Discover the transformative power of effective revenue cycle management (RCM) for your medical practice.
Learn how to overcome challenges such as paperwork overload, billing uncertainties, and insurance payment worries.
Our comprehensive article presents 13 actionable steps to streamline your Healthcare revenue management.
Let’s discuss the some stats:
Northwell Health turns to AI to improve revenue cycle management
Average Cost of Inpatient Claims Denial in 2021: $5,300
In 2021, the average cost of an inpatient claims denial was $5,300, according to Hayes’ Healthcare Audit and Revenue Integrity analysis. This highlights the financial impact of denied claims on healthcare providers and the importance of effective Revenue Cycle Management (RCM) solutions to minimize revenue leakage.
Average Cost of Outpatient Claims Denial in 2021: $585
For outpatient claims in 2021, the average cost of a claims denial was $585, as reported by Hayes’ Healthcare Audit and Revenue Integrity analysis. Outpatient claims denials also contribute to revenue loss for healthcare systems, making it essential for them to streamline their RCM processes and address the reasons behind these denials.
What is Revenue Cycle Management (RCM) in healthcare?
Revenue Cycle Management (RCM) in healthcare refers to the process of managing the financial aspects of patient care services, from the initial appointment scheduling to the final payment collection.
It involves tasks such as patient registration, insurance verification, claims submission, coding, billing, and payment processing.
RCM aims to streamline the revenue generation process, maximize reimbursements, and ensure the financial stability of healthcare organizations.
Why is What is Revenue Cycle Management (RCM) Important?
RCM is essential for the financial health and operational success of healthcare organizations.
It ensures optimal reimbursement, compliance with regulations, and a positive experience for both providers and patients.
Financial stability: It maximizes revenue, reduces payment delays, and improves cash flow for healthcare organizations.
Optimal reimbursement: RCM optimizes billing and coding processes to maximize reimbursements and minimize underpayments or denials.
Compliance and regulatory adherence: It ensures adherence to coding and billing regulations, reducing compliance risks and potential penalties.
Improve operational efficiency: RCM streamlines processes, reduces administrative burdens, and eliminates inefficiencies in the revenue cycle.
Better patient experience: RCM simplifies billing, provides clear communication, and resolves inquiries promptly, enhancing patient satisfaction and loyalty.
13 Steps of Revenue Cycle Management
Let’s start the steps you need to know .
Step #1: Outsource your System
Your First step in RCM is to outsource your system maintenance and management to a specialized third-party provider. Why? Because it will handle tasks for example:
- software updates
- security patches
- and infrastructure maintenance.
It will help your team to focus on other core activities. I hope you got the idea now let’s discuss step 2.
Step #2: Start to Train Your Team
Your second step is to Invest in comprehensive training programs to equip your team. Your team should have the necessary skills and knowledge to effectively manage the system. For example.
training on system functionalities,
- coding practices,
- claims processing,
- denial management,
- and other relevant areas.
Step #3: Preregistration
Now you should Begin the patient registration process. How?
Collect preliminary information. Check the below 3 things to consider.
- demographic details
- insurance coverage
- and medical history.
These steps will help you to streamline the subsequent efforts and ensure accurate and efficient care delivery.
Step #4: Registration
Registration of patients is an essential step. This step will ensure compliance with legal and regulatory requirements. And enable accurate billing and reimbursement processes. Now you should have to Gather detailed patient information for example:
- personal details
- insurance information
- and consent forms.
Step #5: Eligibility verification
Your next step is to Verify the patient’s insurance coverage and eligibility for the services being provided. You should confirm insurance benefits, coverage limitations, and prior authorization requirements to avoid claim denials and facilitate timely reimbursement.
Step #6: Appointment scheduling
You should have to schedule efficiently of patient appointments and take into account factors. For example; physician availability, patient preferences, and urgency of care. This step will help you to optimize resource utilization and ensure smooth patient flow through the system.
Step #7: Check-in
It’s time to Facilitate a smooth check-in process for patients and ensure accurate capture of the necessary information. For example; updated demographics, insurance cards, and consent forms. This step will help you to minimize errors and enhance the accuracy of billing and claims processing.
Step #8: Coding
You should assign appropriate medical codes (e.g., ICD-10, CPT) to the services rendered during patient encounters. Accurate coding is crucial for proper claims submission, reimbursement, and statistical reporting.
Step #9: Charge capture
Now to start Capturing all relevant charges associated with the provided services and ensure accurate documentation and charge entry. This step will lay the foundation for proper claims submission and maximizes potential reimbursement.
Step #10: Claims submission
Your next step is to prepare and submit electronic or paper claims to insurance payers and follow specific formatting and coding requirements. Timely and accurate claims submission is essential to minimize payment delays and denials.
Step #11: Claims processing
It’s time to track the progress of submitted claims, monitor for any errors or rejections, and address them promptly. In this step, you should have to coordinate with insurance payers to resolve any discrepancies and ensure efficient processing.
