Healthcare providers are responsible for the health and well-being of their patients. But how do these institutions maintain their financial health?
For healthcare providers—from sprawling hospital networks to boutique physician groups—to succeed and better serve their patients, they need to implement the most efficient and cost-effective revenue cycle management (RCM) system. RCM entails identifying, collecting, and managing the revenue that comes into a practice from payers. The RCM process and RCM terminology can be complex, especially when providers are dealing with the often obfuscated legalese of payer contracts.
In this guide, we’ll explore what to look for in an RCM Partner and the five key RCM steps that will help lead providers to success, no matter how many payers they’re juggling or how complicated the contracts.
These steps include:
- Pre-registration and patient access
- Claim creation
- Claim submissions
- Claim processing
- Final patient payment and patient statement
Breaking Down the RCM System
Most people, at some point in their lives, have probably had a less-than-ideal experience at a doctor’s office or hospital. And it’s often not getting poked and prodded with needles or having a cavity filled that worries the average patient. It’s the often confusing negotiations required between one’s insurance company and one’s provider.
Do I pay now? Have I met my deductible? Why is my co-pay more at this particular provider? When will my doctor bill me? Where can I find how much I owe?
Contrary to popular belief, the relationship between patients, providers, and payers does not have to be fraught with errors and frustration. Implementing and maintaining a thorough revenue cycle management service can help providers engage with their patients along with their medical billing service.
The RCM life cycle begins the moment a patient makes an appointment. From there the typical healthcare revenue cycle looks like:1
- Administration handles scheduling and verifies a patient’s insurance.
- A patient account is established if there isn’t one on file; this account should contain all pertinent medical history and insurance information.
- Once a patient has been seen, a claims submission is created and the road to reimbursement begins.
Five revenue cycle management steps providers will want to address in order to ensure business success and patient satisfaction are detailed below.
#1 Pre-Registration & Patient Access
Being prepared from the very beginning helps providers eliminate unnecessary errors such as lost revenue down the line.
After a new or returning patient makes an appointment with a provider, the clock starts ticking on a claim’s lifespan. The smoother things function from the start—before a patient even enters the lobby—the sooner a practice will receive a patient collection or revenue for services rendered.
Seemingly mundane mistakes can make or break a successful medical revenue cycle management system.
For instance, when it comes to verifying a patient’s personal and insurance information, your administrative branch or front desk will want to ask questions that don’t simply include “yes” or “no” answers. Having a patient verbalize exactly where they live, what their current phone number is, what insurance they use, and more, will help a practice avoid claims bouncing back.
Note: Even a misspelled address can result in a claim denial—being meticulous at this step is crucial.
Successfully completing these front-end tasks, while ostensibly simple and straightforward, is actually a linchpin in the RCM system. According to a ClaimRemedi survey, the number one reason claims are denied is eligibility issues.2 When errors are made initially as a patient’s account is being created or updated, this can have negative consequences when it comes to claims processing submissions.
Along with pre-registration, patient access is also a critical early step in the RCM system. According to a 2018 report from public accounting, consulting, and technology firm Crowe, patient access was one of the top healthcare revenue cycle risk areas for providers in 2019.3
It is more difficult to work with dissatisfied patients than with those who have had a stellar experience with a provider, and even more difficult to increase revenue when patients start abandoning a practice with subpar patient access.
To ensure a positive experience for patients, providers should ask themselves the following questions when analyzing their RCM system:4
- What are the office hours and appointment availability? Are telehealth services available for patients who are unable or unwilling to come to the office in-person?
- Are the provider’s patients primarily located in a rural area? If so, is telemedicine available to them?
- Does the provider have a relationship with a local or national rideshare company that can help patients without transportation make appointments?
- Are patients being educated about a facility’s services?
- Are patients able to easily access their medical records, appointment history, and prescriptions through an online portal?
If the answer is “no” to any of these questions, it may be time to invest in more rigorous front-end practices to ensure a finely tuned RCM lifecycle.
