Running a healthcare practice is a challenging job to do and involves much more than providing healthcare. There has to be a system that can take care of the practice’s financial situation to maintain a steady flow of finances and keep the focus on the providers on the provision of quality healthcare service.
This is where the healthcare revenue cycle management comes in. Calling it a driving force behind all smoothly running healthcare systems would be the right thing to do.
Here is a deep insight into the system and why it is so important:
What Is An RCM System?
RCM is the acronym for Revenue Cycle Management. It is the sum of all the processes involved in managing a healthcare provider’s revenue. Moreover, this system is crucial for proper and timely reimbursements and is often referred to as the backbone of a healthcare system.
Actually, RCM is a financial process that begins when the patient schedules an appointment and ends when the final revenue is collected for the service provided.
Not only does it optimize revenue, but it also prevents revenue leakage in addition to improving patient experience and staff performance. This, in turn, maximizes revenues and saves lots of time and effort as well.
Know that revenue cycle management is more comprehensive than medical billing. Adding more to this, its horizons expand to the following;
- Denial Management
- Appointment
- Scheduling
- Eligibility Verification
- Documentation
- Coding
- Billing
- Charging
- Audit, And More
How Does Revenue Cycle Management Improve The Revenue Of A Healthcare Practice?
Can you save millions in your healthcare practice just by incorporating the RCM system? Absolutely yes!
Not only does it takes care of the financial situation, but it also helps the providers to focus solely on patient care. This leads to higher patient satisfaction rates, resulting in higher patient influx and, ultimately, more money!
Here are the key points on how RCM helps you improve the revenue of a healthcare practice:
- By reducing administrative costs.
- Hastening the cash flow as a result of faster reimbursement
- Ensuring smooth and accurate processing of all claims
- Reducing bad debts and their recovery costs.
- Reducing the number of appeals, claims, and denials.
- Pointing out errors in the billing systems.
- Making sure documentation is accurate.
What Are The Steps Involved In Revenue Cycle Management?
RCM is a detailed process and consists of a series of steps. Below is the list of all the steps in proper sequence, along with a little explanation to give you an idea:
1. Patient Scheduling/Registration
The first step of the Revenue Cycle Management is “Patient Scheduling.” The process begins when the patient first makes an appointment for a healthcare service. However, this step is exempted when the patient is seeking urgent care or is going to the emergency department.
2. Verification Of Eligibility
This is a crucial step as it determines whether the patient is eligible for the benefits and insurance. When the patient schedules an appointment or registers for a medical service, his information is gathered and checked thoroughly instantly.
Doing so helps the providers to see if the patient is eligible for the benefits and determine the insurance coverage. If needed, this also assists in arranging a financial planning engagement ahead of the medical service.
Additionally, a sub step is involved in the verification and eligibility determination step known as the “Pre-Authorization Sub step.” This step requires the patient to provide a pre-authorization to the insurance carrier and get reimbursement for the required service.
Over and above this, the pre-authorization step involves submitting a request with proper medical records and enables the insurance company to reimburse the patient.
3. Patient and Provider Encounter
The next step is the encounter, where the patient and provider meet to discuss the patient’s healthcare needs and come up with a treatment plan and delivery of treatment. In fact, this patient-provider encounter is recorded electronically in the patient’s chart using a paper or electronic health record.
Moreover, the information includes everything from demographics to medical history. The meeting starts right after the patient arrives and is followed by the provider’s staff conducting the patient intake process.
4. Documentation
This is also known as medical transcription, in which the patient’s medical records are transcribed or coded and put into the patient’s chart. This coded patient’s chart then becomes a part of medical records.
5. Medical Coding
This is a significant step in the Revenue Cycle Management System. It consists of reviewing the document containing information about the patient encounter first and then its translation into two types of codes i.e.
- Procedure Codes: These are medical codes, each with five digits representing a service that a medical provider can process.
- Diagnosis Codes are the disease classification codes used to document illnesses or medical conditions, which is why the patient is seeking the service.
6. Charges Entry And Claim Submission
This step is the core of the Revenue Cycle. Adding more to this, charge entry and claim submission submits a claim to the insurance company for payment. However, it is more complex than it sounds. Before submitting a claim, all the required services are translated into ICD-10 and CPT codes, along with patients’ insurance information, demographic data, and facility and provider information.
7. Payment Posting
This is a medical billing process and involves recording details of insurance decisions against the claim. If, after posting the payment, there is a patient’s share, then the amount will be transferred to the patient.
8. Secondary Billing
Often patients have multiple insurances. If the insurance payers have this information already, they automatically cross over the balance. In this case, the remaining balance is transferred to secondary insurance after adjudication of the claim by the primary insurance.
9. Patient Billing
Sometimes the claim is denied and is then posted again. Furthermore, a medical billing expert reviews it then to examine the reasons for non-payment.
After that, necessary steps are taken for the re-processing of the claim. If it is due to the non-covered services, then the remaining balance is transferred to the patient for requesting patient payment.
10. Accounts Receivable A/R
When an outstanding amount is pending, it is known as Accounts Receivables or AR. In other words, Accounts Receivable is the total amount yet to be collected.
11. Denial Management
Often a claim is denied due to underpayment or improper coding. This is catered by denial management, beginning with the denial receipt of a claim. It is then followed by cash posting and involves analysis of the reason and follow-up with the insurance carrier or the patient.