What Is Revenue Cycle Management (RCM)?

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

Steps for an Effective Revenue Cycle

Appointment Scheduling: This is when the office sets up a time for the patient to see the doctor and collects patient data like their name, contact information, and insurance coverage.
Registration: When the patient arrives, they check in and the office verifies their insurance and collects more information.
Charge Capture for Services: After the patient sees the doctor, the office uses medical terminology to record what was done and why.
Billing: The office sends the insurance company a bill, called an insurance claim, to get paid for the services provided. They also send a bill to the patient for any amount not covered by insurance.
Denial Management: If the insurance company denies the claim, the office figures out why and fixes the problem so they can get paid.
Accounts Receivable (A/R) Follow-Up: The office keeps track of unpaid bills and follows up to make sure they get paid.

Each step helps make sure the doctor’s office gets paid correctly and on time.

The Overall Goal of RCM

The goal of RCM is to make sure doctors get paid the right amount for their services. It helps find and fix any problems that might cause delays or mistakes in billing. This way, the office runs

smoothly, and patients get the care they need without any hassle.

Why Healthcare RCM Is Important

RCM is important because it helps doctors’ offices and hospitals manage their money. Without good RCM, they might not get paid properly, which could cause financial problems. RCM helps keep everything in order so doctors can focus on patient care.

Benefits of Healthcare RCM

Closes the Gap Between Patient Accounts and the Clinical Side: RCM links patient data, like their name and insurance provider, with the treatments they receive.
Streamlines Billing and Collection Cycles: A good RCM system helps schedule appointments, collect payments, and handle denied claims quickly and efficiently.
Enhances Communication: The healthcare team, including doctors, managers, and billing specialists, uses RCM systems to share information and work together.
Improves Turnaround Time: RCM speeds up the time it takes to get paid, reducing administrative costs.
Prevents Need to Revise or Resubmit Claims: RCM systems help staff enter all the necessary information correctly the first time, so they don’t have to fix mistakes later.
Improves Patient Care Process: RCM helps verify insurance coverage before the visit, so patients know what they need to pay upfront.
Ensures Accurate Billing and Coding: RCM helps prevent errors in billing and coding, which means fewer denied claims and less stress for patients and providers.
Allows Online Payments: RCM systems let patients pay their bills online, making it easier for everyone.
Supports Documentation for Medical Necessity: Proper documentation in RCM leads to better patient care because doctors have all the information they need.
Simplifies Reporting and Data Analysis: RCM systems make it easy to track and analyze data to ensure the billing process is working well.

Challenges Associated With Healthcare RCM

RCM has challenges like coding, billing, compliance, credentialing, data analytics, and integrating paper charts with electronic health records (EHRs).

RCM Challenge 1: Coding Precisely and Billing Accurately

For smooth cash flow, healthcare organizations must have precise medical coding and accurate billing. These are separate processes, but both are crucial to receiving payment for services performed. Medical coding involves extracting billable information from the medical record and clinical documentation, while medical billing uses those codes to create insurance claims and bills for patients.

The coding and billing processes must be effective and carried out with extreme caution due to the complexity involved. Errors and improper knowledge result in revenue leakage. Denials resulting from medical coding errors equate to lost time and lost revenue because additional office staff time is needed to correct and resubmit follow-up claims. Also, consider the added costs for items such as postage for mailed claims, paper, and envelopes.

The coding and billing process in healthcare can differ from organization to organization. Some practices use one staff member as the biller and the coder. Other practices have billing separate from coding.

Outsourcing medical coding and billing services to a trusted company is another option for ensuring that providers have well-qualified specialists working to obtain accurate payment. In any case, the coder researches and determines which medical codes are appropriate to assign after reviewing the documentation.

The relationship between medical records documentation and billing is essential. To support reporting the most accurate ICD-10-CM, CPT®, and HCPCS Level II codes, documentation should be clear, precise, and thorough. When reviewing documentation, coders should ask themselves, “Does the documentation support the coding?”

Once the codes are assigned, the biller will then perform charge entry and bill the charges to the payer. Charge entry includes ensuring that a patient’s correct insurance and demographic information is entered into the billing system. The coder also verifies that the assigned procedure and diagnosis codes correspond to the correct physician on the date of service.

Both medical coding and billing require specialized knowledge of coding guidelines, payer preferences, and more, and the rules change frequently. Organizations should administer assessment tests for medical coders and billers before hiring and may conduct drug screenings to ensure that staff members do not perform duties under the influence. Organizations should also provide their coders and billers with training sessions to keep knowledge and processes up to date.

Stay Informed on Career Paths in Billing and Coding

Stay informed with insights from the Bureau of Labor Statistics (BLS) and the Academy of Professional Coders (AAPC) on career paths in the billing and coding industry. The BLS provides valuable data on labor statistics, which can guide individuals interested in a billing and coding career. The AAPC, an academy of professional coders, offers certification for medical billers and coders, such as the Certified Professional Coder (CPC), which is essential for those pursuing a career in this field.

In conclusion, revenue cycle management is an essential part of the healthcare industry. It ensures that healthcare organizations receive correct and timely payments for the services they provide, helps improve patient satisfaction, and supports the financial health of the practice. By understanding and addressing the challenges associated with RCM, healthcare organizations can optimize their revenue cycles, comply with regulations, and provide better patient care.

What Is Revenue Cycle Management (RCM)?