Healthcare Revenue Cycle Management

The recent technological advances have brought about significant changes in the healthcare industry. The combination of AI, machine learning and natural language processing has proved to be rather advantageous for providers and patients alike. However, deploying AI for automating billing procedures solves only a small portion of the financial challenges facing healthcare in America. The answer lies in conducting a results-driven revenue cycle management workflow. This article explores how healthcare revenue cycle management helps providers tackle several financial roadblocks and the best practices that ensure an effective strategy implementation.

What is Healthcare Revenue Cycle Management? Why is it Important?

Healthcare Revenue Cycle Management (RCM) is the process that ensures healthcare providers get paid for their services, from the moment a patient schedules an appointment to the final payment collection. It is a series of actions taken from the moment a prospective patient approaches a healthcare provider till their exit from the facility. It plays a critical role in streamlining billing, managing claims, and reducing revenue loss due to claim denials or delays. Healthcare Revenue Cycle Management refers to a set of steps taken by healthcare providers to ensure a steady flow of revenue in their establishments without flouting healthcare regulations. 

Healthcare revenue management through the ages - A Brief History

Healthcare is an indispensable part of our lives. The government takes all the necessary steps to ensure that medical services provided by healthcare establishments are in compliance with the regulations set by them. Having an effective healthcare management system ensures accuracy in medical coding and documentation, thus stabilising the financial aspect of healthcare practices.

Early Developments

Manual processes: Initially, healthcare management practices heavily relied on manual operations - from medical coding to documentation and billing, everything was managed by the respective experts. 

Advent of computer technology: The 1970s saw the introduction of computer technology in healthcare, which began to automate billing processes. This shift allowed for faster claim processing and the establishment of standardized billing codes, improving reimbursement rates.

Transformation through technology

Electronic health records:The early 2000s marked a pivotal moment with the widespread adoption of EMRs. These systems enhanced data accuracy and streamlined billing processes by facilitating automated data capture for billing and coding.EMRs also contributed to reducing errors and accelerating the revenue cycle.

Electronic Claims Submission: The transition to electronic claims submissions revolutionised the billing process. Standardized formats like ANSI X12 were established, leading to more efficient electronic data interchange (EDI) and improved claim accuracy.

Healthcare Revenue Cycle Management in Recent Times

Value-based payment models: In recent times, healthcare facilities have shifted towards value-based payment models where providers are paid for quality rather than quality. This shift calls for a more integrate approach to RCM based on patient outcomes and quality metrics. The value-based model requires providers to collect and analyze data from clinical and financial domains in order to calculate the final payout.

Integration of AI and Automation: The introduction of AI in medical coding has proven to be significantly revolutionary for the medical coding community. Integrating AI with automation is the latest technological advancement in healthcare revenue cycle management. This has reduced the possibilities of claim denials and rejections, error in coding and documentation, thus facilitating a hassle-free insurance claim process for providers.

Importance of telehealth: The COVID-19 pandemic changed how conventional healthcare practices functioned. Telehealth came into the limelight, allowing patients to access medical services quickly and easily. Healthcare providers optimise their workflows to include remote care billing and virtual consultations.

Healthcare has evolved over the years and so have the billing practices. Today, medical billing workflows are streamlined to accommodate modern technology and patient outcomes. Healthcare revenue cycles have contributed to positive cashflows for many medical establishments by trying to stay true to these principles. Let’s take a look at the steps taken in healthcare revenue management to understand it better.

The Healthcare Revenue Cycle Management Process

A well-executed RCM process can significantly improve a healthcare organization’s financial performance, helping providers focus more on patient care rather than administrative burdens.

Here are the steps taken by the healthcare facilities, once a patient gets in touch with them.

Step 1: Pre-registration

In the pre-registration phase, patients call a certain hospital for an appointment and provide some basic information about their health concerns.

Step 2: Registration

A patient’s medical and insurance details are recorded in the hospital’s billing system during registration. Information on eligibility for certain surgical procedures, policies regarding insurance provider payout, the patient’s demographics, and previous medical and pathological records is collected once a patient physically visits the healthcare facility. Registration is an important part of the healthcare revenue cycle management process. Incorrect information entered during registration can affect the level of care given to the patient, and disturb the financial cycle.

Step 3: Charge Capture

This phase is another key area in the healthcare revenue cycle management process. During the charge capture phase, information such as procedure codes, quantities and descriptions of the services availed by patients is recorded. Depending on the nature of the services, healthcare administrative staff assigns the appropriate billing codes to the procedures availed. It is recommended to automate billing procedures to ensure accurate billing process.

Step 4: Utilisation Review

In utilisation review, insurance providers carefully analyse the treatment plan, prescribed medicines and equipment. After evaluation, they recommend alternatives if patients are ineligible for any medical services/amenities specified by the hospital.

