What is revenue cycle management in healthcare?
Revenue cycle management (RCM) in healthcare is the fiscal process of identifying, managing and collecting payments for patient services. It begins with patient pre-registration, is followed by claims submission and ends with remittance processing.
The main objective of revenue cycle management is to capture the full payment amount for care provided as quickly as possible. When it runs smoothly, this process streamlines and automates how organizations receive timely payments.
The following is a detailed overview of 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 their appointment.
To successfully collect payment after the appointment, it’s best to engage the patient throughout the entire process starting with the first contact. Pre-registration is when you establish the patient’s account and collect as much information as possible. This includes:
- Demographic information (address, phone number, emergency contact)
- Payer information (i.e. insurance, such as Medicare, Medicaid or a commercial payer)
- Medical history
Next, you’ll distribute information to the appropriate doctors, nurses and administrative personnel, setting up each team to enable the best possible care and revenue cycle results.
Step 2: Pre-authorization
During this step, staff schedule visits and verify insurance eligibility.
The purpose of pre-authorization is to confirm a service as medically necessary according to the insurance plan’s agreement. This then confirms benefits and helps identify payment options.
Pre-authorization can be trying and time-consuming for healthcare staff. Patients may not know their insurance information or might have various forms of coverage, which requires more time and effort to confirm benefits.
Many organizations use software like our Inovalon billing solutions to simplify this part of revenue cycle management by checking patient eligibility electronically.
Step 3: Submitting claims
Healthcare providers use claims to receive funds from insurance companies and other payers.
When a claim is reviewed and paid by a payer upon first submission, it’s considered a clean claim. This expedites reimbursement and improves your cash flow.
To achieve a clean claim, it’s critical to have accurate physician records. A claim needs proper documentation of the clinical service(s) provided and the correct associated code(s) attached to the claim. Without this, the claim could be denied or an incorrect payment might be received.
Revenue cycle management software can submit claims through a clearinghouse electronically. This avoids human error and often speeds up the submission process.
Additionally, it’s best if a charge capture system can connect with the electronic medical record (EMR). This optimizes the tracking and receipt of charges for more complete billing documentation. You might also want to consider centralized charge standards across all departments to improve consistency. We have several RCM applications to help you streamline claims management and billing and ensure compliance with CMS guidelines.
Step 4: Managing and re-submitting denied claims
After a claim is submitted, it needs to be tracked as it may be sent back denied or rejected.
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 identify and manage denials can help you recover revenue that may have otherwise remained outstanding because of claim errors.
Efficient denial management can boost earnings. You can uncover denial patterns like common human errors or billing problems that occur for certain types of procedures.
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 5: Posting of the payment
Once you receive the insurance payment and it is posted to the account, you can submit the remaining balance to the patient for payment. Typically, the easier you make it for patients to pay, the faster you will receive payment.
An automated tool can send billing statements via mail for you, or directly to the patient’s email if they have agreed to that form of communication and you have secure, compliant communication methods in place.
Consider sending text message reminders to stay in touch with patients about their payments. Maybe give them the option of having automated recurring payments so that it’s less work for you and them to settle the balance.
Step 6: Processing payments
Accounts receivable staff should verify all claims payments and process them as quickly as possible.
The goal in this step and the guiding purpose of revenue cycle management is to collect the maximum revenue in the shortest amount of time. During payment processing, you may need account specialists to help identify problem claims or to do patient outreach if there are remaining balances due.
Step 7: Financial reports
No automated RCM process is complete without the capability to prepare financial reports.
Leveraging software to develop custom financial and management reports is key for ongoing revenue cycle success, along with reports on key performance indicators (KPIs) to track whether or not your team is meeting their defined short- and long-term goals.
Inovalon is here to support your healthcare revenue cycle management
Patients are at the heart of healthcare, but it’s the revenue cycle management process that keeps an organization running smoothly. Without this key financial process, medical practices, hospitals and other healthcare providers like you can’t keep their doors open to serve their patient community.
That’s why we’re here. Inovalon solutions streamline claims management and billing to help you increase the flow of income, reduce costs and, ultimately, improve patient care.
Discover how we can help by calling us at 888.858.0506 or requesting an online quote.
We look forward to helping you simplify and optimize your RCM process!
