The Revenue cycle workflow can be lengthy and complicated, making it challenging to maintain speed and accuracy. Completing each step is essential for a successful revenue cycle process. Accuracy is crucial throughout the process to avoid delays and ensure proper payment. Strict control of revenue flow is necessary for healthcare organizations. RCM empowers medical practices to manage their revenue effectively.
What Is Revenue Cycle Management?
Revenue cycle management is a process used in the US healthcare system to track revenue from patients starting from their first appointment. The revenue cycle encompasses administrative and clinical tasks required to collect and manage patient service revenue. These tasks typically involve registration, scheduling, data verification, coding, and payment collection. Moreover, revenue cycle management aims to detect any obstacles in a provider’s revenue cycle and eliminate them. Additionally, healthcare providers can optimize their claim reimbursements and boost their revenue from patient services by effectively managing the revenue cycle.
Key Steps In The Revenue Cycle Management Process
The healthcare revenue cycle comprises numerous steps, making it susceptible to errors. Any errors in the revenue cycle can lead to delayed reimbursement from insurers and patients. Therefore, it’s essential to examine the steps in the healthcare revenue cycle to understand where errors can occur.
When a patient schedules an appointment, the provider collects their information to create a patient account and verify their insurance eligibility. RCM emphasizes the importance of accurately completing this step, even for existing patients. Inaccurate information can result in denied claims and delayed payments. As a result, this creates more work for the provider, who must correct the errors in the patient’s information.
Charge Capturing And Coding
Charge capturing involves converting medical services into billable charges using standard medical codes. Insurance companies use these codes to determine reimbursement amounts. Additionally, incorrect medical coding can lead to claim denials, delaying provider reimbursement and costing them time and money. Proper revenue cycle management ensures that valid codes are used to prevent denials altogether.
After the medical services are accurately coded, the claim is submitted to the insurance company for approval. Revenue cycle management guarantees speedy claim submission by monitoring and overseeing the entire process.
During denial management, the insurance company reviews and either accepts or rejects the claim. Accounts staff then analyze the payment from the payer or insurance provider to check for discrepancies. If there is an error, the claim may be returned to the clearinghouse for further review and clearance.
Once the patient’s claim is approved, the provider receives reimbursement from the insurance company based on the patient’s eligibility. The provider must collect payment from the patient for any remaining balance. Revenue cycle management streamlines claims processing to expedite billing. By focusing on front-end tasks like insurance eligibility verification, RCM informs patients of their out-of-pocket expenses from the beginning. As a result, this reduces delays in payment collection.
Medical Service Review
Effective revenue cycle management prompts healthcare providers to analyze clinical treatment data. Providers can then use this data to identify areas where errors occur and find ways to reduce costs. As a result, providers can increase their revenue and improve the patient experience. Healthcare providers must implement effective revenue cycle management to operate efficiently and deliver high-quality patient care.
The impact of revenue cycle management on the financial health of small healthcare practices cannot be overstated. Effective RCM helps small practices to manage their cash flow and maintain their bottom line. Moreover, small practices can avoid costly billing mistakes, reduce denials, and optimize collections by implementing efficient RCM processes.
Challenges Faced By Healthcare Practices In Revenue Cycle Process and How To Fix it
Several challenges small healthcare practices face regarding the RCM process are as follows.
One of the significant challenges in healthcare revenue cycle management is collecting payments promptly. This is particularly difficult because patients are expected to pay more out-of-pocket costs due to increasing deductibles. As a result, many patients fail to pay their total balances, and healthcare practices struggle to keep their operations running smoothly. Collecting payments was identified by nearly half of the healthcare leaders as the biggest challenge they face.
Solution: Online payment portals enable patients to make payments conveniently and securely via credit or debit card, increasing the likelihood of on-time payments. Furthermore, b monitoring payment patterns and encouraging online payment, small practices can optimize their revenue cycle management and improve their bottom line.
Insurance companies denying claims can be a significant issue for small healthcare practices. Claim denials can result in decreased revenue and increased administrative costs.
Solution: To avoid this problem, it’s essential to closely monitor the claims process and identify any errors that could result in a denial of claims. This is why it’s necessary to begin the eligibility check process when patients schedule their appointments.
