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 practice receives full reimbursement for the claim.
- The cycle begins with setting the patient’s appointment, getting demographics (insurance information, date of birth, etc.) from the patient, and verifying benefits and claim submission requirements.
- As part of the process, the insurer (either a 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 care quality.
Revenue cycle management ensures providers have the resources to deliver 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 cycle.
A lack of resources poses many risks for providers, including fewer administrative staff to handle new and returning patients. With lower patient volumes, the practice earns less revenue. Furthermore, a strain on administrative resources means fewer people are managing office conditions and safety measures, which could lead to non-compliance issues.
A streamlined revenue cycle is crucial 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 teams to understand all steps in the medical billing and reimbursement cycle.
Revenue Cycle Steps
Managing the healthcare insurance model requires staff and providers to follow a consistent, 10-step cycle. The revenue cycle management workflow is made up of two parts: front end and back end. The front end of the revenue cycle consists of all steps before the claim is submitted. The back end includes steps after the claim is submitted.
10 Steps of the Revenue Cycle Management Workflow
New or returning patient scheduling and registration includes scheduling, pre-registration and registration. Pre-registration entails collecting patient demographic information (including insurance info) and verifying eligibility.
Challenges:
- Data entry accuracy
- Identifying proper payers
- Coordinating benefits of additional patient policies
2. Encounter
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.
Challenges:
- Improper documentation of the encounter
- Patient policy unawareness
- High costs of care
The medical coding team notes the current procedural terminology (CPT), healthcare common procedure coding system (HCPCS) and diagnosis (DX) codes based on clinician documentation. The coder may also add a modifier based on the payer and type of procedure (CPT code). It is important to know payer guidelines and claim requirements to ensure reimbursement from the service or encounter.
Challenges:
- 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. Then, in the provider’s EHR, the team creates the claim and sends it electronically or via paper to the clearinghouse (insurance may be government or commercial payers). The clearinghouse sends the claim to the payer, which may result in a rejection. If the clearinghouse rejects the claim, the billing team may identify and resolve the root cause of the rejection. When they find the cause, the team can reprocess the claim and resend to the payer.
Challenges:
- Identifying clearinghouse and payer rejections on time
5. Claim Status Inquiry
The back-end team (including billing specialists and accounts receivable) will track the date the practice submitted the claim and follow up on the claim status. There should be a minimum follow-up of once every 30 days until the payer reimburses the claim. In some cases, the practice may need to increase the frequency of its claim follow-up process.
Challenges:
- Identifying the timeframe a payer processes claims is critical to ensuring the medical billing team resolves claim denials
- Noting the claim appropriately with as much detail as needed is important
- Following up on claims is less time-consuming 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.
Challenge:
- Understating the remittance advice (RA) or explanation of benefits (EOB) and identifying issues and resolutions
The billing team will resolve denials by identifying the root cause and submitting a corrected claim, reconsideration or appeal. Then, the billing team will follow up on the denial status. If the insurer overturns its claim denial, the insurer will post payment. If the payer still denies the claim, the appeals process starts over. If, after all this process, the payer doesn’t change its decision, the healthcare provider may decide to write off the claim as a loss.
Challenges:
- 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.
Challenge:
- Entering payments efficiently and identifying payment discrepancies
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 liable.
Challenge:
- The administrative cost of sending patient statements electronically or by mail
- Patients don’t always pay their bills after receiving a statement
- Patients don’t 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.
Challenges:
- 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
Do you need help optimizing your revenue cycle but not sure where to start? Learn how to spot red flags – and opportunities! – with your medical billing team.
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 the clean claim Rate (CCR) and first pass rate (FPR).
- CCR identifies how many initial claims were sent to the payer without rejection.
- FPR demonstrates how effective the practice’s RCM process is
According to the Healthcare Financial Management Association (HFMA), a high CCR suggests the data collected and processed within the electronic health record (EHR) are 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 primary goal of the revenue cycle management process is to get paid on time for patient care. Payers have guidelines and deadlines by which they will accept a claim for reimbursement. If the payer receives the claim after the deadline, they may deny it for missing the timely filing window. Receiving payments on time also allows for more consistent cash flow.
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 have 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 accurately and on time. We understand the administrative burden healthcare providers face, so our staff has specialty-specific experience.
Our team also offers real-time performance analytics and timely alerts to ensure 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 issues.
Ready to learn more? Book a short intro call with our team today!
