Healthcare Revenue Cycle Management

Healthcare Revenue Cycle Management

Running a successful business in any healthcare niche requires more than knowledge of your specialty. You need to understand marketing and finance as well. Unique to the healthcare industry is managing the healthcare revenue cycle. Where other businesses rely on straightforward net 30 terms or payment due at time of sale, healthcare-related businesses must deal with a third-party for payment – insurance carriers. To manage your cash flow, you must carefully manage your revenue cycle. Effective healthcare revenue cycle management begins with understanding the cycle, avoiding the pitfalls, and using technology where possible. 

Steps in the Healthcare Revenue Cycle

To manage the cycle, you must understand the components. While revenue technically begins with charge capture, there are steps that must be taken in advance to ensure the cycle is completed. 

Preregistration collects patient and insurance information before the first appointment. Online, secure patient portals speed this process.

Registration collects any additional information needed at the time of appointment and re-verifies that coverage is still in place. This information is also used to meet various regulatory, financial, and clinical requirements.

Charge capture happens when the services you provide are converted into billable charges.

Coding and Claim Submission converts your billable services into the proper universally accepted medical codes for diagnoses and procedures and then submits the claim to the insurance company. 

The Remittance Processing phase is where the insurer either accepts and pays the claim, adjusts and pays a different amount, or rejects the claim. 

After remittance, you enter the Third-Party Follow-Up phase where you bill and collect from the patient for charges not paid by the insurer.

Finally, as part of the Utilization Review phase, you should analyze your clinical treatment data to discover ways to reduce expenses, better use resources, and improve patient outcomes. 

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Image Courtesy TechTarget

Any problem in one phase affects the other phases downstream. For example, failure to code correctly may cause a problem in remittance processing. 

Most Common Challenges in Healthcare Revenue Cycle Management

Every healthcare practice is unique, but most face the same challenges when managing their revenue cycle. The top three challenges are:

  • Sloppy billing
  • Untrained staff
  • Poor claims monitoring

Sloppy billing impacts the cycle at many steps. Failure to keep insurance records current can cause you to miss lapses in coverage, changes in coverage, or changes in co-pay. Incorrect coding or charge capture can cause claims to be rejected. 

Untrained staff may collect data improperly, make mistakes in data entry that lead to coding errors, or fail to communicate your financial policy to patients. Technology can help with sloppy billing, but it requires training. Implementing technology without adequate training doesn’t solve problems, it only adds to existing problems. 

Poor claims monitoring leads to lost revenue. When you don’t follow-up billing for the patient portion of services or clean-up and resubmit claims you are throwing money away. Every time a claim is returned for more information, it just adds to the cost of submitting the claim. It costs an average of $25 to clean up a dirty claim. So, keep an eye on your clean-to-dirty claims ratio. 

The Role of Technology in Healthcare Revenue Cycle Management

Whether you do billing and accounting in-house or outsource these functions, you need to understand the role of medical billing and accounting software in healthcare revenue cycle management. 

These digital solutions can verify insurance coverage, notify you of the appropriate copayments; send claims with specific treatment codes to insurers once services are delivered; and bill for any remaining balances. They track your purchases of medical supplies and maintain your personnel and payroll records.

As healthcare offices undergo digital transformation, they better manage the healthcare revenue cycle, reduce stress on staff, and create a more efficient office. 

For example, take a look at coverage verification. It’s important to verify coverage and know the copayment before the first appointment. By using technology to establish an online portal, you give patients the ability to securely submit their insurance paperwork and self-report their medical history. By the time they first arrive in your office, medical billing software tells you if your services are covered, what payment you will receive from the insurer, and the amount due from the patient. 

Your accounting software can not only manage your inventory but allocate the resources used for each treatment. This leads to better coding and billing. 

Many technology suites help clean up dirty claims and integrate for electronic claims submission. You submit faster and get paid quicker too. 

Maintaining a healthy bottom line for your practice includes monitoring the health of your revenue cycle. 

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