Revenue Cycle Management (RCM) is an important, financially-driven process in healthcare that allows providers to receive reimbursement for care delivery in a timely and efficient manner.
- Revenue Cycle Management is the step-by-step lifecycle from when a patient first books an appointment until the claim is fully reimbursed.
- The cycle begins with patient appointment setting, obtaining demographics from the patient, and the verification of benefits and claim submission requirements.
- As part of the process, the commercial payer or government payer advises if the services require prior authorizations. The payer also verifies service limitations or disclaimers.
- The back-end of the cycle includes rejections, payment posting, denials and appeals, analysis of over and under-payments, patient billing, and patient follow-up.
Why Is RCM Important?
Lost and delayed claim reimbursements can have a cascading effect on quality care.
Revenue Cycle Management ensures that providers have the resources to administer quality care and achieve quality care metrics required by commercial and government payers. Those resources include staffing, finances, policies and procedures, and electronic health record (EHR) systems to handle the healthcare insurance model cycle.
A lack of resources poses many risks for providers, including fewer administrative staff to handle new and returning patient flows. Lower patient volumes lead to lower revenue. Furthermore, a strain on administrative resources means there are fewer people ensuring proper office setting conditions and safety measures, which could lead to issues with non-compliance.
A streamlined revenue cycle is imperative to quality care, just as quality care is at the center of a successful practice. Therefore, it’s critically important for healthcare providers and their administrative team to understand all steps in the medical billing and reimbursement cycle.
Revenue Cycle Steps
The sustainability of managing the healthcare insurance model requires staff and providers to follow a consistent, 10-step cycle. The cycle can be divided into two parts: front-end and back-end. The front-end of the revenue cycle consists of all steps that occur before the claim is submitted. The back-end consists of all steps that occur after the claim is submitted.
10 Steps of Revenue Cycle Management
1. Patient Registration and Insurance Eligibility
New or returning patient scheduling/registration includes scheduling, pre-registration, and registration. Pre-registration entails collecting patient demographic information (including insurance info).
- Data entry accuracy.
- Identifying proper payers
- Coordinating benefits of additional patient policies
The patient attends appointments and the clinician documents the visit in the Electronic Health Record (EHR). The documentation includes patient history, encounter notes, diagnosis codes, follow-up information, orders, prescriptions, assessments, and labs.
- Improper documentation of the encounter
- Patient policy unawareness
- High costs of care
3. Charge Capture and Medical Coding
The medical coding team documents the CPT/HCPCS/DX codes based on clinician documentation. Based on the payer and procedure (CPT code), a modifier may be applied during coding. It is important to know payer guidelines and claim requirements to ensure reimbursement from the service/encounter.
- Identifying proper CPT or HCPCS to coincide with provider requirements
4. Claim Scrubbing and Submission
The billing team enters the charges for the claim in a medical billing system or on a CMS-1500/UB-04 form. In the providers’ EHR, the creation of the claim occurs and is sent via paper or electronically to the clearinghouse (insurance may be government or commercial payers). The claim is then submitted to a clearinghouse. The clearinghouse sends the claim to the payer which may result in rejections. If the clearinghouse rejects the claim, the billing team may identify and resolve the root cause of the rejection, then reprocess the claim to resend to the payer.
- Identifying clearinghouse and payer rejections in a timely manner
5. Claim Status Inquiry
The back-end team (AR, billing specialists) will track the date a claim was billed and follow up on the status of the claim. There should be a minimum follow-up of once every 30 days until the payer reimburses the claim. In some cases, the claim follow-up process may need to increase its frequency.
- Identifying the timeframe a payer processes claims is critical to making sure the medical billing team is efficiently resolving claim denials.
- Noting the claim appropriately with as much detail as needed is important.
- Additional follow-up time will be reduced if the team notes as much detail as possible.
6. Remittance Advice
The payer receives the claims and reimburses or denies the claim. The payer sends details of the amount billed and/or disallowed, and additional information, such as copayments, deductibles, and reimbursements.
