What is Revenue Cycle Management in Healthcare?

Revenue cycle management is part of the healthcare industry’s processes. It helps organizations manage the financial aspects of a patient care system to ensure efficiency. Excellent patient care is crucial in this industry, but an institution’s financial health only comes last. That is why the healthcare industry needs revenue cycle management services.  Let us look deeper into the details, importance, and rising trend of outsourcing RCM tasks to specialized companies. 

What Is Revenue Cycle Management?

RCM in healthcare is the process through which healthcare organizations trace patient care episodes from registration and appointment scheduling to the final balance payment. It encompasses 17 unique steps typically broken down into three phases: intake, care to claim, and payment.

Order to Intake:

• Scheduling: This is the process of scheduling appointments for the patients.
• Pre-registration: Gathering patient information before the visit.
• Clearance: confirming insurance and eligibility
• Financial Counseling: Explaining the potential cost to patients.
• Online/In-person arrival: Confirm patient arrival and provide information.
• Pre-service payments: collecting any required payments before service.

Care to Claim:

• Level of care: determining the appropriate level of care if needed.
• Case management: coordinating patient care throughout their visit.
• Utilization review: ensuring that services provided are all necessary.
• Charge optimization: ensuring that all services provided are charged appropriately.
• Coding: Transplating services provided into billable codes.
• Acuity capture: Documenting the severity of patient conditions.

Payment Claim:

• Billing: Producing and sending out bills to patients and insurers.
• Patient payments: Managing payments received directly from patients.
• Denial management: Addressing and resolving denied claims.
• Customer Service: Responding to patients’ concerns and billing-related problems.
• Reconciliation: All payments are received, and the accounts are balanced.

The proper application of RCM ensures that healthcare providers are paid with minimal errors for services rendered. Its bottom-line purpose is thus to ensure proper collection and recording of correct information from third-party payers through timely contact with payers by charging only the patients for services rendered. The long-term goal of RCM is to facilitate accurate revenue collection such that cash generation loss caused by errors and defaulting claims is minimized.

Importance of Effective RCM:

Effective RCM will be crucial to an organization’s continued financial fitness. Revenue cycle mismatches will lead to lower patient and clinical satisfaction levels and a reputation damaged due to unnecessary denials. Bad debts will also accrue. Any healthcare provider – from small practice to large system – that does not hold RCM as a key priority will find itself unable to grow, increase the risk of the operations, and create uncertainty in the financials.

Outsourcing RCM

Due to the delicate and complex nature of the RCM, most hospitals have started considering outsourcing because it is a better answer.

• Expertise: acquisition of specialized knowledge and experience about the management of a revenue cycle.
• Efficiency: streamlined processes that can process increased volumes of transactions better and more efficiently.
• Focus: This allows healthcare providers to care for more patients than administrative work.
• Technology: Utilized sophisticated software and tools to increase precision and productivity in pharmacy billing and claims processing.

Conclusion

Revenue cycle management is a very critical function in the health sector. It ensures that the providers are paid for the care they provide. A good RCM process requires an elaborate process from patient scheduling to final payment reconciliation. The healthcare landscape will change with the introduction of new technologies and best practices in adopting RCM processes to keep healthcare organizations financially healthy and in a position to continue delivering high-quality care.