Healthcare Revenue Cycle Management might sound like just three simple words, but they actually form the core of financial management in healthcare. For many independent healthcare providers, these words can be a source of frustration because RCM is anything but simple. With the importance of every dollar in this industry, it’s crucial for providers to really get to grips with how RCM works.
Experts recognize that many parts of the U.S. healthcare system aren’t very efficient. For instance, a recent McKinsey & Company study found that about a quarter of the $4 trillion spent on healthcare each year goes to administration. The study also showed that improving efficiency could save the healthcare system $265 billion every year.
To make this process more manageable, we have broken it down into 15 clear steps. Our goal is to help your practice understand RCM better and set the stage for a smoother, more profitable future.
Step 1: Confirm Provider Credentials
It is essential for medical organizations or offices to verify that all healthcare providers possess the necessary medical licenses and credentials to practice and deliver services.
Here’s how to do this step efficiently:
- Use automated tools to quickly verify provider credentials.
- Follow a standard procedure for checking and documenting credentials.
- Regularly review and update credentials to ensure they are current.
Pro Tip: This verification should be conducted immediately when onboarding a new provider. Additionally, ensure the provider is correctly affiliated with the medical group to avoid issues with insurance queries or claim rejections.
Step 2: Confirm Provider Insurance Contracts
Medical organizations must check that providers have the correct contracts with insurance companies.
Keep these tips in mind:
- Verify contracts with insurers to ensure providers are covered.
- Update payer contracts in your billing system regularly.
- Check for contract changes to avoid payment issues.
Pro Tip: It is important to update all payer contracts for each provider within the billing or practice management system. This helps promptly identify any payment discrepancies or improper denials.
Step 3: Pre-Registration
The RCM in medical billing starts before patients even set foot in the facility with the pre-registration process. This is when you gather and verify important patient and insurance information. Getting this right is crucial. If the details are off, it can lead to denied claims and frustrated patients later.
To make this process smooth:
- Use systems that can quickly check insurance benefits in real time.
- Provide a user-friendly online portal where patients can enter their information.
- Offer multiple ways for patients to pre-register, whether online, by phone, or in person.
Pro Tip: This verification must be completed before the medical organization provides services. Be sure to check for typos or errors, particularly in information related to insurance coverage.
Step 4: Registration
Once patients arrive, the registration step is key to ensuring everything goes smoothly. This is when you formally check them into the facility and make sure their demographic and insurance information is up-to-date.
Here is how to do it effectively:
- Make sure you capture patient information accurately.
- Regularly train your staff on why it’s important to get data right.
- Periodically review your registration procedures to cut down on errors.
Step 5: Charge Capture
Accurate charge capture is essential to ensure that every service provided to patients is properly documented and billed. This stage involves recording and coding all procedures, treatments, and supplies used during patient visits.
To get it right:
- Use user-friendly technology that lets staff enter charges in real time.
- Schedule regular audits to catch any missed charges.
- Implement a detailed process for cross-checking codes to ensure nothing is overlooked.
Pro Tip: It’s essential to have the right fee schedules in place to make sure you are charging accurately for each service.
Step 6: Proper Coding
Accurate coding is crucial for correct billing and reimbursement. Certified coders assign specific codes to diagnoses, procedures, and services provided.
To maintain accuracy:
- Regularly audit coding practices to find and fix errors.
- Provide ongoing training for staff on coding updates and best practices.
- Employ certified medical coders to ensure compliance and accuracy.
Pro Tip: This step is crucial in the healthcare revenue cycle management process because it directly impacts both financial outcomes and compliance.
Step 7: Claims Submission
Submitting claims promptly and accurately is vital for maintaining a steady cash flow. After capturing charges, you need to prepare and send claims to insurers for reimbursement.
Keep these tips in mind:
- Regularly check for errors or rejections in your claim submissions.
- Use technology to streamline the submission process.
- Collaborate with an electronic claims clearinghouse to ensure smooth processing.
Pro Tip: Electronic submission is typically the best option, usually done through an Electronic Data Interchange (EDI) between the provider and payer. Providers should complete EDI enrollment before sending any claims. It’s also crucial to review for any rejections and address them quickly.
Step 8: Patient Billing
Once claims are processed, any remaining patient responsibility (like co-pays, deductibles, or non-covered services) needs to be billed. A confusing or incorrect bill can frustrate patients, delay payments, and harm the provider-patient relationship.
To improve the medical billing cycle process:
- Offer multiple payment options for convenience.
- Maintain clear and transparent billing practices to build trust.
- Send bills promptly and consistently to avoid payment delays.
