What Is Revenue Cycle Management in Healthcare?
Revenue Cycle Management (RCM) is the medical billing procedure that streamlines the reimbursement process for healthcare services given to patients. It covers everything from an individual’s initial service to the receipt of payment for each service. Effective RCM requires a strategic approach to optimize financial performance.
The revenue cycle process in healthcare looks like this:
- Registration: The first step in the patient financial process is demographic intake and proper entry of demographic data that includes elements such as the patient’s name, address, and insurance information. Incorrect entries impact claim accuracy, which may lead to denials by the carrier. Ultimately, the rendering provider of service bears the weight of the compliance and accuracy of each claim, which requires reliable staff to ensure information is up-to-date at every encounter.
- Medical coding: After each patient encounter, a code is required to properly convey the performed services to the payor for reimbursement of treating their beneficiary. Coding often occurs in different ways across organizations, with some having medical coders who consider the documentation and append the code and others who rely on the provider to code each encounter. While either process can be appropriate, the importance of correct and thorough coding is vital to claim payment and the associated reimbursement for the service.
- Medical billing: The services are then ready for claims creation and submission to the payor for reimbursement. However, the medical billing team may add additional reviews to the submitted information to consider billing-specific concerns noted through claim scrubbing. The claim is then finally submitted — however, this does not ensure reimbursement of the service. A payor-specific policy may lead to the rejection or denial of a claim that will belabor reimbursement. The work of the billing team has just begun, as post-submission work might include claim rejection and reprocessing, denial of the service, and a patient collection process related to coinsurance, claims responsibility, and deductibles. The RCM process is not complete until the claim has been paid in full or adjusted as non-collectible in some instances.
By focusing on these elements, medical practices can reduce costs and improve revenue, ensuring financial stability and a better patient experience.