Dealing with too many coding errors can be costly and time-consuming for healthcare practices. Common coding errors, such as upcoding, unbundling codes, inappropriate modifier use, and unlisted codes without proper documentation, can result in claim rejections and manual claims handling, further increasing costs.
Solution: To address this challenge, healthcare providers can invest in staff training to improve coding accuracy, implement up-to-date coding software, and conduct regular audits to identify and correct coding errors.
Healthcare billing involves repetitive and time-consuming tasks that can overload staff, adding to operational costs. Small healthcare practices often need more resources, making it difficult to manage their revenue cycle effectively. This can result in challenges in collecting patient payments, particularly from those with a history of non-payment.
Solution: Software applications with built-in bots can help to streamline the process, reducing the burden of mundane tasks like claim status inquiries. Employees can customize their work lists and focus on higher-value activities by categorizing claims and automating work queues. As a result, this can significantly boost team productivity, enabling a small team to perform the work of a much larger one.
Medical billing software is essential for healthcare providers to file claims accurately, identify coding errors, and verify the output of their billing staff. Unfortunately, many small practices need access to high-quality medical billing software, resulting in a slow and inefficient billing workflow, numerous claim denials, and decreased revenue.
Solution: Small practices should invest in reliable and robust medical billing software to streamline their billing process, reduce errors, and improve overall revenue cycle management.
Strategies for Improving Revenue Cycle Management
There are several key elements that organizations should prioritize to overcome the challenges mentioned above and achieve success in revenue cycle management. By focusing on these elements, healthcare practices can improve their revenue cycle management, increase cash flow, and enhance the overall financial health of their organization.
The accuracy of patient information at the beginning of the revenue cycle is critical. Furthermore, mistakes can cause delays and inaccurate data that hinder RCM effectiveness. To prevent claim denial and ensure precise information, a recommended practice is to promote patient pre-registration. This step allows for thorough checking of patient details.
It’s essential to ensure the accuracy and completeness of claims before submitting them to insurers to increase the chances of prompt payment. Claims scrubbing is the solution to this problem, and using in-house clearinghouses ensures that the practice only submits accurate claims. Therefore, long and arduous manual claims scrubbing can be a thing of the past.
Providers can improve their financial health and revenue cycle performance by utilizing metrics to track their data-driven revenue cycle. Key indicators such as net days in accounts receivable, claim denial rate, percentage of collections, and cost to collect are essential to monitoring. By tracking these metrics, providers can identify areas of their healthcare organization that require improvement.
Collecting Payments Upfront
Automated workflow systems can help providers to collect payments on time and require upfront payments before services. Moreover, implementing point-of-service or pre-payment options through automated systems can help patients make payments quickly, and credit card-on-file services can boost payment collections.
Outsourcing revenue cycle management (RCM) to a third-party company allows providers to improve their RCM. Additionally, outsourcing can help providers reduce staffing and training costs, improve compliance, and reduce the risk of fraudulent or inaccurate billing practices. Overall, outsourcing RCM can be a strategic decision that allows providers to allocate resources, improve financial stability, and deliver high-quality patient care.
Key Metrics To Measure Revenue Cycle Management Performance
These metrics provide a comprehensive view of the revenue cycle performance and can help healthcare organizations identify areas for improvement.
|Net Days in Accounts Receivable (AR)||The average number of days it takes to collect payment for services rendered||< 40 days|
|Clean Claim Rate||The percentage of claims submitted and processed without errors||> 95%|
|Denial Rate||The percentage of claims denied by insurers||< 5%|
|First Pass Resolution Rate (FPR)||The percentage of claims that are approved on the first submission||> 90%|
|Collection Rate||The percentage of billed charges that are collected||> 95%|
|Cost to Collect||The total cost of collecting payments from patients and insurers||< 4% of net patient revenue|
It’s important to note that revenue cycle management is an ongoing process that requires constant monitoring and optimization. Regularly reviewing key metrics and identifying areas for improvement is crucial to maintaining an efficient and effective revenue cycle. By staying on top of these practices, small healthcare practices can ensure long-term success and profitability.