Step 5: Coding 

Coding is crucial in every step of the healthcare revenue management process. Once a patient enters the healthcare facility, ICD and CPT codes are defined for all aspects of the healthcare industry. Incorrect coding can cause major issues for both the hospital and patients. One wrong code can cause claim denials and 

Step 6: Claim Submission

Hospitals and healthcare providers submit claims to insurance companies during this phase. The claim submission is a very critical part of healthcare RCM. This phase involves several steps. 

1. Claim creation: The hospital registers a patient’s appointment and creates charges for services availed during their visit.
2. Claim scrubbing: Claims are scrutinised for errors, such as coding errors, wrongful billing,etc before they are sent to insurance providers. 
3. Submission: Hospitals electronically submit claims to respective insurance providers after multiple quality checks. 
4. Active monitoring: Once the submission is done, healthcare providers actively monitor the progress of their reimbursement process. This step ensures that hospitals and healthcare providers are paid on time.

Submitting accurate claims and communicating with insurance companies ensures timely payments.

Step 7:Remittance Procedure in Healthcare Revenue Cycle Management

In this step, hospitals review remittance documents provided by insurance companies for inaccuracies and explanation of benefits (EOB). The EOB document entails how much money the insurance covers, what amenities the patient is eligible for, etc.

Step 8: Follow up

In reality, hospitals and healthcare providers have a hard time dealing with insurance providers for timely reimbursements. Following up is essential to the healthcare revenue cycle management process. Hospitals that regularly follow up with insurance providers for reimbursements face fewer claim denials and payment delays. However, the reality is far from that. 

This 8-step process is a basic framework of an ideal healthcare revenue cycle. All healthcare providers face many challenges for insurance payouts despite having a revenue cycle system in place. Here are a few common challenges faced by hospitals and how they handle them.

Healthcare Revenue Cycle Management: Challenges and Solutions

One of the biggest challenges faced by healthcare facilities is getting timely reimbursements from insurance providers and bringing down the percentage of claim denials. Despite having an efficient healthcare revenue cycle system in place, the reimbursement process is riddled with complications such as:

Incorrect Coding &  error in documentation

 An error in medical coding can lead to denial of medical claims by the respective insurance provider. This can affect patient care. The best way to tackle coding and documentation error is to set up an efficient audit routine. Many hospitals have automated the audit system using AI powered technologies.

Claims denial/rejection

Error in medical coding is one of the top reasons why claims get denied by insurance providers, in fact, it accounts for 24% of claims getting denied. One of the reasons is incorrect documentation. The solution? Employ a robust evaluation system to find out any errors. Another way to solve this problem is to obtain pre-authorisation from insurance providers.

Compliance issues with regulatory requirements

Adherence to regulations is a crucial part of ensuring a robust healthcare revenue cycle management process. Failure to comply with government regulations is also a reason why claims get denied. It is essential to train all medical staff on medical compliances and the various coding practices like CPT coding, HCPCS coding and IDC coding. Again, regular audits to ensure compliance can also help recognise the areas of non-compliance, thus reducing the number of rejected claims.

Slow Reimbursement

Slow reimbursements to hospitals happen when there is no clear communication among hospital departments and between insurance companies and hospitals. The solution is to ensure that billing best practices are being followed to the book by administrative and billing staff. Automated error checking tools help expedite this process, thus saving time. 

‍

The Way Ahead for Healthcare Revenue Management Cycle

In order to ensure that your healthcare RCM is effective, there should be strict evaluation, thorough training sessions to empower staff and an efficient coding team. A strict flow in the evaluation process and adherence to rules will ensure this. Health care RCM is here to stay. Since erroneous coding is a major reason for claim rejections, employing an automated medical coding system will ensure compliance with government healthcare regulations, thus leaving very little room for any error on the part of the hospital or private healthcare facility.

The framework of healthcare RCM is well synchronised. Constant monitoring of the various loopholes will help hospitals get their payment in time. With its advanced AI workforce, CombineHealth is transforming medical coding. AI-powered medical coders like Amy help analyze medical records, including doctor notes, test descriptions, medical history, etc., and automatically assign the appropriate ICD-10 and CPT codes based on the documented diagnoses and procedures.

FAQs

‍What is the importance of having a healthcare revenue management system?

A revenue management system ensures timely payments to hospitals and healthcare providers from patients as well as insurance providers. Given how difficult it is for hospitals to get timely reimbursements, having an efficient revenue management system in place can boost incoming revenues, resulting in efficient patient care.

What are some of the common challenges faced by hospitals despite having a healthcare RCM ?

There are numerous issues that hospitals have to overcome. However, one of the major obstacles that these hospitals face is due to incorrect coding and documentation. This is where CombineHealth’s effective AI system comes into play. Amy, the AI assistant can process as many as 1000 medical files within an hour. This will help a lot of medical facilities save time over auditing the coding done in medical files.

What are some of the most crucial stages of healthcare revenue cycle management process?

Although this blog has included eight necessary steps, claim submission, coding and utilization review are some of the most important stages of healthcare revenue cycle management process.

‍