Revenue cycle management is a critical concept for health care businesses to understand and work to optimize. When you rely on the right revenue cycle management solutions, you can lower your costs, increase revenue and also boost the patient experience.
Before you invest in a modern RCM solution or platform, it’s good to know why you need it, which can guide you in the buying decision.
For example, features that you should look for in an RCM solution include better billing management and visibility, data reporting and analytics, and features that help you understand what’s impacting your cash flow.
With that in mind, the following are 5 essential things to know about RCM.
1. What It Is
Revenue cycle management or RCM is a term that includes billing, payment processing, handling, and revenue collection.
A revenue cycle is a process that repeats and starts with billing customers and then ends with the collection of payments or writing a bill off.
In many businesses, this process happens instantly. For example, when a customer buys a product from a store, they usually pay, and that completes the cycle. In medical businesses, the process is more complex.
After a patient makes an appointment, then there’s scheduling, verification of insurance coverage and the establishment of a patient account, just to start.
2. The Steps
The steps of the revenue cycle usually include a few processes.
These may begin with charge capture, which is when a physician details a care episode and then that’s included in a medical claims system for reasons of billing. Usually, a charge capture system communicates with an EHR system.
Coding is another step in the process. Medical codes are recorded by coding specialists, and then once a claim’s submitted, an insurance company uses the code to determine what they’ll reimburse.
During the claims submission process, a provider will send a claim asking for payment from the insurer based on set rates. Accuracy is very important here, and if there is an inaccuracy, a claim might be rejected.
There is often communication with billing managers and insurers.
Once an insurance reimbursement is received by the care provider, then the patient is billed for whatever is leftover.
3. The Challenges
Health care providers have to make sure they’re completing the cycles of revenue management quickly and accurately if they’re going to maintain cash flow.
However, with how complex RCM is, it’s difficult to avoid errors and delays.
One of the biggest problem areas occurs during claims submission.
If a claim is submitted with the wrong code or data isn’t accurate for a patient, there may be a delay in reimbursement, or it may be denied altogether.
There’s usually around a 10% claim denial rate for the average hospital.
Collecting payments can also present challenges. Patients are having to pay more and more of the share of their health care because of rising costs. Patients might not be able to make payments in a timely way, especially if they have a high-deductible plan.
Another separate area that creates challenges in RCM is the regulatory environment. Health care regulations change constantly, and it’s hard to stay consistent with financial practices in a constantly changing environment.
4. The Benefits of Operating an Efficient RCM Program
When a health care business invests the time and resources to run their RCM program effectively and efficiently, they’re going to see quite a few benefits.
The biggest benefit is improved revenue. Money will be more consistent and will come in faster, and there should also be lower expenses. The primary goal of RCM is improving financial performance.
With a well-run RCM program, you can also see where there are inefficiencies and you can solve them. It’s also simpler for everyone when the system is operating as it should.
5. Technology Helps
Taking advantage of technology is the best way to have a well-run RCM program.
Spending on revenue cycle management solutions is currently in the billions and is likely to keep growing.
Technology helps solve many of the common issues through automation.
For example, there’s better communication, improved billing processes, and fewer human errors as a result.
With automated software solutions, employees can focus on areas where they’ll be able to add value, rather than doing administrative work or going back to correct errors.
Healthcare revenue cycle management is going to continue to grow in importance as the changes in healthcare also evolve. It’s an important time for professionals in the healthcare industry to understand the relevance of RCM.
