Revenue cycle management is the mainstay of financial sustainability for a medical enterprise. The healthcare revenue cycle management (RCM) process begins when a patient makes an appointment and ends when the medical practice successfully collects the payment for the service. However, the process is far from straight through as the terms medical billing and collection imply. It involves a complex arrangement of patient communications, healthcare documentation, upfront collection, medical coding, insurance billing, claims tracking, denials management, payment posting, and revenue tracking.
Each leg of the healthcare RCM process has scope for errors, which stem from lack of process automation, incorrect coding knowledge, and inadequate patient communication. Adding to this complexity are the dynamic healthcare regulations (such as the No Surprise Act 2022) and the growing share of patient payments. In fact, as per a 2020 study by InstaMed, 78% of providers struggle to collect bills of more than $1,000 within 30 days.
Steps in Healthcare Revenue Cycle Management
Even for hospitals with evolved RCM software, minimizing delays in revenue collections can be an arduous goal to achieve. To improve the RCM outcomes in your medical practice, it’s important to first understand the various components of an efficient RCM cycle. Here are the essential steps in healthcare revenue cycle management that impact the revenue streams of medical practices.
- Patient scheduling and registration
The first stage of RCM is collecting demographic and insurance information when your patient schedules an appointment. It is your chance to ‘get it right the first time’ because accuracy at this stage will determine the efficiency of the entire RCM process. This is where you collect information on the patient demographics, medical history, insurance, and payment details (for collecting the patient payable balances).
Streamlining the patient scheduling and registration process will improve the patient’s experience of interacting with your medical practice and make it easier to bill for the service. If you use a patient portal, then patient scheduling and registration can be enabled online, allowing the patient to upload documents and submit information via the portal. This will ensure that the information you need is available before the patient visits the medical office. It will also allow your billing staff to complete stage two of the healthcare RCM process (i.e., verifying the patient’s insurance eligibility and determining the out-of-pocket expenses).
A quick tip on booking appointments for existing patients – ensure that your staff verifies the information available on the practice’s EHR for all appointment bookings.
- Insurance eligibility and prior authorization
Once the patient’s insurance information is obtained, it is critical to validate its accuracy with the insurance company. Doing this over the phone can be a grueling and frustrating experience for your staff. Investing in an RCM verification software will speed up the verification process and allow your staff to communicate any gaps to the patient prior to the appointment date. Giving your staff a ‘verification checklist’ is a great way to ensure that all the vital information is verified.
Other than a medical emergency, you must obtain prior authorization for each patient. A prior authorization allows the health insurer to evaluate the medical necessity of the prescription, procedure, service, or equipment. For providers, it is the opportunity to understand the conditions under which the payer will reimburse the medical bill. It also helps the medical practice ascertain the value of copay, deductibles, and out-of-pocket expenses for the patient.
A pre-authorization is not a guarantee of payment. Also, it’s critical to maintain a record of the prior authorization received.
- Patient visit and clinical documentation
The information verified in stage 2 of the revenue cycle management process must be communicated to the patient prior to the appointment date. It allows the patient to come prepared to pay the out-of-pocket expenses on the date of medical service. During the patient visit date, the focus is to ensure that the patient is satisfied with the medical services and recommended course of treatment.
The healthcare provider must ensure that the medical condition details are captured on the EHR while the patient is still with the provider. Often providers use audio or video recordings to quickly record medical information before seeing the next patient.
- Medical coding
Medical coding is the classification of the patient’s medical condition, prescription, and medical services rendered into approved CPT codes. Accurate use of medical billing codes will result in timely reimbursements and help you avoid the financial costs (an estimated $118 per claim denial) of reworking claim denials. Using reliable RCM software will greatly reduce inaccuracies in the coding process. Also, while the use of medical billing with unspecified codes still exists, unspecified codes should be used as an exception rather than the rule.
Tracking changes in coding regulations and training your billing staff will be crucial to ensuring that your medical practice revenues don’t dip in 2022. One way to stay on top of medical coding and billing changes is to partner with an experienced medical billing service.
- Claims submission
The next step is to submit the medical claim through electronic data interchange (EDI) to the insurance company (also known as charge transmission). Rejection of the claim can happen due to (a) missing information in mandatory fields, (b) incorrect information, and (c) payer rejection. Ensure that your medical billing team tracks and rectifies claim errors and denials and resubmits the claims. Aim for a claim denial rate of less than 5 percent; anything higher would result in significant losses in revenue, with claims aging beyond 90 days.
Denial management is an important key factor in healthcare revenue cycle management. If you would rather not waste your staff’s time tracking claims and resolving denials, you can outsource RCM for your medical practice. A reputable medical billing and coding service will also assist you in evaluating the reasons for denials and taking corrective actions to decrease denials.
- Payment posting and reconciliation
The patient’s insurance company will review the submitted claims and release the payment to your healthcare organization. The total claims submitted and total claims denied or paid by the insurance company must be reconciled by the RCM team when posting the bulk payments. The explanation of benefits (EOB), correspondence, and ERA (electronic remittance advice) are posted to each patient claim.
Use a patient portal to give patients easy access to their outstanding medical bills. You can improve the patient payment collections process by sending automated reminders on due amounts and giving patients the option to make payments online.
The payment posting process must be supplemented by AR (accounts receivables) calling to resolve aging claims pending with the insurance company.
- RCM reporting
Quality RCM reports will help you ascertain the efficiency of your entire revenue cycle management efforts. The insights gained from RCM reports can be used to identify the bottlenecks in the entire coding, medical claims submission, and payment collection process. There is no dearth of revenue cycle data with modern practice management software. But viewing unlimited data can be overwhelming, which is why you must list the revenue cycle metrics that you want to track on an ongoing basis. Here’s our pick of the top six healthcare revenue cycle management measures.
Efficient revenue cycle management is as important for patients as it is for the medical practice owner. Accuracy is vital to ensuring that patients clearly understand their share of the medical expense ahead of time and are given enough time to evaluate their finances or opt for a different procedure. The No Surprises Act 2022 further emphasizes the responsibility of the medical practice in communicating patient payment responsibilities.
Mismanagement of the RCM operations can impact the financial viability of the medical practice. On the other hand, working with a healthcare revenue cycle management partner can help you take a proactive approach to fix issues and ensure that you are reimbursed timely for the services rendered.