Revenue cycle management, or RCM, is the approach adopted by healthcare companies to manage the financial process of charging and collecting payment for medical services. RCM will start with the time when a patient makes an appointment, and end when they clear the balance in their account, making payments, write-offs, contract adjustments, or reconciliation with insurance payments. RCM would increase revenue by reducing claim rejections, reducing time in accounts receivable, and increasing collections. This enables the healthcare providers to optimize their financial output and to receive the correct and timely payments. Besides assisting healthcare companies to comply with their regulatory requirements, functional RCM can tremendously maximize patient satisfaction.

The general aim of RCM is to find out weaknesses and enhance or remove them to expand and ensure the correct revenue at the various stages included in the cycle. Other proposals of effective revenue cycle management are that this can be an orderly, anticipatory method to detect and address potential compliance issues such as fraud, waste, and abuse. By way of example, one of the practices may initiate a step to ensure that the company is compliant with applicable policies when it discovers that a particular provider is ordering unnecessary tests and procedures.

What is the importance of revenue cycle management in healthcare?

RCM plays a crucial part in the daily operations of healthcare organizations, making it significant whether it is carried out internally or by an RCM services provider. Practices and facilities risk losing reimbursement in the absence of efficient RCM, which could endanger the corporation as a whole. Because of this fact, RCM procedures have a big influence on how the healthcare sector operates as a whole.

• RCM bridges the gap between the clinical and patient accounting aspects of healthcare. By way of illustration, RCM links the demographic data with the therapy of a patient.
• Precise preregistration, scheduling, and scheduling and booking patients, chasing collection of outstanding balances, receiving payments, and enquiries to insurers when they deny a claim are all the methods through which an efficiently designed and suitable RCM system speeds the apparent billing and collection cycle.
• Communication is made through accounting systems and electronic health records (EHRs), with the healthcare team consisting of managers, doctors, and professionals in the field of preauthorizations, coding, and billing. The use of RCM software or systems facilitates the use of EHRs. This simplification lowers administrative overhead expenses and speeds up the time it takes to provide a service and get paid for it.
• RCM solutions assist in avoiding the need to edit or resubmit claims by enabling healthcare personnel to enter all the information needed for processing. Reduced refused claims save money and time for providers.
• RCM enhances the patient care process, giving patients a better overall experience. For instance, patients will be aware of any balance or financial expectations right away through the verification of insurance coverage.
• In order to improve the patient experience through appropriate charges and reduce denials, accurate billing and coding are essential, as is knowing the reasons behind denials. Both the patient and the healthcare professional experience less stress as a result of this accuracy.
• Healthcare providers can utilize RCM systems to manage and preserve patient billing records, and patients can use them to pay their bills online.

Challenges associated with healthcare RCM

Coding, billing, credentialing, compliance, data analytics, and integrating paper charts with EHRs are some of the elements that make the healthcare revenue cycle more complicated.

1. Coding precisely and billing accurately

Accurate billing and exact medical coding are essential for healthcare businesses to have a healthy financial flow. Both of these procedures are essential to getting paid for the services rendered, even though they are distinct. While medical billing employs those codes to generate insurance claims and patient bills, medical coding entails obtaining billable information from clinical paperwork and medical records.

Due to the complexity involved, the coding and billing procedures need to be efficient and done with great care. Revenue is lost as a result of mistakes and inadequate information. Because more office staff time is required to rectify and resubmit follow-up claims, denials resulting from medical coding errors translate into lost time and lost income. Additionally, take into account the additional expenses for things like envelopes, paper, and postage for sending claims.

2. Meeting compliance standards

Tasks carried out to stop fraud, waste, or abuse inside a healthcare organization are referred to as healthcare compliance. Compliance is relevant to RCM in a number of ways. Personal patient data must be adequately safeguarded. They should place the utmost importance to safeguarding the confidentiality and privacy of their health information. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 states that the organization must legally guarantee the confidentiality as well as the integrity of certain health-related information. Most often, the medical records of patients should not be publicly accessible due to the risk of a security breach. This will guarantee the patients that their personal information and medical data are safe and will not be used against them.

