The healthcare revenue cycle management workflow encompasses several stages, including patient registration, insurance verification, coding and billing, claim submission, payment posting, and handling denials or appeals. Each step plays an important role in ensuring that healthcare organizations remain financially healthy.
This post will define revenue cycle management, discuss the key steps to hospital RCM, and explore ways you can better understand your organization's cycle through technology.
The revenue cycle management meaning refers to the process healthcare organizations use to track patient care episodes from registration and appointment scheduling to the final payment of a balance. The primary goal of RCM is to maximize revenue while minimizing the time that passes between patient services and payment collection.
There are several subtypes of RCM, including physician revenue cycle management and hospital or facility-level RCM. Regardless of whether you’re discussing physician-specific RCM or facility-wide revenue cycles, the goal remains the same.
A great RCM workflow ensures that providers and facilitates are paid for their services in a timely and efficient manner.
However, healthcare providers aren’t the only businesses that use RCM. Any organization that wants to condense the time from services rendered to payment receipt can benefit from revenue cycle management.
Does revenue cycle management really matter in the healthcare setting? Absolutely. RCM can help your organization address two key areas of concern.
Effective revenue cycle management will promote your organization’s financial well-being. You’ll gain better visibility into the path from services rendered to payment received.
An optimized RCM process ensures that you receive funds for services in a timely fashion. A poor or non-existent RCM framework, on the other hand, increases the risks of delayed payments and denies claims.
In a healthcare landscape where margins already tend to be on the thin side, you’ve got to do everything possible to ensure a smooth revenue cycle.
Revenue cycle management can be particularly vital for the financial health of non-profit organizations. According to Deloitte, the operating margins of non-profit health systems reached an eight-year low in 2023, coming in at -0.8%.
Revenue cycle management can also help your organization achieve and maintain compliance with laws like the No Surprises Act. By maintaining a clear view of the revenue cycle, you can confirm that you’re abiding by transparent billing mandates.
Proper revenue cycle management guarantees that your billing practices are accurate and in line with regulatory requirements. This, in turn, will reduce your risk of penalties or legal issues while promoting better patient trust.
Now that we’ve answered the question, “What is RCM?”, let’s dig deeper into the key aspects of the revenue cycle.
The revenue cycle begins when a patient schedules an appointment. Your team will collect their information and book the service.
It’s essential to verify the patient’s insurance coverage before providing any services. This ensures that the services are covered and determines the patient’s responsibility.
Your coding team must assign the correct standardized codes to the procedures and diagnoses. Mistakes during this phase will delay your revenue cycle and disrupt the organization’s cash flow.
Next, your accounting team will create bills or claims and send them to the insurance company.
Once billing is complete, the claim is submitted to the payer. The sooner you can get a claim over to the appropriate entity, the better your odds of receiving prompt payment.
The payment will be posted to the patient’s account. Any remaining balance will be billed to the patient directly.
Not all claims are accepted on the first go. Managing denials involves reviewing and correcting claims that the insurance company has rejected.
After resubmitting any denied claims and determining the patient’s final balance, you can obtain the remaining funds. If they refuse to pay, you may have to send the account to collections.
Want to learn more about these key steps? Download our ebook for a great primer on RCM. In it, our team breaks down the critical steps of the revenue cycle and provides additional insights you can bring to your organization.
Here are some of the people responsible for making sure the revenue cycle is smooth and efficient:
These professionals oversee the entire revenue cycle, ensuring that each step is completed efficiently and accurately. They monitor the process, analyze claims data, and implement changes to improve RCM performance.
These individuals are responsible for billing patients and submitting claims. They coordinate with the accounting team to reduce claim denials and ensure prompt payment.
If an insurance company kicks back one of your claims, it will go to the denials department. They’ll work to resolve the issue by correcting errors and submitting claims to recover lost revenue.
In smaller practices, administrators may handle multiple roles within the revenue cycle. They could take care of everything from patient registration to billing and collections.
Financial officers typically work for larger organizations. Their job is to analyze revenue streams and manage budgets.
If you manage a large hospital network, these roles may be highly specialized. Smaller practices, meanwhile, may only have a few staff members who juggle multiple responsibilities.
Revenue cycle management technology can make it far easier to create and maintain effective RCM workflows. RCM software automates many of the steps discussed here, such as patient registration and claim submission. In doing so, these tools promote superior efficiency while reducing the chances of a mistake.
RCM tech with advanced analytics capabilities can help you pinpoint areas for improvement and make targeted changes to your revenue cycle.
For example, you may find that a payer keeps denying a particular type of procedure. You could use this data to get to the bottom of the issue and reduce the likelihood of future denials.
Unlock actionable insights about your revenue cycle with diagnostics tools from Rivet Health. Explore our suite of solutions and services designed to help you stabilize your cash flow and promote long-term continuity. Schedule a demo today to get started.