Revenue cycle management (RCM) is the process healthcare practices employ to handle the financial aspects of their business. In this guide, we will discuss whether ‘RCM in medical billing’ is a correct term or a misconception.
We will also present some of the important strategies that you can integrate into your RCM process to make your practice more productive and efficient.
Moving forward, we will discuss the key performance indicators (KPIs) that can help practices measure the impact of their RCM process on the financial health of their facilities.
So, what are you waiting for? Let’s get started!
RCM in Medical Billing – What Is It?
Are you wondering how RCM in medical billing can help your practice’s financial health? Well, here we are going to burst your bubble of thought. Because before we discuss anything specific, it is essential that we first debunk this myth.
Revenue cycle management is not a part of medical billing. In fact, they both have two distinguished functions. If both flourish, healthcare practices can scale and become profitable.
But, it won’t be wrong to say that RCM is a much more interconnected and complex process that also involves medical billing. So, keeping things straight, we can say the right title for this guide should have been ‘medical billing in RCM’.
Medical billing deals with claims submission and following up on those claims. While RCM encompasses more processes and information compared to what we deal with in medical billing.
To give you a better understanding, we are going to discuss all the key components involved in the revenue cycle management process.
Key Components of Revenue Cycle Management
- Verification of Service Delivery – Ensuring all details about patient encounters are accurate and comply with the applicable standards. This includes verifying where the service took place, what service was delivered, when was it rendered, and its duration.
- Prior Authorization – Verifying that the Medicaid or other health insurance coverage is active for the patient receiving care services before you submit the claim.
- Coding – Ensuring that appropriate and correct diagnosis or service codes are assigned to the claim and comply with the HCPCS standards.
- Claim Creation – The creation of error-free claims for the rendered services in proper format.
- Claim Submission – Securely transmitting claims to the relevant insurance payer.
- Denial Management – Analyzing claim denials to identify root causes of rejection to streamline the payment collection process and reduce the future denial rate.
- Remittance Process – Analyzing and posting the payment collections.
- Reporting – Providing daily, weekly, or monthly claim status reports on key metrics, such as account receivables (A/R), to effectively manage the practice’s revenue cycle.
Understanding the difference between RCM and medical billing is enough to realize that for a healthier revenue cycle, you have to focus on the entire RCM.
Thus, the rest of this guide will focus solely on explaining the best practices to ensure effective revenue cycle management. After that, we will discuss what KPIs you should monitor to assess the performance of RCM.
Revenue Cycle Management Best Practices
By implementing key strategies into your revenue cycle management process, you can significantly enhance its accuracy, efficiency, and productivity.
To help you get started, here are some of the most common yet effective RCM best practices:
1. Adopt a Patient-Centric Approach
Better patient-provider relationship is key to your RCM success. If your healthcare facility’s staff works proactively to keep patients engaged and satisfied, you will have patient loyalty.
Therefore, train your staff to provide verbal and written explanations about their financial responsibility, patient options, and what they can expect from the time they enter the facility till the payment collection.
Many patients find the medical billing process intimidating and confusing. However, the interactions with your staff will help them educate, and as a result, they will be more likely to pay any outstanding accounts.
2. Automate Prior Authorization and Eligibility
In any successful RCM process, the first step should be the verification of insurance coverage during patient registration. Over time, insurance companies are making their requirements more strict for prior authorization and benefit verification. This results in payment delays and denials.
Therefore, we recommend you automate this step to optimize your clinical processes, accelerate the revenue cycle, and minimize the time spent on this task by your front-desk staff.
3. Leverage the Latest Technology
Are you handling revenue cycle management in isolation? It’s time you invest in an RCM system to help you manage patient information, timely claim submission, claim denials, and automate prior authorization.
The intricate requirements and coding can overwhelm your administrative staff. By employing an effective RCM system, you empower and enable your staff to focus on other core responsibilities, such as engaging with patients, keeping them satisfied, and providing quality care.
4. Improve Charge Capture and Coding
Healthcare facilities must develop and implement processes for efficiently capturing revenues for rendered care services. Common areas that experience revenue leakage are outpatient nursing procedures, such as injections and IV therapy, since they often lack proper documentation. Besides, you can experience pharmacy revenue loss due to errors in reporting units or missing charges.
Therefore, you must train your teams to review claims and charts for any missed charges, submit complete nursing documentation, and regularly review pharmacy charges to determine discrepancies.
5. Proactive Denial Management
Unfortunately, not all of your submitted claims will get reimbursed. The insurance company will also deny some claims for several reasons, including incomplete or inaccurate patient information, coding errors, late filing, eligibility issues, etc.
Thus, to rise above this challenge, you should keep track of claim denials, asses them to identify the root cause, and implement effective strategies to prevent these issues.
What KPIs Should Be Used to Monitor RCM Performance?
Applying RCM best practices cannot take you far if you don’t assess its performance regularly. There are many key performance indicators (KPIs) that you can use to gauge your RCM’s performance. Some of them are discussed below:
- First-pass Claim Rate – This refers to the percentage of claims that get reimbursed by insurance companies when you first submit them without reworking or additional information. A high first-pass claim rate, i.e., 90% or above, means error-free coding and clean claim submission.
- Days in Account Receivables (A/R) – This represents the average days it takes for a claim to get reimbursed after the submission. A lower number of A/R days reflects efficiency. However, if the days become 50 or more, it indicates problems within your RCM process.
- Collection Rate – It represents the percentage of account bills that are collected successfully. A high percentage of this metric means efficient revenue capture and financial performance.
- Denial Rate – Denials occur when insurance companies either reject your claims or ask for additional details. Monitoring this metric enables you to identify trends, enhance coding accuracy, and reduce revenue leakage.
- A/R Aging – Monitoring this metric helps you identify and address overdue accounts. It enables practices to track the outstanding A/Rs based on the duration of the outstanding balance.
Bottom Line
Here’s a quick RECAP! This guide, ‘RCM in medical billing’, first debunked the misconception and clarified that revenue cycle management is a complex process and medical billing is one aspect of it.
Proceeding forward, we shared some RCM best practices to help you keep your practice’s revenue cycle healthier. And finally, we discussed the key metrics every healthcare facility should use to measure their revenue cycle management’s performance.
Revenue cycle management works as fuel to your practice. If you don’t focus on it, your practice will face delays in payment and revenue leakage.
