Why is Revenue Cycle Management Important?

RCM is an important primitive function of any practice. It is the soul and blood of the company. Without RCM, there would be no money flow into the clinic, with the practice being deprived of much-needed cash flow for its very existence and growth. RCM is an important part of a healthcare organisation’s structure and operations. The administration of the healthcare organisations wants to render optimal care to its patients and do so easily if the best RCM services are utilised.

Why is RCM in Healthcare So Important?

1. A well-researched and successfully implemented revenue cycle management (RCM) will reduce the billing and collection cycles by correctly registering, appointing, scheduling, and processing payments.
2. RCM attaches administrative data (patient identity, insurance plan, and other pertinent patient demographics) to the care that the patient is receiving. Elevate your healthcare expertise at London’s premier hub for training and consultancy excellence.
3. It saves on both administrative costs and patient time, thereby enabling payment online and reducing claim denial.
4. It bridges the gap between healthcare's business and clinical sectors.
5. These healthcare set-ups manage and maintain patient billing information through RCM systems.
6. Integration of EHR and billing systems shortens the time span between giving a service and being paid while also reducing related administrative costs.
7. RCM fosters communication and interconnectivity between accounting and EHR systems.
8. RCM covers all administrative responsibilities, from notifying patients about their upcoming appointments to sending reminders about outstanding balances to patients and payers to contacting the insurers when a claim is denied.

Steps in a healthcare revenue cycle

The revenue cycle in healthcare involves repetition; one phase follows the other, and then it returns to its starting point. There are these main steps involved in the process for healthcare organisations:

1. Patient Registration and Scheduling

Enrolment of the new patient, an update with information, and scheduling an appointment for service is the first part of a healthcare revenue cycle. This step is most important, as it enables the practice to possess accurate and up-to-date information related to the patient that is necessary for treatment, billing, and reporting.

Scheduling is merely the setting up of appointments for patients to come in and receive these services. This might be accomplished by front-office staff or through a patient portal or application. The reason why scheduling is crucial in the revenue cycle is that optimum schedule density enables physicians to spend the time they want with patients while still allowing them to see the greatest number in a given day. Strategic scheduling will help with revenue and may improve health outcomes by enabling the patient to engage in care continuously.

2. Insurance Verification and Eligibility

This is the next process in the healthcare revenue cycle where the patient's insurance is verified. It is necessary for the providers to know if the patient has had any active insurance policy and what the coverage conditions are since this would matter in how much your practice will be reimbursed by the patient for the services. It would prepare the patient, too, in the matter of how much will have to be paid out of pocket, and it is always better to inform them in advance rather than afterwards.

3. Medical coding and charge entry

When services are rendered, they have to be coded accurately. Medical coding is the translation of medical procedures, diagnoses, and services into standard codes for billing and reimbursement purposes. This may be achieved by a human medical coder or partly automated by a healthcare IT platform. For example, some integrated healthcare platforms allow providers to select from pre-populated codes during the patient encounter or leverage language processing-enabled tools to scrape clinical documentation to produce codes automatically.

Charge entry: Charge entry is the process of coding the relevant information into your organisation's billing system. Adequate charge entry will help reduce cases of denied claims, underbilled, or overbilled charges.

4. Claims Submission and Processing

Where claims are correctly coded, the next stage is submitting them to the insurer for reimbursement. Submission of claims is now commonly completed via electronic means, such as through a revenue cycle management platform or a clearinghouse service. Artificial intelligence and machine learning have also made some strides in this area. For example, athenaOne customers benefit from the knowledge and data accumulated by the network representing over 150,000 providers, through whom a combined total of over 290 million claims are annually filed. Such details have elevated athenaOne's clean claim submission rate to 98.4%, making it the best in the industry.

Submitting clean and accurate claims has a very significant impact on the revenue cycle in that claims will achieve the first-pass approval most of the time, thus shortening the entire cycle, reducing subsequent work, and improving the bottom line.

5. Posting and reconciliation of payments

Posting payments refers to payment recording and reconciliation concerning the payment received from insurance companies and patients for the health care services carried out regarding a patient's treatment. Reconciliation is comparing the payment recorded for the expected payment. Payment posted should include proper financial records and all payments accounted for in the revenue cycle of the healthcare organisation. It is also equitable to realise that this work does not necessarily need to be executed with house resources. For example, there are some technology platforms like athenaOne that will offer taking on such actions and assure verified data is populated within the system.

Benefits of a Successful RCM Process

Richly benefits hospitals and health systems through a strategic management process relating to the revenues. On the other hand, poor management and practice along these lines can financially hurt the organisation and may result in the inability to stay in business. Streamlining operational procedures will also help the organisation maintain financial viability and focus on providing a superior patient experience as the U.S. healthcare system moves towards value-based reimbursement. These include benefits within an effective RCM process to hospitals and health systems:

1. Time commitment reduction: RCM saves time for an organisation by streamlining activities, from pre-registration and registration of patients to appointment and payment reminders to engaging payers about claims and denials.
2. Less error and redundancy: RCM can aid hospitals and health systems in the time-critical detection of errors, which could quickly be corrected.
3. Cost reductions: Time commitment is diminished; error probability is also reduced, a course of action, and thereby associated revenue management costs will also fall.
4. Fewer denials: RCM reduces the denial rates from reduced or eliminated errors in payment claims; thus, payments are expedited to organisations rather than delayed.
5. Reduced administrative burden and faster collection process: Effective RCM expedites the collection process while reducing the administrative burden around preparing bills, submitting claims, and collecting payments.
6. Improved patient experience: The aim of RCM is to bring simplification and streamlining into the revenue process so that hospitals and health systems can spend more time on providing quality care and optimally deliver the end-to-end patient experience.

Increasing Revenue Through RCM

This effective RCM aims for any hospital or health system towards streamlining the revenue cycle, making it possible for nearly seamless payment collection without interrupting the organisation's ability to offer clinical care services. Simplifying and streamlining the payment cycle will reduce the errors and redundant processes as well as lighten the burden on administrative staff and cut the time required to process and collect payments. These can cause double impacts: the increase in revenue (decreased debt) and more time to focus on providing high-quality care to patients.