Your Complete Guide to Healthcare Revenue Cycle Management
Our healthcare providers may be the superheroes of our time, but to keep doing their good deeds, they need money to pay the bills. Through revenue cycle management, your healthcare organization can stay on top of your earnings and help patients when they need you the most.
Even the most generous doctors can’t provide the best care for free, so it’s your financial responsibility to make sure you’re paid by every patient who comes through your door. This requires you to complete a full medical billing process — better known as the healthcare revenue cycle or the revenue cycle management process — for every visit.
As the healthcare industry goes through many new changes and the cost of patient care continues rising, it’s more crucial than ever to master revenue cycle management (RCM). Keep reading to learn about the RCM process and how technology can make it easier.
What Is Revenue Cycle Management?
Revenue cycle management can be defined as the process that healthcare providers use to verify, collect, and manage patient payments. This process is done by health administrators and clinicians, wherein the patient’s information is paired with the health services they’ve been provided. This process starts from the moment a patient reaches out to use your services and doesn’t end until all your money is collected.
A large part of going through a full revenue cycle is working closely with health insurance companies to check off each step of the process. As you take a look below at the seven-step RCM process, you’ll see why this collaboration is so important.
- Patient registration: The process begins as a new patient is added to your schedule. This step also requires you to collect basic information about your patient such as their medical records, and confirm that they need your services.
- Insurance verification: Once you have all the patient details you need, the next step is to double-check your patient’s insurance eligibility and benefits. This can require lots of time on the phone if you don’t have modern RCM software.
- Claims submission: As soon as you figure out what charges can be billed based on the type of care your patient received, you can submit a claim to your patient’s insurance company.
- Payment posting: If your claim has been reviewed and approved, the payment will be posted and your patient can pay what they owe.
- Denial management: During the RCM process, you must keep track of your claims’ progress. This is the best way to catch an increase in claim denials and figure out the cause, which may be an issue with a specific procedure or with the way your team submits claims.
- Accounts receivable follow-up: Often outsourced to an expert accounts receivable (AR) team, this step involves reaching out to insurance companies to collect any overdue payments.
- Reporting: At the end of the cycle, you should have detailed reports about your financial health to make sure your practice management is up to par with others in your industry.
Challenges in Healthcare Revenue Cycle Management
While the basic framework behind the healthcare revenue cycle can help you find success when working with patients, payers, and insurance companies, there are some pitfalls of following each step manually.
Revenue cycle management can be a very complex process that can easily fall victim to human error. Even simple misspelled names can lead to issues with your medical billing.
Insurance coverage verification and claims management are two particularly time-consuming parts of the RCM process that can take up much of your staff’s time. This not only leads to large expenses for small amounts of work, but it can also cause more employee turnover and less productivity.
With how much time the revenue cycle management process takes, you may not be left with a lot of time to handle claim denials and follow-ups, leading to lost revenue for your medical practice.
Benefits of Using RCM Software
The healthcare industry is in the midst of a massive shift from fee-for-service models, which charge patients for the amount of treatments given, to value-based models, which charge more for better quality care. Because of this, providers seek to switch to new RCM solutions to match the modern changes in how they’re paid. In many organizations, this has led to the adoption of advanced RCM software.
Revenue cycle management systems are built to help you visualize the RCM process and understand where you’re at for every patient by storing all billing records in one secure system. By keeping all the data you need in one place, RCM software is able to streamline the process by:
- Automating reminders to your patients about appointments and upcoming payments.
- Allowing your patient to pay online, with links to payment pages directly on reminder emails.
- Helping you verify insurance and calculate co-pays faster, instead of waiting on the phone for long periods of time.
- Telling your employees exactly what information they need to add to avoid a claim denial.
- Helping you track any errors or missed steps in the RCM process to avoid wasted time on follow-ups later on.
Bringing revenue cycle management software to your organization can bring you some benefits beyond speeding up the process. It can actually improve your revenue by reducing claim submission mistakes and giving you insight into any trends that hurt your overall gross profit rate. Plus, it will give you the best insight into what your healthcare organization needs to do to improve your cash flow.
Frequently Asked Questions
Understanding revenue cycle management is no longer optional for leaders in the healthcare industry. To help you get a better handle on the complex process and the technologies that make it simpler, here are our answers to a handful of frequently asked questions:
1. How much does a standard revenue cycle management software cost?
RCM systems are not cheap. It’s fairly common for quality software to cost several hundreds of dollars per month. To alleviate the cost while still reaping the benefits, many healthcare organizations will actually join together to invest in a single, shared RCM system.
Other organizations will opt out of an RCM system altogether due to the hefty cost. Instead, they may choose to save their in-house resources by outsourcing some, if not all, of the most time-consuming duties.
2. How much does it cost to outsource my medical billing?
Many healthcare organizations choose the outsourcing route because this cost can be far more manageable than the price of a full revenue cycle management system. Medical billing services typically charge a rate of under 10% — sometimes as low as 3% — of the payments they help you collect instead of charging a flat fee that can be far over a smaller organization’s budget.
3. What are some examples of revenue cycle management systems I can use for my medical organization?
As the use of RCM software has grown in the healthcare industry, some systems have found more success than others. A few of the most popular vendors for revenue cycle management systems that healthcare providers use today include:
4. How do I ensure my practice remains HIPAA-compliant if I use a revenue cycle management software?
Most revenue cycle management systems, especially those widely trusted by medical professionals, will typically be designed to ensure your practice still complies with HIPAA. If you want to be completely safe, you can do extra research to make sure your software encrypts your patients’ medical records and billing information.
Earn Money to Keep Helping Patients
Keeping track of your revenue becomes a critical part of every healthcare provider’s life. As more and more organizations start charging based on the quality of services and healthcare expenses go up, you need to make sure your claims are submitted correctly, so you don’t lose profit due to little mistakes. When you have a solid handle on revenue cycle management and what resources you can use to make it easier, your claim denials will drop and your revenue will soar.
If you’ve got billing figured out and your biggest pain point is communicating with your patients, take a look at our guide to CareMessage, which uses mobile technology to offer you solutions.