Pro Tip: After receiving all payments from payers, your organization should send billing statements to patients. Timeliness is crucial, as some states have regulations that prohibit sending billing statements if too much time has passed since the date of service.
Step 9: Payment Processing
Efficient payment processing is key to capturing revenue promptly. This involves accurately posting payments from payers and patients and reconciling any discrepancies. Issues with payment processing can lead to misapplied payments and disrupt the revenue cycle.
To boost payment processing:
- Use an efficient system to minimize errors and delays.
- Offer online payment options to make it easier for patients.
- Carefully reconcile each payment against the services rendered to ensure accuracy.
Pro Tip: Posting payments from both payers and patients in a timely manner is essential for accurately assessing the “True Accounts Receivable.” Delayed posting can lead to an overstated accounts receivable balance, which may result in poor decision-making.
Step 10: Insurance Follow-Up
Prompt follow-up with insurance companies is essential for addressing denied or underpaid claims. This step involves pinpointing the reasons for denials, collecting the necessary documentation, and resubmitting claims to ensure proper processing.
To manage this effectively:
- Regularly check on outstanding claims to keep payments on track.
- Build strong relationships with insurance providers to speed up the process.
- Use software to monitor claim statuses and flag any delays or denials.
Pro Tip: Timely follow-up according to each payer’s payment cycle is crucial. Delays can lead to cash flow issues.
Step 11: Denial Management
Managing denials effectively is key to maximizing reimbursement and reducing revenue loss. This step focuses on analyzing why denials occur, identifying any recurring issues, and making improvements to avoid future denials.
To handle denials well:
- Understand the common causes of denials and work to address them.
- Train staff on strategies for managing denials effectively.
- Track and analyze denial patterns to implement preventive measures.
Pro Tip: This is an important component of the medical billing cycle. Handling denials efficiently enhances cash flow. So, it is essential to reduce the number of denials as much as possible.
Step 12: Appeals
When claims are denied incorrectly, initiating the appeals process may be necessary. This step involves gathering the required documentation, following payer-specific guidelines, and submitting appeals within the appropriate timeframes.
To streamline the appeals process:
- Keep detailed records of all communication related to the appeal.
- Use data and evidence to build a strong case for the appeal.
- Stay organized and escalate the issue if it’s not resolved on time.
Step 13: Patient Collections
Collecting outstanding patient balances is a vital part of managing your revenue cycle. This involves reaching out to patients about what they owe, offering flexible payment options, and handling overdue accounts fairly and effectively.
Here is how to approach it:
- Communicate in a patient-friendly way when reminding them of their balances.
- Offer payment plans that fit their financial situation.
- Keep your payment policies clear and transparent.
Pro Tip: Make sure your billing process is clear and straightforward. Send detailed bills quickly and offer different ways for patients to pay. This helps keep things transparent and can prevent confusion or disputes.
Step 14: Reporting and Analysis
Effective reporting and analysis are key to spotting areas where you can improve and make smart decisions about your RCM in medical billing.
To make the most of reporting and analysis:
- Track important metrics like denial rates, days in accounts receivable, and collection ratios.
- Regularly share these reports with relevant team members to ensure everyone is on the same page.
- Use data to identify opportunities for improvement and increase efficiency.
Pro Tip: An RCM system should enable organizations to monitor and report on metrics and key performance indicators related to payments. It should assist in tracking KPIs such as Gross Collection Rate (GCR), Net Collection Rate (NCR), First Pass Acceptance Rate (FPAR), and Days in Accounts Receivable.
Step 15: Compliance
Maintaining compliance with regulations on coding, privacy, and billing is essential. Even small errors can lead to large fines and damage your reputation.
To stay compliant:
- Consider investing in a dedicated compliance team or consulting with external experts.
- Regularly perform audits and risk assessments to catch any potential issues.
- Make sure your staff receives ongoing training to stay updated on the latest regulations.
Pro Tip: Regularly review and update your compliance protocols to stay consistent with current regulations and industry standards. Conduct periodic training for your team to ensure everyone is aware of and follows the latest compliance requirements. This proactive approach helps prevent violations and maintain smooth operations.
The Bottom Line
While there are particular difficulties at each stage of the revenue cycle management process, The Physician Billing Company is experienced in handling the kinks to maximize your practice’s earnings.
Our medical billing cycle services are designed to manage these steps head-on and save you from the hassle that comes with filing claims.
Our solutions streamline every step of the process, from pre-claim services that help ensure claims are submitted correctly to collecting final payments. We enhance accuracy, simplify procedures, and boost cash flow.
Get in touch with us right away to have a detailed discussion about our services and how they can benefit your practice.
