Understanding The Revenue Cycle Management In Relation To Medical Billing

Healthcare facilities use medical billing software to track patient care episodes from registration and appointment scheduling to the final balance payment. This process is known as revenue cycle management (RCM).

By combining administrative data, such as a patient’s name, insurance company, and other personal information, with the treatment a patient receives and their healthcare data, RCM unites the business and clinical aspects of healthcare.

RCM’s interaction with health insurance providers is crucial. The employees at the doctor’s office or the hospital often verify the patient’s stated insurance coverage before the visit when the patient makes an appointment. A healthcare professional or coder classifies the type of treatment offered when an insured patient receives care for a specific disease and pays any necessary copayments using ICD-10 codes. The patient is then charged for any remaining costs after the hospital or care facility gives the insurance company the care summary with ICD and Current Procedural Technology codes to determine what percentage of the patient’s care will be covered by insurance. 

Revenue Cycle 

The revenue cycle encompasses all administrative and clinical tasks that support capturing, managing, and gathering patient service revenue (HFMA). The revenue cycle involves the following:

  • Submitting claims to insurance carriers for chargeable expenses.
  • Coding: Accurately coding procedures and diagnosis. Determine patient balances and collect payments for patients. 
  • Gathering preregistration data before a patient’s arrival for inpatient or outpatient operations, such as insurance coverage. 
  • Patient information is gathered during registration to create a medical record number and satisfy some regulatory, financial, and clinical obligations. 
  • Application of or rejection of payments made through remittance processing. 
  • Follow-up with third parties: Getting money from their insurance companies. Examining the need for medical care is known as a utilization review. 

The Importance Of An Integrated Revenue Cycle 

To store and manage patient billing records, healthcare providers frequently invest in and implement specialized revenue cycle management systems. An efficient RCM system can shorten the time between providing a service and collecting payment. An RCM system can help healthcare companies automate tasks previously done by staff. Administrative chores like reminding patients of upcoming appointments, advising payers and patients of outstanding balances, and contacting insurers with specific inquiries if a claim is refused are included in these responsibilities. 

RCM systems can help providers save money by letting them know why a claim was rejected. By reminding healthcare workers to submit all the data needed for claims processing, an RCM system can reduce the number of denied claims. 

A firm can buy data analytics software and employ dashboards to define and track revenue objectives. By categorizing billing information and creating associated reports, the company may see where its revenue cycle needs to be improved. 

Systems for revenue cycle management today also incorporate robotic process automation and cognitive computing to help ensure that the proper medical codes are given to suitable patients and to speed up the process. 

Payment will be based on accurate and thorough service documentation as the industry transitions to value-based care. However, the fragmented systems make it challenging to gather all the clinical data required to document care for payment. For this reason, more healthcare companies in acute and ambulatory settings are combining their clinical, financial, and logistical data on a single platform. Data extraction and interpretation skills are becoming more and more crucial. 

Analytics can be applied throughout an organization to improve clinical and financial outcomes. The quality of healthcare and revenue cycle intelligence can both be enhanced when data is collected and shared on a single platform. 

An integrated platform improves the user experience for consumers who require simple access to their health information and are increasingly proactive in pursuing data on the value and cost of healthcare. The opportunity to inform consumers about their treatment is immense, as is the obligation. 

RCM And Value-Based Care

According to some analysts, RCM technologies will ultimately aid in the industry’s move from fee-for-service to value-based reimbursement. Many RCM systems include analytics that gives payers and providers a more thorough understanding of their patient population. For example, they may see what percentage of their patients have chronic diseases and can track claims data to identify anomalies. 

Healthcare Revenue Cycle Management Difficulties 

Collecting Payments From Patients At Or Before The Point Of Service. 

Although it may be more straightforward to say than perform, collecting payments before a patient leaves the clinic can save time and effort. Patient gathering for 74% of healthcare providers takes longer than a month, according to InstaMed statistics from 2020.

Due to high deductibles and financial difficulties, many patients cannot pay total medical expenditures upfront. Healthcare firms must balance timely payment collection success and patient retention.

 Prior Authorization Procedures 

Prior authorization procedures present providers with additional difficulties regarding revenue cycle management. When providers are subject to previous permission restrictions, they and their patients are forced to hold off on obtaining or offering care until the health plan has been approved.

