The #1 priority for hospitals, healthcare systems, and medical practices is caring for the health and well-being of patients through routine, preventative, emergency and life-saving procedures. But to overcome obstacles, stay financially healthy, and maintain continuously high patient-care quality, healthcare organizations must adhere to rigorous, often time-sensitive policies and rules
Recent data from Kaufman Hall revealed that median hospital operating margins fell 71% from December 2021 to -3.68% in January 2022. In addition to declining operating margins, hospitals and other healthcare systems have been facing a range of other problems, including:
- Increased length-of-stay
- Increased labor costs per discharge
- Decreasing operating room minutes
This is precisely where revenue cycle management comes in.
What is Revenue Cycle Management?
Revenue cycle management (RCM) is a financial process that uses medical billing software in healthcare facilities to track payments, scheduling, and general processes for patients. Having a refined revenue cycle management process improves practice efficiency and patient engagement, so having an RCM process in place is essential.
The healthcare RCM process begins when a patient makes an appointment. The process ends once the organization collects all claims and patient payments. However, the patient’s journey and the life of their account with the healthcare organization aren’t always as straightforward as they may seem.
Learn about the steps involved in healthcare revenue cycle management and the benefits this process offers below.
What Steps Are Involved in Healthcare Revenue Cycle Management?
Pre-registration is the first step in the RCM process. This step involves capturing the patient’s demographic information, insurance information, and eligibility in real-time. This information flows through the practice management system, is passed to the patient’s insurance carrier, and then flows back to the provider. The practice management system is where the provider receives details about the patient’s insurance coverage, including the deductible, co-payment, and whether or not a referral is needed.
Pre-registration is what sets the whole revenue cycle management process up for success, so it’s not a time to drop the ball.
Registration occurs once the patient arrives for their appointment. This step includes confirming the patient’s contact and insurance information, such as:
- Date of birth
- Home address
- Phone number
- Email address
- Insurance information
This information is what enables you to contact the patient with billing and other important information. Even though you’ve likely collected this information during the pre-registration stage, it’s important to confirm its accuracy at every subsequent visit.
3. Charge Capture
During the charge capture stage, details about the service(s) the patient received during their appointment are sent to billing. There are two generally accepted methods to approach this stage:
Automated: The patient’s medical service history is automatically pulled from the documentation that was created during the patient’s registration. This method may involve an electronic health record system (EHR), which saves time while reducing data entry errors. EHRs enable more accurate coding and documentation, leading to improved charge capture and collections.
Manual: Manual charge capture involves the receptionist manually entering the patient’s appointment information and service history into the practice’s system and sending it to the billing department. Once billing receives the charge capture, they will be tasked with seeing the billing process through to completion.
4. Claim Submission
Assuming all charges have been captured and accurately coded, the claim is then sent to the patient’s insurance provider. Charges are determined by the rates applicable to the medical code or codes attached to the claim.
The insurance provider will quickly complete the payment if the claim is completed correctly. However, if there are coding or other errors on the claim, the insurance company may send the claim back to the medical provider to be updated.
5. Remittance Processing
Remittance processing is the next step in the revenue cycle process. After the practice’s claims have been approved, they will receive remittances. These are explanations of benefits showing the practice what it was paid for the service(s) provided.
The remittance step is also when allowables are determined. The term “allowables” refers to what the provider has contracted with the insurance company for a specific service provided. The provider and carrier negotiate a contract, and the insurance company will confirm how much it will pay for the service.
Fee schedules are another important element in the remittance process. They are documents showing the amounts the practice or hospital charges for each of its services. Providers will want to review their fee schedules on a regular basis to ensure they’re aligned with adjusting insurance rates, contracts, and allowables. Not reviewing your fee schedules may mean leaving money on the table.
Write-offs are the last piece of the remittance puzzle. There are two types of write-offs, contractual and non-contractual. A contractual write-off is not preventable. It’s a type of write-off that involves contracted rates with insurance carriers and payors. Non-contractual write-offs, on the other hand, are avoidable. These are write-offs that result from an error or breakdown in the remittance process. Avoiding non-contractual write-offs is possible by carefully reviewing reports for red flags like no authorization, no referral, or a claim not being submitted in a timely manner.
6. Insurance Follow-Up
If the insurance company doesn’t process payment in a timely manner, correspondence will need to continue so you can gauge what has been paid vs. what hasn’t. Following up with the insurance agency can also reveal barriers that are getting in the way of the company’s ability to pay. For example, the insurance company may delay or avoid payment if they’re negotiating a contract with the medical facility or the patient.
7. Patient Collections
Patient collections is the final step in the RCM process. Patients will typically have to cover some of the costs on their own. If the insurance contribution is calculated up front, it’s easiest to have the patient make any necessary payments during the registration stage. Once a patient leaves your office, it can be very challenging to obtain payment.
See how Acqueon’s Epic EHR Connector can help you increase collections, lower costs, and provide better patient experiences.
Benefits of Revenue Cycle Management in Healthcare
Better Patient Experience
Proactively engaging patients during the revenue cycle management pays off. Your hospital, healthcare system, or practice won’t have to chase patients down, send them to collections, or write-off their files, if you proactively notify them of upcoming payments. Giving patients the option to utilize self-service features and pay their bills online streamlines the payment process. This improves the patient experience and leads to higher retention and lower patient churn rates.
The RCM process enables you to automate tasks that would normally take hours to complete. This extra time means your facility can register more patients, expedite the billing and claims processes, and more effectively communicate with insurance providers. And when you catch problems in your RCM process early and solve them, you benefit from a tighter, more efficient process which can result in improved collections for your business.
Not only will patients be more satisfied because of simplified and streamlined processes, but your staff will, too. Scheduling appointments will be easier appointment adherence will improve, data entry errors will reduce, and much more.
Improve Your Revenue Cycle Management Process Today
The revenue cycle management process is a critical element of the financial literacy of any healthcare practice. Now more than ever, medical practices and other healthcare organizations can’t afford to rely on inefficient, outdated financial practices. By taking the time to streamline these complex financial processes, healthcare organizations will be better prepared for long-term success.
Acqueon’s solutions for healthcare can help you collect more revenue and improve operating margins. Explore our patient engagement & Revenue Cycle Management solutions to learn more