Friday, January 26, 2024

What is Revenue Cycle Management?

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What is Revenue Cycle Management (RCM) in medical billing?

Revenue Cycle Management is critical to the profitability of any healthcare organization. Medical billing is one of the components of Revenue Cycle Management. However, RCM extends beyond payment posting. Medical practitioners use RCM to evaluate, track, and adequately manage the progress of patient claims on the receivable accounts.

The medical sector’s backbone is Revenue Cycle Management (RCM). It oversees the providers’ money and maintains them running regularly. There are numerous organizations engaged in the process to ensure its success. The importance of medical billing services and front-desk personnel in the United States cannot be overstated.


If you are interested in the medical billing sector, you must be familiar with RCM. Today we are going to discuss RCM (Revenue Cycle Management), which is most important for medical billing. So you have not any sound knowledge or have not been heard before, do not worry. Let us discuss all relevant information from the beginning.

What is Revenue Cycle Management?

Revenue Cycle Management (RCM) is the process of finding, gathering, and administering revenue from patients depending on the services given by the organization. An effective RCM process is important for a healthcare practice’s financial sustainability. And in order to keep providing excellent care to its patients.

The shift toward value-based compensation and more holistic patient care has compelled healthcare professionals to reconsider their approach to revenue cycle management. Improper billing processes can lead to financial losses and jeopardize the capacity to provide quality treatment.

RCM integrates healthcare’s medical and administrative aspects by combining administrative data, like a patient’s name, insurance provider, and other private information, with the treatment they get and their health records. With the treatments they get and their health records.

Communication with health insurance companies is an important aspect of RCM. When a patient makes an appointment, the practitioner’s office or facility personnel usually double-checks the patient’s stated insurance coverage before the visit. A healthcare practitioner or coder classifies the nature of the treatment using ICD-10 codes. 

After an insured patient receives treatment for a particular illness and pays any appropriate copayment. The hospital or care provider then submits the service brief, complete with ICD and Current Procedural Technology codes, to the client’s insurance company to determine what percentage of the treatment will be reimbursed by insurance, with the patient billed for the balance.

The Revenue Cycle 

Revenue Cycle Management entails more information and procedures than what we deal with in billing services. RCM is concerned with the administration of different financial transactions that arise as a result of medical interactions. The interactions take place between patients and medical suppliers, institutions, or health care providers.

Transactions are including:

  • Billing
  • Coding
  • Collections
  • Compliance
  • Data Analytics
  • Management Duties

So you can now understand, RCM is a complicated process. It must be. Your first concern should be to keep the lights on and pay your employees. Otherwise, you will be unable to serve patients.

According to the Healthcare Financial Administration Association, the revenue cycle encompasses all medical and administrative tasks that assist in capturing, administering, and collecting patient service revenue (HFMA).

The revenue cycle comprised of the following steps:

  • Charge capture: Charge capture is the process of converting medical services into billable costs.
  • Claim submission: Claim submission is the process of submitting claims for billable expenses to insurance companies.
  • Coding: coding diagnosis and procedures correctly.
  • Patient collections: Patient collections entail calculating and collecting patient balances.
  • Pre-registration: Pre-registration is the process of gathering pre-registration information, like insurance coverage, before a patient arrives for inpatient or outpatient operations.
  • Registration: Registration entails gathering more patient information during registration in order to create a medical record number and fulfill numerous regulatory, financial, and clinical criteria.
  • Remittance processing: The application or rejection of funds via remittance processing.
  • Third-party follow-up: Collecting reimbursements from third-party insurers is referred to as third-party follow-up.
  • Medical service review: Examining the need for medical care 

Difficulties in managing the Revenue Cycle

The Revenue Cycle commences when the patient schedules an appointment and concludes when money is collected successfully. However, several procedures must be done properly and swiftly in order to assure prompt payment. Human error owing to coding complexity, misunderstanding, medical billing errors due to duplicate data, and incomplete information or spelling mistakes all have the potential to result in revenue loss.

Obtaining timely compensation might be complex due to constantly changing healthcare regulations and reimbursement methods. This can also place additional demands on employee time and frequently necessitates using suitable software technologies to conduct essential reports. Healthcare practitioners frequently deal with minimal resources. To achieve RCM success, providers must often focus on increasing organizational productivity.

