Steps Involved in the Revenue Cycle Management (RCM) - It's More than Just Billing and Coding
- 2 days ago
- 6 min read
While patient care is the core of every private practice, running a successful practice requires many administrative tasks, including navigating the complexities of billing, coding, and reimbursement. Revenue cycle management (RCM) is the set of processes that helps your practice manage the financial aspects of running a practice, from patient registration to collections of unpaid balances from patients. A well managed revenue cycle can help reduce claim denials, minimize the administrative burden on your staff, and provide a better cash flow for your practice. Below, we cover what revenue cycle management is, the importance of RCM, and the steps of RCM in healthcare.
Some of the information in this article has been derived from original material contributed by Cosentus, one of our partners who helps medical practices with their credentialing, billing & coding, revenue cycle management, and accounts receivables (and offers PSG members 5% off services through our affiliate link with code PSG5OFF).Â
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What is revenue cycle management (RCM), and is it just billing and coding?
Revenue cycle management (RCM) is more than just billing and coding. It is the set of processes that healthcare organizations, including private practices, use to manage the financial operations related to billing and collecting revenue generated from providing medical services.
RCM begins at the moment of the first patient encounter for scheduling and registration and continues until all patient’s account balance is resolved and reconciled.
This includes tracking and collecting insurance payments, patient payments such as copays or deductibles, contractual adjustments, and any write offs for amounts your practice is unable to recover.
Why optimization of each step in the revenue cycle management process is important for your medical practice
Whether you have an in-house team or outsource your RCM to a third-party provider, RCM is essential to the day-to-day financial operations and success of your practice.Â
Without efficient RCM practices, practices likely leave a lot of revenue on the table.
Well managed revenue cycle management helps a private practice with:
Faster payments from insurance companies
More accurate payments collected from patients, minimizing follow ups required to chase down remaining balances
Fewer denied claims resulting from coding errors or service ineligibility under the patient’s policy coverage
Less administrative burden for you or your staff by streamlining processes, letting you focus on patient care and potentially reducing your practice’s overhead staffing costs
More predictable cash flow to optimize a practice’s financial performance, making practice budgeting and forecasting more reliable, which can help with staffing and practice growth (if desired)
Increased patient satisfaction by reducing unexpected bills after services are rendered
What are the steps in revenue cycle management (RCM)?
The processes related to medical billing each play an important role in the financial success of a private practice. Important services all practices should implement, either in-house or through a third-party service, include:
Patient scheduling & registration: Effective revenue cycle management practices start with your staff’s very first encounter with a prospective patient. Collecting relevant contact and insurance information during scheduling and pre-registration prior to the first appointment can help prevent billing issues and insurance eligibility issues later in the process, helping streamline the revenue cycle.
Insurance eligibility verification: This includes confirming a patient’s insurance coverage, benefits, and any pre-authorization or referral requirements. Insurance verification prior to an appointment reduces the risk of claim denials due to ineligible services. Proper communication with patients throughout the verification process can also speed up check-in for appointments and reduce surprises (and frustrations) for patients regarding copays and uncovered services. This also allows you to collect any co-pays or deductibles during the patient visit. Learn more with our guide to insurance eligibility verification for medical practices.Â
Medical coding & charge capture: Clinical documentation from patient encounters is used to assign medical procedure and diagnosis codes for the patient encounter. This helps ensure all billable services are appropriately recorded and coded to standardized CPT, ICD codes, and modifiers for accurate billing. Explore our guide to medical billing and coding.
Claims submission & processing: Once charges are coded, you submit billing claims to the insurance payer for reimbursement for the services rendered. You want to turn claims around as quickly as possible (ideally within 24-48 hours) to accelerate reimbursement and minimize revenue leakage. When a payer receives the claim, they review it for accuracy, coverage, and medical necessity. During processing, the payer may pay the claim in full if it’s a clean claim, reduce the amount of the claim that is paid depending on their review, or deny the claim.
Payment posting & reconciliation: Once claims are processed and the payer submits payment to your practice, you need to post the payment to the patient’s account to see if there are any remaining balances owed. Any patient responsibilities, such as co-payments or deductibles, should be collected and posted at the time of the service based on the insurance verification performed. Any remaining balances should be summarized in a statement and sent to the patient for collection.
Denials & appeals management:Â Practices need to identify and resolve any issues with rejected or denied claims to keep the revenue cycle moving efficiently and to prevent delays in payments. Practices can also benefit from analyzing denial trends and identifying root causes. Implementing changes and strategies from these findings can help prevent future denials. Denials & appeals management maximizes reimbursement rates and reduces losses in revenue.
Accounts receivables (A/R) management: Any outstanding amounts need to be tracked and followed up on until payment is received and full payment has been reconciled. This includes tracking unpaid claims, following up on denials, and managing patient billing & collections. Effective A/R management accelerates revenue collection, reducing outstanding receivables, and improves a practice’s cashflow.
Reporting & analytics: Regular financial reporting can provide valuable insights into the efficiency of your RCM as well as revenue trends. These reports can help practices monitor and evaluate their billing practices and overall revenue cycle and identify areas for improvement to help practices make informed decisions.
While not part of the day-to-day revenue cycle, new practices must also credential and contract with insurance companies and payors before this entire process starts. If you’re just starting out, explore:
Conclusion
While the administrative side of medicine can feel tedious for private practice owners, revenue cycle management is critical to your practice’s financial health and success. Understanding the processes involved and putting practices in place to optimize them to best suit your practice and patients can be the difference between a thriving practice and one that constantly struggles to collect payments. By understanding each step in the cycle and identifying potential weak points in your current workflow, you can reduce denials, accelerate payments, and improve satisfaction for both your patients and your team.
Related RCM resources for physicians
Explore related PSG resources:
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