If you are scratching your head over trying to figure out what is revenue cycle management and how to handle your revenue cycle management, you’re not alone. Healthcare systems in not only the United States, but all over the world, face the same coding, billing, and payment challenges. Although the process is complex, there are steps that you can take to crack the revenue cycle management code and improve your practice’s overall financial health.
What Is Revenue Cycle Management?
What is revenue cycle management (RCM) is comprised of a series of steps that track revenue to help improve the efficiency and effectiveness of billing processes. In healthcare, RCM is closely tied to electronic health record (EHR) optimization as practice management (PM) software is usually integrated with the EHR.
The medical revenue cycle begins when a patient schedules an appointment and ends when payment of their balance is final. The entire process is critical to ensuring accurate and timely payment to providers.
RCM also promotes patient satisfaction since it helps prevent the frustration of claim denials and drawn-out billing processes. Other benefits of RCM include:
- Reduction in claims denials.
- Improved collection rates.
- Increased overall revenue.
- Enhanced efficiency through system automation and redesigned workflows.
One of the primary goals of healthcare revenue cycle management is to reduce the number of accounts receivable (A/R) days. Accounts receivable can best be described as revenue that has been billed, but not yet paid.
For a health system’s financial well-being, it is important to have a steady stream of income. Too many A/R days can have a dramatic impact on its bottom line. Unfortunately, many healthcare providers and their staff simply don’t have the time or expertise to handle RCM internally, which can lead to:
- Decreased reimbursement due to improper coding, training, or workflows that slow down or stall your reimbursement.
- Increased claim denials due to poor workflows, improper use of data, or lack of timeliness.
- Payments stuck in A/R due to a lack of processes and patient engagement.
- Unoptimized workflows or limited capacity. Staff turnover due to frustration.
What Are the 4 Keys Steps of RCM?
Clearly, RCM can have a major impact, good or bad, on your practice. Sometimes it is best to call in an expert, but often, you can resolve many issues with just a few simple steps. What is revenue cycle management can be broken down into four steps.
Step 1: Insurance Verification
The first step in RCM is to collect patient information and verify insurance. To avoid denied or delayed claims, insurance information must be entered correctly. Unfortunately, administrative staff sometimes enter incorrect details, which then results in delayed reimbursement.
That’s why outsourced insurance verification specialists can play an important role in what is revenue cycle management. These experts have an in-depth understanding of insurance coverage and policies, coding, and billing systems. Outsourcing insurance verification can not only help free up staff for revenue generating activities, but also reduce A/R days from inaccurate insurance claims.
Step 2: Working with Your Patient and Creating a Patient Superbill
Medical billing and coding information is captured in what is called a superbill. A superbill chronicles patient transactions and activities and is the primary source of information for claims. While there is no standard format, superbills are basically an itemized list that aggregates data about the patient, provider, and healthcare services.
What is included in a superbill? Let’s start with the patient portion, which should include the following:
- First and last name
- Home address
- Phone number
- Date of birth (DOB)
- Insurance information
For the patient services, the details are more in-depth and are especially important for not only claims processing, but also for compliance. According to Centers for Medicare and Medicaid Services (CMS), the National Provider Identifier (NPI) is required by HIPAA in administrative and financial transactions.
The NPI is a unique 10-digit identification number issued by CMS. It must be shared with other providers, health plans, clearinghouses, and any organization that may need it for billing purposes. In addition to the NPI, superbills should also contain the following practitioner information:
- Practice Address
- EIN/Tax ID Number
Finally, for timely and accurate claims processing, the superbill also should contain the following information for services rendered:
- Date of visit
- Procedure codes and description (CPT)
- ICD-10 diagnosis codes and descriptions
- Any modifiers
- Units or minutes
- Fees charged
If all of this sounds like a lot of information (and work), we have good news for you. Your EHR should have an automated RCM module to aggregate all this data into a template to create one comprehensive superbill.
Step 3: Claims Submission and Denial Management
Denied claims can do serious damage to a practice’s bottom line. That is why it is critical to get claims submissions right the first time. Unfortunately, faulty claims happen all too often. However, most claims denials can be avoided by simply double-checking claims details for accuracy. Aside from basic clerical errors, some common things to watch out for when submitting a claim include:
- Out-of-network provider
- Duplicate claims
- Out of date or expired insurance.
- Coding errors
- Lack of prior authorization
- Incorrect place of service (POS) code
- Missed filing deadline
- Procedures that are not covered by insurance
According to the Medical Group Management Association (MGMA), 50-65% of denials are never remedied due to lack of time or knowledge on how to resolve the claim. That’s a lot of revenue left on the table, which is why it is important to have a denial management process in place. The first step is to analyze denials, understand why the claims were denied, and identify trends either with payer or processes.
Practices with limited resources and frequent denials may benefit from outsourcing their billing. Advantages of outsourcing include:
- Team approach: You will have an entire team dedicated to cleaning up accounts, reviewing claims and posting payments.
- Provider satisfaction: Providers can focus on patient care instead of billing and RCM.
- Compliance: Outsourced experts stay current on coding, payment changes, quality programs and insurance guidelines updates.
- Accuracy: Outsourcing reduces errors to ensure claims are paid quickly and accurately.
Step 4: Payment and Reporting
Of course, everyone’s favorite stage of RCM is when the final payment comes in at the end. However, there is one more step that is critical to effectively managing revenue: reporting. Creating and reviewing A/R reports is essential to maintaining good financial health.
Your revenue cycle management software should have the capability to generate reports that include the current number and balance of claims, the number of days they have been in A/R, and who is responsible for the payments. If you see a large dollar amount or the report shows 10% or more of unpaid claims, then it may be time to bring in an RCM expert.
Summary: What is Revenue Cycle Management? Now You Know!
To summarize, optimized revenue cycle management can make a wealth of difference for your practice’s bottom line. It also can make your staff and patients’ lives easier. Just remember our top four tips:
- Verify insurance.
- Work with patients and create a superbill.
- Submit accurate claims and manage denials efficiently.
- Collect timely payment and review reports for trends.
Medical Advantage Can Help
If you have concerns about your RCM, Medical Advantage can help. Our process includes:
- Revenue cycle analysis where we review A/R processes and provide real-time solutions to improve workflows.
- Set up or review of lock/hard close processes.
- Set up and training for denial management and encounter review processes.
- Review of IE, set-up, and audit of Eligibility PM Scheduled Task with training.
- Recommendation and build of Claim Edits based on type of practice.
- Database analysis and assistance with running financial reports to identify gaps and find areas for improvement.
Understanding revenue cycle doesn’t have to be overwhelming. Our consulting services and training will help you to create workflows that will minimize A/R and maximize reimbursement – and revenue. Contact us to speak with one of our RCM experts today.