- Understating the remittance advice (RA) or explanation of benefits (EOB) and identifying issues and resolutions.
7. Denials and Appeals
The billing team will resolve denials by identifying the root cause and submitting a corrected claim, reconsideration, or appeal. The billing team will follow up on the status of the denial. If the claim is overturned, payment posting occurs. If the claim is still denied, the appeals process starts over. If the denial cannot be overturned, the healthcare provider may decide to write off the claim as a loss.
- Most payers process claims within 7-21 days.
- Medicare claims: 7-14 days
- Commercial claims: 14-21 days
- Deciding if a claim can be recovered or is a write-off.
- Determining if medical documentation supports the codes billed or if another code is more suited for the encounter.
8. Payment Posting
The billing team will post the payers’ reimbursement into medical billing software. This provides a snapshot of financial health for healthcare providers.
- Entering payments efficiently and identifying payment discrepancies.
9. Patient Statements
After the information is logged in the medical billing software, medical bills are prepared and sent to the patient. Modern billing software makes this step more automatic. The medical bill includes all expenses for which the patient is deemed reliable.
- The administrative cost of sending patient statements electronically or by mail.
- Patients do not always pay their bills after the statement is received.
- Patients do not know what the statement is for and call the provider’s office for an explanation.
10. Patient Follow Up
Many patients are unable or unwilling to pay the balance of their medical bills when the statement is received. This is largely due to a misunderstanding of benefits, denied claims, high cost of services or other financial hardships. It then becomes the responsibility of the healthcare provider to contact the patient and collect the outstanding balance.
- Lack of financing options for the patient to settle their debts.
- Healthcare providers aren’t adequately staffed or trained to play the role of debt collector.
What Happens if the Claim is Denied?
Managing claim denials is a time-consuming process. The ultimate goal of the medical billing team is to submit a clean claim. A clean claim is a claim submitted to the payer without issues or errors. Two metrics used to measure the likeliness that a claim will be immediately reimbursable are Clean Claim Rate (CCR) and First Pass Rate (FPR).
- CCR identifies how many initial claims were sent to the payer without any rejections.
- FPR demonstrates how effective the providers’ RCM process is.
According to HFMA, a high CCR suggests the data collected and processed within the electronic health record (EHR) are of high quality, which may mean claims are highly accurate. According to Gentem standards, a quality CCR is anything over 95%; anything less is sub-par.
Revenue Cycle Management Goals
The main goal of the revenue cycle management process is to obtain payment for the services in a timely manner. Payers have guidelines and deadlines in which they will accept a claim for reimbursement. If the payer receives the claim after the deadline, the claim has the potential to deny for timely filing. Receiving payments in a timely manner allows for the finances of the business to be in a constant flow. When the finances become unstable, the business may suffer financial loss.
According to the American Academy of Family Physicians, a 5-10% denial rate is the industry average. Having a target denial rate below 5% ensures you are managing your revenue effectively and maintaining a consistent cash flow.
How Gentem Can Help Manage Your Revenue Cycle
Gentem is a US-based company with technology built in Silicon Valley, leveraging automation, data science, and medical billing experts to support your staff. We are headquartered in Silicon Valley with a nationwide team that understands various state and payer policies specific to your practice and region. Gentem transforms the reimbursement experience by not only handling the end-to-end billing and revenue cycle processes but also reimbursing physicians upfront.
We assist providers by ensuring claims are submitted timely and accurately. We understand the administrative burden faced by healthcare providers; therefore, our staff has specialty-specific experience, providing weekly meetings which report an analysis of key provider performance indicators (KPIs). The analysis of KPIs allows Gentem to enhance transparency and enable providers to set targets and profitability and proactivity goals.
In addition, we offer real-time performance analytics and timely alerts to ensure that no claim is left behind. Using Machine Learning/AI, we help providers understand how to identify missing funding by finding root causes, denial patterns, and insurance underpayments while providing actionable insights to correct the issue(s).