Insurance Basics and the Revenue Cycle

Revenue cycle management (RCM) is the process healthcare organizations use to manage financial operations related to billing and collecting revenue for medical services. RCM begins when a patient schedules an appointment and ends when the account balance is resolved through reconciliation of insurance payments, contractual adjustments, write offs, or patient payments.

What is the overall goal of RCM?

The overall goal of RCM is to increase and ensure accurate revenue throughout the various processes of the cycle by identifying points of deficiency and then improving or eliminating those deficiencies. There are additional benefits to efficiently managing your revenue cycle, such as providing a structured, active approach to finding and addressing potential compliance issues like fraud, waste, and abuse. For example, a practice may discover that a provider is ordering unnecessary tests and procedures, and the practice can then address that issue to ensure the organization is complying with applicable rules.

Why healthcare RCM is important

Whether performed in-house or by an RCM services provider, RCM is important because of its essential role in the day-to-day operations of healthcare organizations. Without effective RCM, practices and facilities are likely to lose reimbursement, which could put the entire organization at risk. That reality translates to RCM processes having a significant impact on the overall functioning of the healthcare industry.

Benefits of healthcare RCM:

• RCM closes the gap between the patient accounts side and clinical side of healthcare. For instance, RCM links demographic data (patient’s name, insurance provider, and other personal information) with the treatment a patient receives.
• A well-designed and proper RCM system streamlines the billing and collection cycles by accurately pre registering, making appointments for, and scheduling patients; collecting existing balances; processing payments; and questioning insurers when they deny claims.
• The healthcare team (including providers, managers, and specialists in billing, coding, and preauthorization) communicates using accounting systems and electronic health records (EHRs). Using EHRs becomes easier with the help of RCM software or systems. This streamlining improves the turnaround time associated with offering a service and receiving payment for it, along with reducing administrative overhead costs.
• RCM systems allow healthcare staff to enter all the information required for claims processing, which helps prevent the need to revise or resubmit claims. Reducing denied claims saves providers time and money.
• RCM improves the patient care process, creating a better experience for patients. For example, through insurance eligibility verification, patients will know of any balance or financial expectations from the beginning.
• Accurate billing and coding, as well as understanding the reason for denials, help improve the patient experience through appropriate charging, which leads to fewer denials. This accuracy leads to less stress for the patient and healthcare provider.
• RCM systems enable patients to pay their bills online, and healthcare providers can use RCM systems for preserving and managing patients’ billing records.
• RCM depends on documentation to support the medical necessity behind the charge. Patient safety is improved because the correct documentation leads to better overall quality of care for the patient. Many clinicians review the patient’s chart to ensure clear documentation, which provides a better overall picture of the patient problem.