Revenue cycle management occurs in the business and administrative side of healthcare. It combines patient data with the treatment they receive and other healthcare information. To understand how it works, a patient will schedule an appointment, and the healthcare staff will usually check the patient’s insurance coverage before their scheduled visit. After the patient receives their treatment, the healthcare provider will then categorize their treatment following ICD-10 codes. (ICD-10 stands for International Classification of Diseases, 10th Revision.)
Next, the healthcare provider will send the summary of care to the patient’s insurer to see what portion of care will their insurance cover. And finally, the healthcare provider will bill the patient for the remainder.
Revenue cycle management has been helping healthcare facilities organize their patient data and collect payment. However, it’s not infallible, hence healthcare providers must always look for ways to improve it. This period is particularly critical for them, with the pandemic and rising demands for care.
Factors Affecting the Revenue Cycle
The revenue cycle is made up of nine factors:
- Charge capture — medical services translated into billable charges
- Claim submission — billable fees charged to health insurance providers
- Coding — coding diagnosis and procedures in accordance with ICD-10
- Patient collections — computing patient balances and collecting payment
- Preregistration — collecting information before a patient’s appointment
- Registration — collecting ensuing patient information during their registration (the assignment of a medical record number, etc.)
- Remittance processing — applying or rejecting payments
- Third-party follow-up — collecting payments from health insurers
- Utilization review — analyzing the necessity of medical services
Many healthcare providers employ an innovative revenue cycle management software tool to store and organize their patients’ billing records. It streamlines every step in the cycle, reducing the time between providing a service and collecting payment. An RCM software also automates a number of duties that were once handled by employees. These include notifying patients about their appointments, reminding patients of their due balances, and communicating with insurers regarding claims.
Top Challenges in the Revenue Cycle
- Billing and Collection Errors
As more patients become responsible for their out-of-pocket costs, hospitals need to ensure that they’re computing their bills correctly. But they can’t run their patients dry either, or they’d start switching providers.
According to Availity CEO Russ Thomas, hospitals must communicate with their patients about their bills at or before the point of service. If they only collect revenue long after the patient’s treatment, they’d accumulate bad debt and find it even harder to demand what they’re due.
- Health Information Tech Challenges
Some hospitals do not have the budget or infrastructure for modern or required technologies, such as electronic health records. Small rural hospitals particularly face this challenge the worst.
For this reason, the affected hospitals turn to consolidating or outsourcing. Others simply shut their doors. To mitigate this challenge, hospitals can seek guidance from information technology consultants and have an IT expert onsite at all times.
- Insufficient Staff Training
Top hospitals may use the most sophisticated RCM technology, but if they don’t train their staff enough, they will still fail in collecting the correct amount of revenue. The staff in charge of billing must master the first step in the revenue cycle, charge capture, so they can immediately determine the charges they can claim from insurers.
Gary Marlow, Vice President of Finance at Beverly Hospital and Addison Gilbert Hospital, stated that getting the most accurate information starts with patient scheduling and registration. It sets the groundwork where healthcare providers can bill claims and collect payments efficiently and effectively.
Therefore, every healthcare provider must train their staff, despite the additional costs it incurs. After all, it will save them more money in the long-run, not to mention it’s costlier to deal with bad debt.
- Erratic and Unpredictable Claim Volumes
This particular challenge emerged during the pandemic. Alpha Health conducted a national survey to study the impact COVID-19 has left on the revenue cycle of health systems and hospitals across the United States. 50.5% of the respondents reported that “Erratic and unpredictable claim volumes” were the leading revenue cycle issue they experienced.
Malinka Walaliyadde, Alpha Health’s co-founder and CEO, stated that health systems must act quickly to identify the gaps in claims-handling capacity and adjust their practices accordingly. Revenue cycle leaders may consider automation to improve their cycle operations moving forward. Their efforts will be crucial in ensuring the short-term and long-term health of their organizations, staff, and the communities they serve.
As new cases still rise every day despite the COVID-19 vaccines, many hospitals will likely continue experiencing these challenges. But thanks to technology and effective systems, they can reduce the impact of the challenges, provide patients with the quality of care they deserve, and receive what are due accordingly.