Did you know that medical billing is only a single element of revenue cycle management (RCM)? However, both of them are essential for sustaining your practice. While medical billing specifically deals with medical claims, RCM is a comprehensive financial process. It optimizes the entire financial arm of a practice to maximize revenue.
We all understand the importance of revenue growth for survival in any industry. Your practice can only achieve financial success by integrating medical billing into the larger framework of RCM. But for that, you must understand the distinct roles of medical billing and revenue cycle management.
Revenue Cycle Management (RCM)
Revenue cycle management, or RCM for short, manages the finances of a healthcare organization. Healthcare providers in high-volume practices use RCM to charge and track/ collect payments. It also helps them provide excellent care to the patients.
About 45% of healthcare providers have improved their patients’ experience through effective RCM.
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Unlike medical billing, which has a sole purpose, RCM covers all the financial aspects of a patient’s care from the initial to the final stage.
From the appointment to the payment, it optimizes the entire lifecycle of a patient’s interaction with a healthcare facility. The key components of this comprehensive approach include:
- Patient registration
- Charge capture
- Medical coding and billing
- Claim submissions
- Payments
- Data analytics and reporting
Medical Billing
In comparison, medical billing is a component of RCM and hence has a more specific focus. AAPC defines medical billing as the method for determining who should be billed based on a patient’s medical records. In other words, this process mainly deals with medical claims.
Medical billing is primarily a transactional process, often involving various steps, such as coding and submitting claims to ensure timely reimbursements to healthcare providers for their services. The main steps of this process include:
- Coding
- Creation of a claim
- Submission of a claim
- Follow-ups
Key Differences: Medical Billing vs. Revenue Cycle Management
Both medical billing and revenue cycle management are important cogs in the healthcare revenue cycle. These concepts rely on each other for efficient operations.
For example, RCM minimizes the claim denial rates by up to 50%.
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However, they are not the same thing. RCM’s primary goal is to reduce billing issues and increase collection ratios. Whereas, medical billing is only its subset. Let’s discuss their key differences!
Scope: Broad vs Narrow Focus
RCM is a comprehensive process with a broader scope. It covers the entire financial cycle of a patient, encompassing tasks such as patient registration, medical coding, medical claims, claim denial management, and reporting.
Meanwhile, medical billing is only a singular element of this framework. Unlike RCM, it primarily focuses on timely claim submissions and reimbursements. Hence, although medical billing generates significant revenue for your practice, it mainly deals with bills and payment collections.
Approach: Collaborative vs Independent Operations
Revenue cycle management takes a holistic approach to providing better care to the patients and as a result, optimizing revenue streams. This framework requires the cooperation of various departments within a healthcare organization, including finance, administration, clinical, and more, to successfully integrate different processes. The collaborative approach enhances the efficiency and performance of the RCM model.
On the other hand, medical billing operations are independent. Instead of collaboration, billing experts focus on decreasing the claim denial rates through accurate coding and claims submission.
Objectives: Improved Customer Satisfaction vs Timely Payments
While revenue cycle management and medical billing are related concepts, they have different objectives. RCM makes the financial operations of a healthcare organization more efficient. It streamlines the entire revenue lifecycle of the patients, consequently improving their satisfaction. The main goal of RCM is to improve the financial stability of a healthcare organization while delivering high-quality services to patients.
In contrast, medical billing aims to improve the acceptance rate of medical claims. Medical billers follow a series of steps to submit accurate claims on time. This process helps healthcare providers secure timely reimbursements by complying with coding and billing standards.
Challenges: Changing Regulations vs Payer Policies
The advancement of technology and ever-changing regulations present new challenges for medical billing and revenue cycle management services.
Health insurance claim denials have increased because insurance companies now employ computer algorithms to verify medical claims.
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So, what are the consequent challenges?
RCM-related issues range from dealing with complex regulations and maintaining data accuracy across different departments to ensuring effective communication. Maintaining a healthy revenue cycle management system can also become challenging when process integration requires substantial technological investments.
On the other hand, medical billers have to keep up with changing insurance policies and coding updates. Non-compliance could result in inaccurate coding, leading to claim denials and delayed reimbursements.
Interdependence Between RCM and Medical Billing
Both revenue cycle management and medical billing are essential elements of a healthcare organization’s revenue management system. They both depend on each other to improve the financial health of an organization. Since medical billing is a part of RCM, accurate billing is essential for increasing the effectiveness of this process.
Meanwhile, RCM increases the claim acceptance rates by ensuring that medical billing complies with the set regulations. This interdependency between medical billing and RCM maximizes the revenue of a healthcare facility while decreasing claim rejections.
Professional medical billers often work with RCM teams to create a more cooperative environment. This collaboration results in improved operational efficiency, patient satisfaction, and financial stability of healthcare providers.
Do You Need Medical Billing or RCM Services?
Both medical billing and revenue cycle management are essential elements in a healthcare system. You cannot achieve financial stability by prioritizing one over the other. Medical billing allows you to prepare and submit accurate billing data and claims to insurance providers.
You can either perform these operations by yourself or outsource medical billing services. You can seek professional help for complex billing procedures, like coding for major surgeries. In such cases, medical billing companies handle the complexities of your medical claims.
Meanwhile, revenue cycle management services are suitable for high-volume healthcare practices. They help improve revenue by optimizing all operations and adhering to the ever-changing healthcare regulations.
In short, medical billing and revenue cycle management are indispensable in any healthcare practice. These services improve financial stability and enhance patients’ satisfaction by reducing billing misunderstandings.
At MediBill MD (view profile on DesignRush), we provide a comprehensive range of medical billing and RCM services tailored to the needs of healthcare practices. We cater to a wide range of healthcare specialties by offering a viable solution to all billing complexities.
Summary – Medical Billing vs. Revenue Cycle Management
Don’t let financial stress get in the way of quality patient care! Both medical billing and revenue cycle management are essential for enhancing your revenue. However, you can only achieve financial success by understanding their differences. Where medical billing is a subset of RCM and deals with medical claims, RCM is a comprehensive process that optimizes the patient’s entire financial lifecycle. Together, both services increase the cash flow of healthcare organizations by reducing claim denials. As a result, healthcare providers get timely reimbursements, allowing them to focus on providing excellent patient care.
