For a lot of people, revenue cycle management is a scary term that means administrative processes and policies. While there certainly are some, most health care revenue cycle management involves ensuring that a clinic or hospital can afford to give care at the best level possible. Read on as revenue cycle management is explained in terms everyone can understand.
What It Is
Revenue cycle management in health care simply refers to the finances that allow the hospital or clinic to function. It involves claims processing, payment, invoicing, revenue generation, medical coding, financial management, and analysis. The best revenue cycle management maximizes the collection of patient service revenue while reducing the outstanding revenue totals to improve the cash flow of the organization.
Why It Is Important
Without revenue cycle management, hospitals would have massive amounts of accounts receivables and revenue generation would be a comparative trickle. In fact, while no one but those who work in the field like it, without it, most health care organizations couldn’t keep their doors open. Cycle management allows hospitals to pay the bills. Many institutions rely on revenue cycle management companies to manage their revenue.
When a patient visits a health care facility, their insurance is verified, and their account is either created or updated. During preregistration, information is collected that helps develop a profile of a patient that gives some indication as to what to expect from that patient in terms of revenue generation and health care services used.
Once a patient has been treated, a claim submission is created and submitted, and the appropriate health care codes are affixed to their account. An invoice is then generated and submitted to their insurance company for reimbursement. Anything not covered is forwarded onto the client via the organization’s internal billing department.
The coding must be highly accurate for the billing cycle to move along as fast as possible. This is why third-party revenue cycle managers are frequently used. They understand the coding and can minimize mistakes. They also can work with insurance providers to address coding errors or discrepancies, increasing the amount of money a claim can generate.
The goal of revenue cycle management is to streamline the billing process and minimize errors. This speeds up reimbursement and collections. Additionally, it ensures a steady stream of revenue is coming in at all times, based on client load.
A revenue cycle management strategy that works best is to push at the front end to get claims in quickly while not sacrificing accuracy. By minimizing errors, claims are processed quicker and collections for aspects of the bill not covered can begin more quickly. This inevitably means that revenue streams become more stable.
That means the preregistration period is about as important as any other part of the cycle. Having that completed correctly generally means that insurance companies will cover services provided with little pushback. Establishing eligibility before treatment vastly reduces both rejections and having to go after patients for more money than is necessary. The most difficult part of the process is collecting from patients, so minimizing that also helps revenue streams.
This is revenue cycle management in a nutshell. It basically allows a hospital or clinic to streamline its billing to facilitate the quick collection of revenue. That, in turn, means the organization can stay financially viable. For more information, check out Medical Business Services, LLC.