5 Benefits of Revenue Cycle Management
Healthcare providers’ top priority is bringing quality care to their patients. But this requires more than just treating the patient—it also means having an effective strategy to manage administrative and clinical functions so that practitioners are reimbursed for their services. After all, if they can’t keep the doors open and the lights on, healthcare providers can’t help anyone.
That’s where revenue cycle management comes into play.
Revenue cycle management is essential to running a successful medical practice. The benefits that revenue cycle management can bring to healthcare providers create a better experience for patients and administrative staff alike.
Read on to explore the top five benefits of revenue cycle management in healthcare.
Before diving directly into the benefits, let’s first define revenue cycle management, or RCM.
RCM is the process by which healthcare facilities and small practices can ensure they’re paid for their services as quickly as possible. It encompasses the entire healthcare revenue cycle, beginning when a patient makes an appointment with their healthcare provider and ending when all claims and payments for that appointment have been collected.
While this may seem straightforward, it’s anything but. Revenue cycle management is a multi-step process that requires all steps to be completed thoroughly and accurately so as to not result in error.
Errors can delay payments, causing dips in revenue and stress on the whole facility.
The Revenue Cycle Steps
Let’s take a look at the steps that comprise revenue cycle management to better understand how it benefits healthcare professionals.
- The first step involves syncing all relevant information between the patient and the administrative staff. This includes patient intake forms and insurance verification forms. RCM emphasizes this first step because all other steps rely upon this information being streamlined and accurate. If any errors occur, this leads to claim denials and a grossly impacted patient payment timeline.
- From there, services rendered must be detailed and coded. This process is called charge capturing, and it’s when physicians or care providers transcribe their services into billable charges. Each service has a universally accepted medical code to determine reimbursement amounts.
- Once the services have been coded, they’re submitted to the insurance provider as a claim for reimbursement.
- Communication with the insurance companies is key at this stage in the billing process. Healthcare providers need to keep up-to-date on what claims have been submitted and where they are in the payment process. Should there be a lot of delays at this stage, ensuring that you have a tight payor contract in place can help guarantee timely reimbursement.
- Once the insurance company has paid for their portion of the services, the remaining balance is sent to the patient for collections. This entire process then needs to be reviewed in order to be further streamlined.
So why is revenue cycle management important? By properly carrying out the steps of the revenue cycle, providers can expect to see significant improvements in their medical practice’s financial success, as well as in their quality of service.
Let’s take a look at the most noteworthy benefits of revenue cycle management.
#1 Increase in Claims Paid After First Submission
Successful revenue cycle management puts a heightened focus on accurately completing front-end tasks to ensure claims are paid the first time they’re submitted. These front-end tasks include insurance verification, the collection of accurate patient information, and proper coding.
On average, between five and ten percent of claims are denied after their first submission.1 However, most of these denials are due to human error and technical problems. These include errors in coding and insurance verification, or missing information in the patient’s chart. In fact, about 90% of claim denials are preventable.
When claims are denied, they can go back and forth between insurance companies and providers for months until all issues have been resolved. The best way to avoid these costly delays is to guarantee the claims are accurate before they are submitted.
#2 Increase in Practice Collections and Revenue
Healthcare facilities have a multitude of expenses to account for. Not only do they have to pay for the services they provide to patients, but they also have to pay their staff for the work they do. When claims are denied or patients are unable to pay for services upfront, the healthcare facility’s payments are delayed. This makes it challenging for the practice to manage their expenses.
To avoid this, RCM helps practices uncover patterns of claim denial. By recognizing these patterns, practices can work to avoid claim denials in the future so that they can receive timely reimbursement.
Denied claims not only result in reimbursement delays, but they also cost the provider money in claim investigations and appeals. In fact, practices spend roughly $15,000 on re-working claims. That’s why effective claim denial prevention can result in more than five million dollars in additional revenue for the average hospital.2
#3 Increase in Focus on Quality Care
When a practice implements revenue cycle management, it no longer has to spend time and money correcting errors and appealing claims. This allows practices to put more time and money into the quality of care they provide.
Revenue cycle management can even help providers transition to value-based reimbursement practices instead of traditional fee-for-service reimbursement practices.
Value-based reimbursement practices were developed with the goal of providing better care for patients by promoting quality of service over quantity of service. Under fee-for-service models, healthcare facilities were incentivized to see more patients, and order more procedures or tests for those patients, even if outcomes weren’t necessarily improving. Alternatively, value-based reimbursement rewards providers for effectiveness of service, with payment based on the financial value of the healthcare services they provide.
How is that financial value determined?
Providers report to insurance companies on specific metrics, including hospital readmission, adverse events, population health, and patient management. By analyzing this data, providers can see their progress in improving patient care and health management strategies.
#4 Improved Patient Experience
With a greater focus on patient outcomes, effective revenue cycle management means improvements in overall patient experience. Patients can expect to receive more comprehensive and targeted healthcare, reducing their likelihood of readmittance.
RCM also simplifies processes like scheduling, filling out intake forms, and billing, to create a more satisfactory experience for both patients and administrative staff. Plus, because RCM emphasizes thorough insurance verification upfront, patients will better understand their insurance eligibility from the start. That way, they’re not caught off guard by any out-of-pocket expenses down the line.
#5 Decrease in Administrative Burden
When a patient makes an appointment, administrative staff is responsible for scheduling the appointment, establishing or updating patient information, and most importantly, verifying their insurance. With a revenue cycle management system in place, these front-end tasks are streamlined so that administrative staff can work more efficiently.
Plus, RCM ensures these administrative tasks are completed accurately so claims aren’t denied in the future. When claims aren’t denied, administrative staff doesn’t have to spend their time investigating and appealing denials.
Revenue Cycle Management Experts You Can Trust—PayrHealth
The benefits of revenue cycle management are plentiful, affecting both healthcare providers and their patients. Healthcare providers can trust RCM to decrease the burden of their administrative tasks while increasing their collections and revenue. This means patients can expect to receive more thorough, targeted treatment.
If you’re wondering how an organization can improve its revenue cycle management, we’re here to help. To ensure they experience all the benefits revenue cycle management has to offer, many healthcare providers choose to partner with us. At PayrHealth, we do everything in our power to ensure you have strong contracts that work in your favor and improve your RCM. That way you get back to focusing on what you do best—providing quality healthcare to your patients.
- Revcycle Intelligence. Top 4 Claims Denial Management Challenges Impacting Revenue. https://revcycleintelligence.com/news/top-4-claims-denial-management-challenges-impacting-revenue
- University of Illinois Chicago. What is Healthcare Revenue Cycle Management? https://healthinformatics.uic.edu/blog/what-is-healthcare-revenue-cycle-management/
- Revcycle Intelligence. What is Healthcare Revenue Cycle Management? https://revcycleintelligence.com/features/what-is-healthcare-revenue-cycle-management
- CollaborateMD. The Key Steps and Benefits of Revenue Cycle Management. https://www.collaboratemd.com/blog/the-steps-and-benefits-of-revenue-cycle-management/
- Revcycle Intelligence. What Is Value-Based Care, What It Means for Providers? https://revcycleintelligence.com/features/what-is-value-based-care-what-it-means-for-providers