What is Revenue Cycle Management?
Patients enter the revenue cycle when they make an appointment and exit the revenue cycle when the healthcare provider receives the final payment for the rendered services.
Sounds simple enough, right?
While this process is essential to any medical practice’s financial health, there are many complex steps between entering and exiting that make it difficult to track revenue. To reap the benefits of revenue cycle management, you’ll need a strong grasp of each step.
So, what is revenue cycle management, and how does it affect your practice? Let’s dive in.
The Stages of Revenue Cycle Management
Revenue cycle management boils down to two things: tracking and administering the financial transactions of a healthcare provider’s services.1 This includes oversight of medical, financial, and administrative data, then collecting and processing that information efficiently.
Put simply, revenue cycle management ensures care providers have all the information they need to do their job and be compensated properly for it. The stages of this include:
- Patient Intake and Insurance Verification – When a patient enters your care facility, they should fill out a patient intake and insurance eligibility verification form. These will identify their level of coverage, what care they’re eligible for, and how your organization will recoup its costs. Ideally, this should be completed before a patient’s treatment begins.
- Charge Capture – Once the physician administers treatment services, these charges should be captured in a secure database to be used for billing purposes.
- Coding – Billable charges, such as diagnoses, treatments, and procedures, are then categorized by providers or coders using industry-accepted medical codes.2
- Claims – After examining a patient, providers must submit a claim containing a summary of care rendered for payment with insurers, who will then calculate what amounts are paid to the provider using codes.
- Communicating with Insurers – Open communications with insurance companies occur throughout the entire revenue cycle, including everything from network verification to claims submissions to negotiating contract rates.
- Additional Payments – Once the insurance company has reimbursed physicians for a claim, remaining balances are billed to the patient, who may have a copay or deductible to meet. Patient payment responsibility varies by insurance plan and circumstance.
- Data analytics – Regular reviews and analyses of medical services and policies should occur to discover redundancies, optimize effectiveness, and reduce unnecessary expenses while maintaining good medical practices.3 Expense and revenue data can also inform your payor contracts—denoting where you can raise or lower costs on the next round of negotiations.
The Foundations of Optimized Revenue Cycle Management
When you have a new patient, a healthy start to the entire revenue cycle involves pre-registering and scheduling them for an appointment. This area often has room for improvement, considering inaccuracy or confusion can occur on both the patient and provider’s end of communication.
Gathering accurate information about the patient is key to preventing errors later down the line which can result in reimbursement delays, claims denials, or even make it harder for a physician to administer patient care.4
Patient Intake Forms
At the preliminary stage, a patient intake form should identify:
- Are they covered under health insurance?
- If so, is the provider in- or out-of-network with that insurance?
- What type of care are they looking to receive and are they pre-authorized by their insurance for that treatment or service?
- What is the patient’s previous medical history?
All of this should be compiled with other relevant information, such as their name, date of birth, contact information, and consent forms. This data can then be used to set up the patient’s medical record.
By confirming a patient’s eligibility and insurance coverage before they receive care, the provider can avoid clerical errors and other potential pitfalls. Instead, they can focus on providing the best health care possible to their patients.
Challenges in Revenue Cycle Management
We’ve discussed how important it is to verify an incoming patient’s medical information and insurance eligibility beforehand. But what about post-care revenue cycle management?
Communicating often and effectively with health insurance companies is necessary to receive payments in a timely manner. One important part of that communication is the claims process. A health insurance company will not submit payments to a medical practice until a claim detailing the patient’s treatment is properly submitted.
What are Some of the Issues that Result in Claims Denials or Outstanding Payments?
To streamline reimbursement, the claim should contain all the pertinent information, and use universally accepted medical codes so insurers can categorize the services rendered.
Having a system or software in place that can generate reports on claims statuses and smooth out revenue returns is essential to a financially viable practice. It can also eliminate human error resulting from manual data entry.
An uptick in denied or disputed claims in quarterly reports can be an indication that your claims management system is inefficient. If you’re experiencing this, it may be time to start asking how an organization can improve its revenue cycle management.
To do so, identify problematic points and bottlenecks in the revenue cycle. Look carefully at potential pitfalls, including:
- Misfiled claims containing medical billing errors, missing patient data, or even typos.
- Incomplete charge captures that don’t accurately summarize care rendered.
- Slow and inefficient collection of outstanding invoices from patients who may not understand their responsibility.
- An administrative buildup of unfiled claims, resulting in delayed or overdue payments.
So why is revenue cycle management important? Becker’s Hospital Review finds that 90% of claims denials are preventable, while 67% can be turned into recovered revenue.5 By reducing the number of errors in the claims process, a healthcare practice’s revenue reports can more accurately reflect the services it provides and its financial viability.
Changing Healthcare Regulations
Regulations in the healthcare industry continue to evolve to reflect new government policies. As such, healthcare providers must be equally flexible in their practice and procedures.
Keeping up-to-date on continually changing regulations not only ensures that a practice is providing the best of patient care, but that their financial processes continue to run smoothly and payments are collected without undue delay.6
One example of legislation that directly affects healthcare reimbursements is new regulations that require practices to adopt one of two payment models:
- The traditional fee-for-service model, in which providers charge based on services rendered.
- A pay for performance model, which focuses on the quality of care and incentivizes best practices, patient satisfaction, and other factors that the fee-for-service model does not consider.7
While a large percentage of healthcare incomes still rely on the fee-for-service model, the growing shift to pay for performance encourages providers to consider new factors in their performances and how they might impact reimbursement. Keeping the practice’s policies up-to-date with the changing landscape will ensure a reimbursement issue never catches you off guard.
How You Can Benefit by Outsourcing Your Revenue Cycle Management
The many complex moving parts of a revenue cycle can be challenging to navigate. Having an effective revenue cycle management system in place is like using an automated GPS that directs your next step to reimbursement. What’s more, building features into your payor contracts that ensure you’re paid your worth—and paid on time—can dramatically reduce the number of claim denials you experience.
That’s where PayrHealth can help. We analyze payor contracts to ensure that you’re not only receiving the highest possible reimbursement for your services, but that the wheels of your revenue cycle keep spinning.
We focus on what we do best—payor contracts—so you can focus on what you do best: providing excellent care to your patients.
If you’re interested in learning more about revenue cycle management and how you can optimize your business’s financial processes, contact us at PayrHealth today.
- Healthcare Business Management Association. Medical Billing & Revenue Cycle Management.
- TechTarget. Revenue Cycle Management.
- University of Illinois Chicago. What Is Healthcare Revenue Cycle Management?
- RevCycleIntelligence. What Are the Front-End Steps of Revenue Cycle Management?
- Becker’s Hospital Review. Best Practice Strategies to Protect Earned REvenue Through Effective Denials Prevention.
- University of Illinois Chicago. What Is Healthcare Revenue Cycle Management?
- NEJM Catalyst Innovations in Care Delivery. What is Pay for Performance in Healthcare?