Other compliance standards that healthcare RCM would have to satisfy are the maintenance of workstations that would meet the HIPAA standards, relevant audits of the facility as well as facilities to comply with regulations, high rates of coding accuracy, and compliance with regulations of electronic filing of medical claims. Failure to do so might result in hefty fines for the practice, up to $1 million, if government auditors find gaps in an organization’s compliance procedures.

3. Applying data analytics

The practice of looking for trends in the revenue cycle by analyzing reports (for denials, appointments, charges billed, reimbursement collections, etc.) and other paperwork is known as data analytics. This entails identifying patterns like mistakes, lost billing chances, and assessing if revenue is increasing or decreasing. Data analytics can provide insight into procedures, including whether they are being followed or not. The healthcare sector is greatly impacted by this analysis. Accuracy and efficiency can be increased by recognizing and addressing direct behaviors that have a detrimental effect on income.

How can these challenges be overcome?

By examining each stage of the revenue cycle to identify what is effective and where there is space for improvement, clinics and medical practices can enhance their revenue cycle procedures. RCM managers can use the data analytics discussed above to get information specific to their organization to support change decisions. Here are some key areas to keep an eye on in order to enhance revenue cycle procedures.

First, keeping in mind that every stage of the cycle is interconnected is essential to successful RCM. It is possible for issues in one phase to cause issues in other steps. Efficiency is increased by having a certified RCM manager or director on staff. This important team member keeps the office neat, has an extensive understanding of medical billing, and can communicate with doctors and other providers in an effective manner.

Additionally, this individual needs to be able to respond to inquiries about RCM and understand how to conduct efficient research. The director or manager of the revenue cycle also integrates the front-end and back-end activities. Patient contact occurs throughout front-end procedures like enrollment, eligibility, precertification, and direct patient care. Administrative tasks, including handling claims, denials, medical billing, and collections, are part of back-end patient accounts procedures.

Furthermore, Oxford Training Centre offers specialized Healthcare Management Training Courses that help professionals develop skills in Revenue Cycle Management. With training courses led by industry experts, will improve healthcare teams’ financial processes, reduce errors, and increase patient satisfaction.

Examples associated with healthcare RCM

Here are some instances of how better front-end management can result in more efficient back-end operations:

• Medical billing starts with appointment scheduling and registration, since a medical claim denial has already been initiated if patient demographics and facts, including name, address, gender, spouse information, and whether a visit is related to a work-related injury, are inaccurate. Claims containing erroneous or incomplete patient information will not be accepted by insurers.
• Denials can be avoided by confirming patient eligibility before every appointment. This stage verifies that the payer and plan the patient has chosen will cover them.
• Revenue management will benefit from proper handling of prior authorization, often known as precertification or preauthorization. A health plan’s requirement that patients get clearance for specific medical services or prescriptions before obtaining care is known as prior authorization, and practices cannot afford to lose money as a result.
• It may be more likely that a payer will compensate for a service if providers are involved when required. For instance, an ordering provider might have to participate in a peer-to-peer review alongside a payer-affiliated provider. For the payer to comprehend the provider’s request for prior authorization, these evaluations concentrate on the reasons why a patient needs a service or medicine.

Things to consider when choosing an RCM system

One of the most important things to look for when choosing an RCM system for healthcare businesses is that it has extensive and adaptable applications, which indicates that it is well-rounded and allows each organization to customize the system to suit its needs. Patient registration, collecting, and simple provider charting are examples of system applications to search for.

Advanced and astute RCM system technology and security minimize the likelihood of information being compromised or disclosed. In order to bill past-due invoices, more current systems are able to locate the most recent patient address. The insurance eligibility of a patient can also be confirmed by these RCM systems. Office workers had to make more phone calls due to outdated technologies’ limited functionality, which decreased productivity. 

Choosing an RCM system that offers individualized client support, like on-site training and user certification, is crucial. Users of RCM systems could find that in-person assistance is more beneficial than training videos, which have the potential to cause viewers to lose interest and not completely understand the material. The capacity to execute reports seamlessly to verify data points, such as “missing charge” reports, copay collections, and daily appointment lists, should be one of the other RCM system requirements.