A successful medical practice requires many factors. Revenue cycle management is one of the most important.
Why revenue cycle management is important in healthcare?
Healthcare providers can ensure that they are properly and promptly reimbursed for their services by using revenue cycle management (RCM). This is not only beneficial for the provider but also for the patient.
Let’s first define RCM, before we discuss why it is so important to ensure reimbursement.
What is Revenue Cycle Management?
Revenue cycle management Software is exactly as it sounds. It’s a strategy that healthcare providers use to manage both the clinical and administrative functions of their revenue cycle. When a patient calls to make an appointment, the revenue cycle starts. Once all the payments have been received for treatment and appointment, the cycle is over.
Revenue cycle management aims to find any friction points in the provider’s revenue stream and resolve them. Care providers can increase their claim reimbursements by managing their revenue cycle effectively.
The Steps in the Healthcare Revenue Cycle
There are many steps to the healthcare revenue cycle. There are many areas where errors can occur. Errors in the revenue cycle could delay reimbursement to patients and insurers or even stop reimbursement.
Let’s take a look at the steps in the healthcare revenue cycle to get a better idea of the types of errors that can be made and the ways RCM can help prevent them.
- Pre-authorization – The healthcare provider collects information from patients to create a patient account. This includes collecting patient’s insurance information, and verifying their eligibility.
This step is important for revenue cycle management, even if the patient has an existing account with the provider. Ineligible or incorrect information will result in a denied claim in the revenue cycle. This can lead to a delay in provider’s reimbursement payment. This also means that the provider will have to spend more time looking through patient information in order to fix any errors.
- Charge Capturing and Coding-Charge capturing is the process of converting patient services into billable charges by using universally accepted medical codes. These codes are used by insurers to determine the amount of reimbursement.
The insurance company could deny a claim if the patient does not have proper medical code. It can lead to delayed provider reimbursement. The provider also loses time and money because denied claims must be investigated and appealed. A good revenue cycle management will ensure that coding errors are avoided and can be avoided.
- Claims submission – After a patient has been properly coded and their treatment is complete, the claim will be sent to the insurance company. RCM makes sure this happens quickly by monitoring and managing every step of the process.
- Payment collection – After the claim is approved by the insurance company, the provider receives reimbursement based on eligibility. The provider must contact the patient to collect any balances after receiving insurance reimbursement.
By streamlining the claims processing, revenue cycle management speeds up patient payments. Patients will be able to see upfront what out-of-pocket expenses they are responsible for by RCM’s increased focus on front-end tasks such as eligibility verification and insurance eligibility verification. This helps avoid delays in receiving the final payment.
- Review of medical service– Care providers should analyze the clinical treatment data. This data can be used to identify areas where there are errors and to help reduce expenses. This will increase provider revenue and improve patient experience.
The Benefits of Revenue Cycle Management
A good revenue cycle management will ensure that these steps are done accurately and thoroughly to avoid revenue loss or delays.
RCM’s main purpose is to increase provider revenues, but it also delivers other benefits. These benefits are not only for the providers, but also for the patients. This makes revenue cycle management even more valuable.
Let’s look at some advantages of revenue cycle management.
Identifying, Resolving, and Correcting Errors
Healthcare providers will be able to identify errors in the revenue cycle more easily by implementing RCM. RCM allows healthcare providers to identify where errors are occurring in the revenue cycle and reduces the chance of claims being denied. 1
Providers receive reimbursements quickly if these errors can be avoided and the claims are approved within 24 hours of their initial submission. Providers don’t need to spend additional money to appeal denied claims.A claim denial prevention program can lead to an additional $5 million in revenue for an average hospital. 2 Healthcare providers should ask how they can improve their revenue cycle management.
Decreasing Administrative Burden
Administrative burden is reduced by avoiding claim denials. Administrative staff don’t need to waste time appealing denied claims and investigating them. This allows for more time and energy to be used for patient care.
RCM’s focus on the front-end tasks makes it easier for patients and administrative staff to interact. To make the experience more pleasant for everyone, RCM streamlines appointment scheduling, intake forms completion, and payment processing.
Avoiding Healthcare Fraud
RCM also prevents healthcare fraud and abuse. Healthcare fraud is a huge problem that costs the industry billions every year. An investigation into fraud can result in a loss of revenue and reputation for a provider.
Incorrect medical coding can lead, whether intentionally or not, to investigations into healthcare fraud. Billing for:
- Services not rendered
- Procedures that are not medically necessary
- Services rendered by unqualified or improperly supervised employees
- Tests or procedures of low quality
Also, providers may upcode procedures. If you request a higher reimbursement rate, it is called upcoding.
Revenue cycle management emphasizes accurate data collection, billing and coding so providers are less likely to submit incorrect information to insurance companies. RCM is able to keep providers current with changing healthcare regulations, so unintentional fraudulent submissions are not an issue.
Healthcare fraud can also stem from patient dishonesty. Two ways this can occur:
- Incorrect information A patient might lie about their insurance coverage to get the treatment they need. But, insurance verification is an important step in revenue cycle management. Administrative staff will quickly detect any incorrect insurance information.
- Engaging with medical identity theft Increasing concern in the healthcare sector is medical identity theft. It can be costly for both the victims and providers. Any identity theft that occurs early in the revenue cycle management process will be identified and dealt with immediately.
Additional steps can be taken by medical providers to verify the identity of patients during the pre-authorization phase.
Increasing Healthcare Facility Revenue
Healthcare providers can quickly receive reimbursements for their services if they avoid technical errors, claim denials, or fraud investigations. They can also avoid spending thousands on errors resolution, appeals, and investigation of fraud.
Providers can use their extra revenue to invest in patient care. Quality patient care is the top priority for any healthcare provider.
RCM: A valuable tool for patients and providers
Why is revenue cycle management so important?
RCM’s ultimate goal is to increase provider revenue. This will benefit the patient more than anyone else. The revenue cycle management improves provider revenue and decreases time spent on clinical and administrative functions. This results in more time and money being devoted to patients and their treatment.
Many providers trust Payments. Our expert negotiators will ensure that you have the right tools to create a smooth revenue cycle. Our team is experienced, thorough, dedicated, and committed to ensuring that healthcare facilities offer the best possible patient care.