Examining the Basics of the Health Care Revenue Cycle

The health care revenue cycle is more than just collecting bills and is a pillar of a successful organization.

There are a number of different processes that go into running a successful health care organization. However, regardless of whether you are a multi-location hospital network spread across the country or a private practice of one doctor and one nurse, revenue cycle management is one of the most critical processes that organizations need to master to be successful.

Revenue cycle management (RCM) is the process that handles claims processing, payment and revenue generation.

In the simplest terms, it is a health care organization’s financial circulatory system. It is all administrative and clinical functions that contribute to the capture, management and collection of patient service revenue. It is the entire life of a patient account.

RCM includes the use of technology to keep track of any claims through their entire lifecycle, ensuring payments are collected and addressing any denied claims. The ultimate goal allows health care providers doing the billing to follow the process and address any issues quickly, allowing for the steady stream of revenue. A system running effectively prevents denials of claims and maintaining a visible, efficient billing process.

RCM also encompasses everything from determining patient insurance eligibility and collecting co-pays to properly coding claims using ICD-10. Phyllis Wright, the Office Manager at Lake Shore OB/GYN, has said that RCM is nothing magical. It is simply how an organization pays the bills and optimizing these solutions is critical to success.

A streamlined and efficient revenue cycle is one of the pillars of a successful health care organization. However, one that lacks efficiency, proper skills set of staff and effective denials management can negatively impact the healthcare facility’s bottom line. To do this successfully, organizations need to consider coding of diagnoses, signs and symptoms, services or procedures, and supplies involves the process of assigning numbers to narrative diagnostic and procedural statements.

The narrative and statements become coded data that can easily be collected, stored and manipulated for internal and external purposes.

• The basic steps include:

• Scheduling/pre-registration

• Point of service registration counseling collections • Encounter Utilization Review and case management • Charge capture and coding

• Claim Submissions

• Third Party follow-up

• Remittance processing and rejections

• Payment posting, appeals and collections.

Clearly, the revenue cycle is more than just ensuring the end balance on any account is zero. It starts the moment a patient calls to make an appointment and ends when everything is collected. Staff needs to properly capture patient’s name, phone number and insurance company. There are many steps that need to be taken from the very beginning to ensure that nothing goes wrong. Failure to capture insurance information while setting up an appointment, for example, could lead to wasted time and resources when it is discovered that a patient’s provider is not accepted.

Ripe for Technological Innovation

The revenue cycle management marketplace has experienced substantial innovation in recent years. Because it is such an important aspect of operations, it is no surprise that there would be new software and systems in this area. This has happened through direct software systems and approaches, as well as indirectly through electronic health records and other health care technologies.

According to Alan Soberblom, the vice president and CIO at Adventist Health, the revenue cycle is an area that is experiencing some of the most innovation around.

“I think the area for some of the most innovation is around revenue cycle,” Soberblom said. “Innovating around improved integration and operational efficiency are what set ‘Most Wired’ organizations apart from others. Having registration, scheduling and patient account workflows on a single platform can dramatically increase efficiencies by helping users to complete tasks without having to switch between multiple solutions.”

It can be hard for a revenue cycle team to manage multiple high-priority projects at once. However, it is even harder when these systems are separated and not as seamless as possible. This is creating a need for hospitals to examine the entire revenue cycle. While many organizations have a solution that works, it may not be ready to handle the latest technology.

There are several areas that health care organizations need to focus on when it comes to investing in tech solutions that will help revenue cycle management solutions be more successful. These include:

System Integration – Revenue cycle systems can be very siloed. This leads to lost revenue opportunities. Organizations need to examine integrated software and hardware systems, assuming capital is set aside for a project of this magnitude, that can combine patient accounting, billing, collections and electronic health records.

Billing and claims management – Reducing denials and rejected claims, training staff on denial management processes, improving point-of-service collections and decreasing delays in patient billing can all improve revenue cycle productivity.

Contact analysis – Robust data and proper strategy can help hospitals and other providers leverage more in negotiation sessions. The revenue cycle has to have the confidence to both effectively negotiate rates and adjust the contracting process as needed to boost revenue opportunities with payers.

Coding/ICD-10 – Financial management teams have been hearing about ICD-10 and it will be a revenue issue, not just a coding/health information technology issue. Physicians need to ensure that they are coding everything correctly as a single mistake can lead to overbilling and cause any health care organization to fail an audit.

Clinical documentation demands – Much like ICD-10, systems like meaningful use and other electronic documentation solutions can also impact revenue systems.

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Photo courtesy of: Lending Memo