient outcomes.

 

Furthermore, RCM's particular attention to front-end duties streamlines exchanges between management staff and patients. Consultation scheduling, intake form registration, and transaction processing are all optimized to provide a more pleasant experience for everyone.

 

Also Read | Guide to Assets Under Management

 

Healthcare revenue cycle organization keeps evolving and adapting to the health insurance ecosystem's dramatic changes, such as valuation treatment, new technology improvement, and major catastrophes. 

 

In order to offer adequate treatment to patients and get the correct compensation for services, healthcare providers need always be informed of their revenue cycle status.