Step #12: Payment posting
Accurate payment posting helps you to maintain up-to-date accounts receivable records and facilitates financial management. In this step, you have to record and reconcile payments received from insurance payers and patients and match them to the appropriate claims.
Step #13: Denial management
Denial management is also an important part of revenue cycle management. In this step, you have to analyze and address claim denials, identify root causes and implement corrective actions to prevent future denials. Effective denial management will help you to optimize revenue and reduce revenue leakage.
Bonus Steps of Revenue Cycle Management
Accounts receivable management
Now it’s time to monitor and manage outstanding balances, follow up on unpaid claims, and establish efficient processes for collections and financial reconciliations. Effective accounts receivable management is crucial for maintaining a healthy revenue cycle.
Reimbursement
Your Final step in revenue cycle management is to track and reconcile reimbursements received from insurance payers and ensure accurate and timely processing. And Monitor reimbursement trends and analyzing payment patterns will help optimize revenue and identify opportunities for improvement in the revenue cycle process.
Frequently Asked Questions
What are the key components of an effective Revenue Cycle Management system?
Patient registration and eligibility verification
Accurate and complete patient information, including insurance verification, is crucial.
Claims submission and coding
Proper coding of medical procedures and diagnoses ensures accurate claims submission to payers.
Billing and collections
Generating patient bills, managing collections, and facilitating various payment channels.
Denial management and appeals
Tracking and managing claim denials, addressing common denial reasons, and supporting the appeals process.
Reporting and analytics
Generating reports and providing analytics to monitor performance indicators, helping identify areas for improvement and make data-driven decisions.
How does Revenue Cycle Management benefit healthcare organizations?
Increased revenue capture
RCM optimizes billing and coding processes, minimizing errors and maximizing reimbursements from payers, resulting in increased revenue.
Improved cash flow
Streamlining billing and payment processes reduces delays in reimbursement and shortens accounts receivable cycle time, improving cash flow.
Enhanced compliance
RCM ensures adherence to coding and billing regulations, reducing compliance issues and penalties while maintaining accurate documentation.
Better patient experience
Efficient RCM processes lead to smoother billing and payment experiences, clear communication, simplified statements, and timely resolution of billing inquiries, improving patient satisfaction.
How does CLiX revenue, the AI-powered NLP solution, help improve Revenue Cycle Management?
CLiX revenue utilizes Natural Language Processing (NLP) technology to automate document processing, including initial chart reviews and claims. It can process millions of documents in a matter of hours, significantly faster than manual processing. By automating RCM functions, CLiX revenue reduces the need for manual labor, improves accuracy, and accelerates revenue cycle workflows.
What are the potential benefits of using AI-powered solutions like CLiX revenue in revenue cycle management?
Adopting AI-powered solutions in RCM can bring several advantages to healthcare organizations. These benefits include increased efficiency, reduced processing time, improved accuracy, minimized claims denials, and better financial performance. By automating traditional RCM processes, healthcare providers can allocate more time and resources to strategic initiatives like digital health transformation.
What challenges in revenue cycle management did the COVID-19 pandemic highlight for health systems?
The COVID-19 pandemic revealed vulnerabilities in health systems’ revenue cycle management processes. Due to factors like low patient volumes and increased COVID-19 related costs, health systems and hospitals experienced significant financial losses, totaling nearly $203 billion in the early months of the pandemic. Additionally, claims denial rates reached an all-time high, further impacting revenue streams and necessitating improvements in RCM.
How can predictive analytics be utilized in revenue cycle management?
Predictive analytics can play a crucial role in revenue cycle management by analyzing historical data and identifying patterns or trends. Healthcare organizations can use predictive analytics to anticipate revenue cycle needs, predict denials before they happen, and pinpoint inefficiencies at specific stages of the RCM process. This enables proactive measures to optimize revenue collection and improve overall financial performance.
Why are healthcare executives accelerating their AI plans, especially in the context of RCM?
Healthcare executives are accelerating their AI plans, including the adoption of AI in RCM, primarily due to the lessons learned during the pandemic. The challenges faced by health systems highlighted the need for resilient and efficient financial processes. By leveraging AI, healthcare organizations can streamline RCM, reduce costs, and have more resources to invest in strategic initiatives that drive growth and transformation.
How can AI-powered solutions like CLiX revenue help health systems manage claims denials?
AI-powered solutions like CLiX revenue can aid health systems in managing claims denials by automating the claims review process and identifying potential issues proactively. By addressing denials promptly and accurately, healthcare providers can minimize revenue leakage and improve their overall financial performance.
What are the implications of avoidable claims denials for healthcare organizations?
Avoidable claims denials can have significant financial implications for healthcare organizations. According to the data from Change Healthcare’s analysis, approximately 86% of claims denials were potentially avoidable. Addressing avoidable denials is crucial for maximizing revenue and ensuring that healthcare providers can allocate sufficient resources to support their growth strategies and operational needs.
Conclusion
I hope you learned a lot in this guide about the 13 steps of revenue cycle management. If yes? Leave a comment below. Also if you want medical billing services you can contact us to get high-quality services. Thanks!