What is Revenue Cycle Management?

What is Revenue Cycle Management?

All care provided within a health care institution has a cost and associated fee or payment. Managing the charging for and collection of such bills fall under the purview of the revenue cycle management team.

The Healthcare Financial Management Association defines the Healthcare Revenue Cycle as the set of all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue.

What is the Purpose of RCM?

The revenue cycle consists of the following components:

  • Registration
  • Charge Capture
  • Coding
  • Claim Submission
  • Patient Billing and Collection

The primary purpose of the revenue cycle management process is to ensure that all revenue cycle components operate without error and interdependently.

Organizations can become siloed within the above departments. When communication does not exist among various areas within the revenue cycle, these common pitfalls can occur:

  • payment denials due to lack of authorization during registration
  • repeat denials due to an inappropriate modifier added to a CPT code through the HIM department
  • denial based on invalid revenue code-CPT code pair

When an insurer denies a claim, the billing department must submit a rebill to receive payment. The rebilling process adds extra effort, time, and cost to the overall span of getting a claim paid. Thus, taking even more away from the already slim margin.

Revenue Cycle Management Structures: Which is the best?

There are several ways to operate revenue cycle management teams. The options include:

  • In-house/employed: hiring the right team to manage this process can be daunting but investing in such a team can yield great rewards. A robust in-house RCM team will ensure constant communication between all departments and prioritize initiatives for collaborative improvement across the revenue cycle.
  • Outsourced: bringing in a team of expert RCM managers from the outside guarantees industry experience. The outsourced team will bring best practice applications to improve charge capture and communication among all cycle components.
  • Mixed: often, a successful move is to supplement an in-house team with RCM consultants who bring industry knowledge to the table, getting the best of both worlds. When the teams are committed to working together, this can be a successful mix of outside coaching for the long-term staff.
  • Technology-assisted: RCM Technology should accelerate, not hinder the RCM process. Finding the right program that aids in workflow decreases the amount of time that an employee must touch or review a claim or charge code, and one that ensures accuracy and historical tracking for security is a must. Revenue Cycle Technology can supplement any of the above models.

While there is no "one size fits all" best approach that wins every time, it is essential to know your organization's specific needs and match the existing talent with necessary outside supplements and hiring capabilities.

RCM Management: Where to start

Inventory what staff you have and where your communication gaps exist to get started. Do you have the technology to assist with managing your chargemaster and auditing its connection to charge entry systems? What type of team do you have overseeing the revenue reconciliation? How often do you hold revenue cycle communication meetings to address payment and denial trends to determine the root cause for denials and implement solutions? How many days does it take to get a new charge added to your CDM, and how does it delay claim submission?

You can determine if you need people, technology, or process improvements by answering these preliminary questions. For additional assistance on how to improve your RCM, contact us at consulting@medcomsolutions.com.

About MedCom Solutions

MedCom Solutions creates patented technology and state-of-the-art software to help medical service providers meet rapidly escalating and changing medical billing demands. Our Chargemaster, Pricing, and Compliance solutions have yielded hundreds of millions in net revenue for healthcare providers across the country.

Learn more about our solutions or visit our homepage and contact us today!

Recent Posts

Leveraging Technology to Improve Revenue

A study summarized on yahoo!finance indicates that the future of Health Care Revenue Cycle Management may include increases in outsourcing. “The study, entitled PatientPay 2022, found 63% of respondents indicated they were ...

Read More

Are you Prepared for the Big Patient Shift?

Hospital margins depend highly on the type and volume of services they perform. Historically, the hospital was the only place to go for healthcare services. However, today a variety of stand-alone specialty locations can meet ...

Read More

Subscribe to our Newsletter

Subscribe here to receive newsletters on industry insights.