Revenue cycle management (RCM) is the process of getting a healthcare provider paid for the medical services and treatment they provide to patients from both the administrative and clinical side. It consists of everything from patient registration and pre-authorization to medical coding and claims submissions, all the way to reporting and the processing of the final payment.
The RCM process is complete when the balance on the patient’s account becomes zero and the healthcare provider is fully reimbursed for all the medical care they have provided to the patient. Healthcare revenue cycle management includes handling claims, generating medical bills, processing payments, and ultimately generating revenue in the healthcare industry.
The Healthcare RCM Process
There are many steps to the revenue cycle management process. They include:
Step 1: Insurance Eligibility Verification
At the initial stage, the healthcare provider needs to determine whether the patient has adequate valid insurance coverage to schedule their appointment.
Step 2: Collect Co-Pays and Overdue Balances
The healthcare provider is responsible for collecting a fixed amount from the patient on their first visit or any amount that is owed from a prior visit, if the amount was not covered by the patient’s insurance policy.
Step 3: Medical Coding
The treatment, procedures, and medical diagnosis needs to be properly coded and entered into the system by following standard CPT and ICD-10 coding guidelines.
Step 4: Claim Creation and Submission
Claims need to be generated either manually or electronically, validated, and submitted to either the clearinghouse, insurance provider, or other claims vendors.
Step 5: Managing Denials
At this stage, claims need to be corrected for errors and then resubmitted or additional information may need to be collected to ensure that the claim is now complete. Some insurance providers may follow specific appeals processes or deadlines for a claim to be successfully reconsidered.
Step 6: Claims Follow-Up
The healthcare provider will need to follow-up with the payer via phone, online, or email so that the claim may go through successfully and be reimbursed on time. Following up will substantially reduce A/R days and eliminate any financial burdens for the patient.
Step 7: Final Bill
The final costs and charges need to be sent to the patient in the form of a printed or electronic bill. It should contain information like the amount owed, a breakdown of the fees, and the date of the procedure.
Step 8: Payment Collection
Payments need to be collected from the patient at this stage. Online banking and mobile banking are 2 options that can simplify this process for them so that they do not need to appear in person to settle their bills.
Step 9: Reporting and Data Analysis
All financial and patient data will need to be processed and aggregated at this stage into meaningful insights in order to improve business operations from reducing A/R days to increasing collections to improve the healthcare provider’s financial performance.
Why Is Outsourcing RCM Important for Healthcare Providers?
Without RCM, medical practices and hospitals would find it hard to get paid for the services they provide. This is especially the case because health insurance needs to be factored into the equation as patients do not carry the entire responsibility for covering medical expenses on their own in the US. Doctors would be overwhelmed with considerable administrative and financial responsibilities, while also needing to attend to their patients with high quality medical care, if RCM was not outsourced.
What Are Some RCM Challenges That Healthcare Providers Face on a Regular Basis?
Billing and Collections Inefficiencies
Medical billing and collections involves many moving parts, which makes it difficult to manage. Throughout the collections and billing processes, even the tiniest of inefficiencies can result in very costly claims denials, rework, or revenue loss. If medical bills and claims are not accurate or complete, denials are not properly managed, or A/R is not followed up on in a timely manner, this could lead to significant revenue leakage.
Inaccuracy of Patient Registration Data
Collecting accurate patient registration information is important for an RCM and billing system to do its job efficiently. Without accurate data, claims would be denied, and reimbursement lost in the process. Because entrusting patient registration to a human being may be a bad idea given how we humans are prone to human errors like lack of focus, outright confusion, and laziness – automating patient registration would solve this problem. Leaving the collection of valuable and critical patient data to software will help your practice bring in more revenue as errors are reduced, if not completely eliminated, during the data collection process.
Limited Insurance Eligibility Verification
Healthcare providers often end up facing delinquent patient accounts and fewer A/R reconciliations because the patient’s insurance coverage was not properly verified ahead of the scheduled appointment.
Insurance eligibility needs to be verified upfront so that patients without coverage do not enter the system and result in a steady flow of denied claims for your practice. Because insurance verification is time-consuming and labour-intensive, more efficient methods of assessing insurance coverage need to be leveraged instead.
Erroneous Charge Capture
Another challenge that healthcare providers routinely face involves managing charge capture data effectively. Good hospital revenue cycle management relies on collecting accurate and up-to-date pricing for medical services so that the medical bills that are generated cover the right treatments and their related charges.
RCM specialists also need to follow the strict billing guidelines set by Medicare and other payers, which untrained personnel would not be able to pull off. Proper training in the metrics and documentation required, as well as how to complete charge capture accurately, is a major challenge for hospitals.
Better Communication Between Physicians and Financial Staff
It is common for physicians to lose touch with the financial state of the medical practice when they are so busy trying to properly treat their patients and reduce their pain. The burden falls on the administrative and financial staff to look into ways to reduce A/R days and increase collections, but doctors at the practice have no clue of what is happening behind the scenes. To get both parties on the same page, however, can be quite a challenge.
