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While hospitals, small practices, and larger healthcare systems are known for saving lives and treating patients, every healthcare organization needs to develop successful processes and policies for staying financially healthy. That is where healthcare revenue cycle management comes in.
Healthcare revenue cycle management is the financial process that facilities use to manage the administrative and clinical functions associated with claims processing, payment, and revenue generation. The process encompasses the identification, management, and collection of patient service revenue.
Without this key financial process, healthcare organizations cannot keep their doors open to treat patients. Healthcare revenue cycle management is the strategy that healthcare organizations use to pay the bills.
Through the next sections, we will explore the basics of healthcare revenue cycle management and how it impacts the healthcare industry.
WHAT ARE THE BASICS OF HEALTHCARE REVENUE CYCLE MANAGEMENT?
Healthcare revenue cycle management begins when a patient makes his or her appointment to seek medical services and ends when all claims and patient payments have been collected. However, the life of a patient’s account is not as straightforward as it seems.
To start, when a patient arranges an appointment, administrative staff must handle the scheduling, insurance eligibility verification, and patient account establishment.
Pre-registration is key to optimizing healthcare revenue cycle management processes. During this step, employees create a patient account that details medical histories and insurance coverages.
“From a revenue cycle perspective, getting the most accurate information up front starts with patient scheduling and patient registration,” Gary Marlow, Vice President of Finance at Beverly Hospital and Addison Gilbert Hospital, told RevCycleIntelligence.com.
“That provides the groundwork by which claims can be billed and collected in the most efficient and effective manner possible,” he stated. “The last thing you want is getting a claim submission kicking back to them then having to work their way through the institution.”
Once a patient has been seen, it is time to create a claims submission. The healthcare provider or coder must identify the nature of the treatments received and the proper ICD-10 code. These codes signify how much an entity is reimbursed for highly specific treatments, which means that coders must select the most appropriate code to prevent claims denials.
“If you’re bringing in a certain amount of revenue, you can’t have expenses that exceed that revenue. It’s seems very basic but people don’t look at it that way.”
The provider also must complete charge capture duties, which documents services into billable fees.
After a claim has been created, it is sent to the private or government payer for reimbursement. But, healthcare organizations still need to oversee more back-end office task associated with claims reimbursements. This involves payment posting, statement processing, collections, and handling claims denials.
Once an insurance company evaluates the claim, healthcare organizations are usually reimbursed for their services depending on the patient’s coverage and payer contracts. In some cases, claims can be denied for various reasons, such as improper coding, missing items in the patient chart, or incomplete patient accounts.
For anything that is not covered by insurance, healthcare organizations must notify and collect payments from the patient.
The goal of healthcare revenue cycle management is to develop a process that helps organizations get paid the full amount for services as quickly as possible.
However, healthcare revenue cycle management is unique because bills and claims are usually processed over a long period of time. Oftentimes claims go back and forth between payers and providers for months until all issues have been resolved and patients do not always have the funds available to immediately pay medical bills.