The benefits of a Revenue Cycle Management system

Many healthcare providers decide to invest in Revenue Cycle Management (RCM) software, generally a Practice Management product. However, some providers may prefer to outsource RCM in order to assure a complete and correct understanding of ICD-10 codes.

RCM software is typically suitable, although it can also interface with Electronic Health Records (EHR). Integrating with other EHR systems can help store and maintain patient billing information and effectively shorten the time while seeing the patient, billing, and payment.

An RCM system may be able to help with the shift from fee-for-service to value-based compensation by providing a more comprehensive view of the patient demographics. Other advantages of an RCM system may include:

  • Saving time by automating tasks like appointment and payment reminders and contacting insurance about claim denials.
  • Providing information on why a claim was refused
  • Include mistake detection to aid in the correction and monitoring of underpaid claims.
  • Possibilities for reviewing revenue shortages
  • Issuing staff urges to input information in order to save money on claim revisions and get insight into why claims may be refused
  • Ensure correct compensation for medicare patients
  • Identifying a patient’s financial status and payment requirements

Factors that may affect Revenue Cycle Management

The supplier has limited influence over the payment resulting from the claim review and rejection procedure. Long wait times for billing and claims to be handled for provider payments may occur from claims denied owing to insurance verification difficulties and increased efforts to prevent healthcare frauds and misuse.

However, there are specific internal issues over which the supplier seems to have some control. Providers may enhance their Revenue Cycle Management by focusing on productivity, patient volume, and collecting payments for services. 

Among the issues that might obstruct the Revenue Cycle Management process are:

  • Patient payments collection

The patient’s contribution to healthcare expenditures is increasing. Therefore, when patient payments are collected before or during their service, the danger of lack of payment is totally eliminated. However, this is frequently a complicated process because many people cannot afford the large deductibles and are ignorant of their financial responsibilities.

Patient pre-registration is critical for obtaining the correct information about a patient’s history and insurance details ahead of time in order to prevent claim denials. In addition, this allows for the payment process to be front-loaded by obtaining information regarding insurance coverage, supplementary insurance, the patient’s maximum permitted visits, and assessing the patient’s financial responsibility.

  •  Issues on eligibility

Communication with medical insurance companies is essential. Failure to manage the insurance claims after submission can result in pending, rejected, or denied claims, as well as claims that were never received. Monitoring claims to discover where problems arise, like difficulties with certain procedures or codes, can assist raise awareness and minimize recurrences.

  • Insufficient digital workflow

Without such capacity to simplify the digital workflow, inaccurate data and future revenue cycle difficulties might occur. Creating effective supporting healthcare IT architecture can help with Revenue Cycle Management and the capacity to process required reports. Implementing an electronic workflow can also aid in the smooth coordination of front and back-office communication and the elimination of missing paper paperwork.

  •  Administrative processes are fragmented

The front and back ends of the office sometimes have opposing priorities. Claim denials can occur if the information is not given. Effective communication about coverage status at patient registration can help with insurer coordination, claims reimbursement, and payment collecting.

Priority should be given to front-end administrative activities to expedite claims and help underprivileged patients understand their coverage choices through insurance marketplaces. Revalidating patient insurance details are frequently missed on future visits, resulting in eligibility denials.

Management of the Revenue Cycle Management process

Understanding and enhancing an organization’s core operations systems can enable the provider to begin managing the RCM process instead of allowing claims to influence the provider’s financial sustainability. In addition, focusing on early identification of difficulties with pre-registration may aid in identifying eligibility concerns and averting first claim denial, while using RCM software may assist in ensuring timely payment.


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I am a medical biller, a blogger and have 20 years of experience in medical billing, medical billing management, and medical assistant. My background includes positions as a clinical medical assistant, medical records technician, medical office manager, biller, and coder. I am certified by the American Academy of Professional Coders (AAPC) as a Certified Professional Coder (CPC) and by the Practice Management Institute (PMI) as a Certified Medical Office Manager (CMOM). As an office manager/biller/coder, I was a member of the Michigan Medical Group Managers, Michigan Medical Billers Association. I also served as a committee member of the Michigan Osteopathic Association of Practice Managers Education Committee.

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