Benefits of Outsourcing RCM Services
Hospitals and medical practices look into outsourcing their RCM services because of the many challenges that outsourcing would solve. From reducing errors in collecting accurate patient registration information to generating the right CPT and ICD-10 codes so that claims are not denied or rejected, outsourcing healthcare revenue cycle management can be a smart move and prove to be effective in raking in more revenue. Some of the other critical benefits of outsourcing these services may include:
More Timely Reimbursements
Since outsourcing your revenue cycle management means that professional billing agents will be working around the clock to process your reimbursements, you can rest assured that you will be getting reimbursed for all the medical care you provided in considerably less time. Moreover, since the RCM process does not involve any of the medical functions, your outsourcing partner does not have to wait around, but can instead collect and validate all patient information, confirm insurance eligibility, and process payments independently to make sure that you get paid on time, and in full.
Prioritize Patient Care
Because your healthcare revenue cycle management partner is in the business of getting you paid, you can then focus your entire attention on providing your patients with the best medical care they could possibly receive.
By outsourcing your RCM, professional agents will be the ones keeping tabs on claims and ensuring that you meet compliance requirements, leaving you with less distractions and more time to focus on what really matters. Not only will your medical diagnosis and intervention meet a higher standard, your patients will also leave feeling like they were a priority to your practice.
Require Less Administrative Staff
When your RCM partner takes care of routine RCM activities like registration, billing, collections, denial management, coding, and insurance eligibility verification, you can downsize your workforce and only hire medical and clinical staff, instead of administrative staff as well. Less staff to manage also means that you can focus on your medical practice, rather than worry about financial pressures and performance, which you can leave for your RCM partner to handle.
Reduced Billing Errors
With highly trained staff and state-of-the-art technology at their beck and call, your RCM partner will never commit any billing errors that can result in revenue leakage such as entering incorrect patient names or entering the wrong CPT codes. This works in your favour as your medical practice can then look forward to improving your reputation in the healthcare industry and attracting more business long term.
Improved Cash Flow
With your outsourced healthcare RCM partner, doctors will no longer need to be anxious about administrative work. As insurance verification and AR collections become their responsibility, no follow-up from your side will be needed, which will positively impact cash flow into your organization.
More Predictable Revenue Stream
Fewer interruptions in cash flow arising from multiple parties attempting to manage your RCM functions will also lead to a more secure and predictable revenue stream. As only your RCM partner has access to your financials, you can breathe easier knowing that every patient that registers with your practice will be duly taken care of and that their expenses will easily be converted into payments for your business, without you needing to get involved in any way.
Greater Compliance
An outsourced RCM partner can help you better meet compliance requirements as they are experts in that field. Regulatory changes and compliance issues will no longer be your concern as the experts will be introducing and managing administrative workflows related to compliance activities on your behalf. Payer policies, industry regulations, and compliance will be monitored and handled without any complications or delays, so that you can focus on providing the best patient care.
Streamlined Operations
It is a common misconception that outsourcing your RCM requirements will result in you losing control of your medical practice and that revenues will be affected negatively as more resources are brought on board. The exact opposite is true, however. An RCM partner will act as an extension of your business and give you greater transparency into your business operations as well as help you better control your resources.
Outsourcing your RCM will help streamline your operations such that redundant tasks are removed, and greater efficiency is achieved with the remaining processes.
Increase in Accounts Receivables (A/R) Reconciliations
It is important to follow-up on Accounts Receivables to keep your practice’s financial health in check. An effective healthcare revenue cycle management partner will follow-up on A/R reconciliations from insurance providers to make sure that you are getting the revenue that was owed to you by providing the medical care and treatment needed for your patients.
Stronger Financial Performance
Your practice will benefit from stronger financial performance when you outsource your RCM as you are able to reduce your overheads by cutting salaries that you would have needed to pay for an internal team of specialists. Think of all the investments you no longer need to make in infrastructure, resources, and technology when an outsourced team of RCM experts take care of your financial processes and responsibilities for you.
Healthcare RCM is a complex process that can be riddled with costly inefficiencies that can negatively impact a healthcare provider’s financial performance over time. It often pays to outsource RCM services because the healthcare revenue cycle management partner you bring on has extensive experience in increasing collections, achieving greater compliance with industry regulations, and improving cash flow by plugging different sources of revenue leakage.
Some other benefits of RCM outsourcing can include stronger financial performance and reduced billing errors arising from having trained professionals handle claims and denial management for you. If your practice could use some help in better handling your financial burdens and processes, trust an outsourced RCM partner to bring in the efficiencies your organization needs to stay competitive.
Who We Are and Why We Are an Industry Authority?
This article is brought to you by OutsourceRCM, an enterprise-grade solution provider for your end-to-end revenue cycle management requirements. We have witnessed many transformational changes in the healthcare industry over the 10 years we have been in business devising RCM solutions for our clients. It is through our vast experience that we are able to help our clients plug sources of revenue leakage, achieve greater compliance and address costly inefficiencies in their processes.