Surprise Billing Restriction 

Leaders in revenue cycle management have also faced difficulties due to the surprise billing restriction imposed by the No Surprises Act. By banning out-of-network physicians from invoicing customers for more than their in-network cost-sharing amount, the policy shields patients against unexpected billing. Additionally, the policy prohibits balance charging.

Understanding The Revenue Cycle Management In Relation To Medical Billing 1

 Increased Administrative Complexity 

The revenue cycle management team has a difficult challenge because qualitative healthcare is difficult to quantify and track.

RCM is challenging enough from an administrative standpoint in a fee-based model. RCM specialists must not only carefully align data to ensure reimbursement, but they must also maintain meticulous records to appeal any claims denied. Your team will need to spend 20% more time resolving the problem if reporting and billing are done incorrectly initially.

Lack Of Integration

Revenue cycle managers use past data from several financial and medical information systems. However, not all hospitals and health systems have reached this level of integration. When hospitals consolidate, the number of different information systems may keep growing. 

Lack Of Preventive Education

Human error is often the cause of reimbursement issues. Such are issues with insurance eligibility, erroneous coding, and missing items on a patient’s account. Reducing turnover and medical errors leads to a decrease in the number of denied claims, which is routinely achieved by health organizations that aggressively promote appropriate coding procedures, thorough chart documentation, and financial policy reinforcement.

Lack Of Visibility And Control On Claim Submission-Denial Process

Revenue can be recovered only when service providers can locate the source of issues and swiftly fix errors. Healthcare personnel should closely monitor the claims processing system to find mistakes. Automated alerts are typically available to providers. You might also hire a specialist in data analysis to provide customized, automated reporting. The purpose is to determine why payers consistently reject claims for particular procedures or codes.

Managing The Healthcare Revenue Cycle: Success Rules 

Prioritize Patient Access And Front-End Improvement

 For revenue cycle management to succeed, patient access and front-end improvement must be prioritized. It is crucial to complete tasks like confirming insurance eligibility for facilities reimbursed by health plans. Front-end activities aid in the progression of claims, and mistakes made at this step can prevent claims reimbursement. 

Training and Educating Employees and Patients

Organizations can avoid claim denials by using software that automates coding and insurance verification, support and education about medical costs, and training staff members on coding and billing procedures. Healthcare organizations should also monitor claims and investigate the causes of denials.

Advanced value-based care 

Health systems have advanced value-based care and care coordination using data analytics. Healthcare organizations must report on several metrics for quality treatment, patient happiness, and healthcare costs to earn total reimbursement rates from payers as more payments are being linked to value-based care models. Many providers also use data analytics to conduct effective healthcare revenue cycle management programs. 

Overcoming Value-Based Rcm’s Challenges 

Capitated Contracts

For instance, the contract rate may occasionally come in various forms and formats from the payers. Some will only depend on capitated payments made per member per month (PMPM), while others will have built-in goals that must be achieved before costs are made. To forecast and manage income, it is essential to comprehend their distinctions and the contracts your company utilizes. Specific capitated contracts might make forecasting cash flow very challenging from a budgetary perspective. 

Financials & Reimbursement

A value-based payment framework makes it far more challenging to track finances than a fee-for-service approach. Although fee-for-service financial management is not “simple,” linear billing and reimbursement are comforting. Value-based healthcare, on the other hand, is anything from linear. Remember that the tools, platforms, and workflows you employed during the fee-for-service era won’t function anymore when we transition to the value-based model. Instead, your healthcare organization will probably need to develop an entirely new system to monitor patient progress, contractual payments, incentive payments, the effects of improvement and decline in billing, interest payments, and the usual patient care standard codes, which will probably endure indefinitely. 

Workflow Management

Fortunately, the value-based payment model motivates doctors to address the patient’s underlying issues to deliver higher-quality care. While patient longevity and quality of life are the top concerns for all doctors, the business model now reflects this by rewarding the organization more when patients do well. 


Finally, and probably most complicatedly, a value-based care model will need radically new reporting to be reimbursed, to stay in compliance with regulatory authorities, and to demonstrate that the underlying principle—improved health over the long term—is being delivered. Reporting in fee-for-service arrangements is primarily quantitative. But evaluating and reporting on qualitative indicators is also a part of value-based care