#2 Claim Creation
The second key step to finding success in your RCM system is claim creation.
A claim is created after services are evaluated and tests or procedures are translated into ICD-10. ICD-10 codes are standard transaction codes set for diagnostic purposes under HIPAA.5 These codes correlate to reimbursement rates.
Once a claim has been created and meets compliance for coding and formatting, the provider must also complete charge capture duties. This simply means they are recording information on their services which is then sent out to payers.
Claims will typically include:
- Patient information
- Procedures performed, which are translated to appropriate codes
- Procedure codes paired with an ICD code
- Price for procedures
- Provider information
#3 Claim Submissions
Once a claim has been completed correctly, it’s time to submit for processing and reimbursement.
Private or government payers will assess these claims for reimbursement, while on the back-end the work of the provider is not quite finished for this claim’s life cycle.1 They’ll need to post payments, process statements, and handle collections.
In 2021, most billers conduct these transactions electronically, which helps to reduce human error.
Claims—except in the case of large third-party payers like Medicare or Medicaid—will typically go through a clearinghouse.
A clearinghouse is a third-party entity that reformats claims from providers before transmitting them to the appropriate payers. The clearinghouse handles the complexities of payer requirements so the provider doesn’t need to complete a dozen claims in a dozen different formats.
#4 Claim Processing
Once submitted and evaluated by the payer, insurance claims may be denied, paid in full, or only partly remitted. Providers will need to notify and collect funds from the patient for whatever amount is not covered by insurance.
Providers will often have to go back-and-forth with payers to appeal claims denials or underpayments. Again, this back-and-forth can be eliminated early on in the claims processing life cycle if front-end practices are completed thoroughly and correctly.
The payer will send the provider a detailed report of what (and how much) of the claim they’re willing to pay. This will typically include fees that are part of previously negotiated contract terms between payer and provider.
If the provider finds any errors or discrepancies in the report when compared to the initial claim, the appeal process will begin.
#5 Final Payment and Patient Statement
Once all services are reimbursed, the cycle ends. A statement will be prepared for the patient detailing how much they owe for the procedures and tests they received.
Oftentimes a provider will include an EOB (explanation of benefits) for the patient, which can be helpful in explaining why certain costs had insurance coverage, while others did not.
Streamline Your RCM System with Healthcents
Tracking a claim for the entirety of its life cycle can be a daunting task. But maintaining strong and open communication channels between providers, payers, and patients is essential when it comes to the financial health of healthcare providers across the board.
If your healthcare organization is struggling with negotiating contracts or needs to source additional talent to help out your team, third party contract management firm Healthcents can take your healthcare practice or facility to the next level.
With Healthcents, outsourcing revenue cycle management results in more profitable payer contracts, which means you can focus your efforts on ensuring top-notch patient care and access.
Interested in learning more about healthcare revenue cycle management vendors? Contact us today.
- Revcycle Intelligence. What is Healthcare Revenue Cycle Management? https://revcycleintelligence.com/features/what-is-healthcare-revenue-cycle-management
- Revcycle Intelligence. Quantify Denial Rates for Smooth Revenue Cycle Management. https://revcycleintelligence.com/news/quantify-denial-rates-for-smooth-revenue-cycle-management
- Crowe. The Top Risk Areas for Healthcare Organizations in 2019. https://www.crowe.com/-/media/Crowe/LLP/folio-pdf/Top-Risk-Areas-for-Healthcare-Organizations-in-2019-HC-19005-015.ashx?la=en-US&hash=5D9BF468A6167ABA26287C72157B74E97E7070AD
- Patient Engagement HIT. Top Challenges Impacting Patient Access to Healthcare. https://patientengagementhit.com/news/top-challenges-impacting-patient-access-to-healthcare
- AAP. ICD-10-CM used to document diagnoses but also affects payment. https://www.aappublications.org/news/2019/02/06/coding020619#:~:text=ICD%2D10%2DCM%20is%20the,outcomes%2C%20mortality%20statistics%20and%20billing.