Revenue cycle management is the process of managing all aspects of a company’s revenue stream. This includes collecting payments, processing claims and denials, and resolving customer issues. It’s important for any business owner to understand how this process works because it can have a direct impact on their bottom line.
In this article we’ll explore why revenue cycle management is essential for running a successful business and outline how you can implement it in your own company.
What is Revenue Cycle Management?
Revenue cycle management is a process that involves the collection, processing and payment of healthcare claims. Revenue cycle management includes activities such as claim submission, adjudication, billing and collections.
It’s important to understand that there are many components involved in revenue cycle management. These include:
- Claim Submission – The first step in the revenue cycle process is submitting claims for reimbursement from your payer (insurer). This can be done electronically or manually depending on your preference and what type of software you use for this purpose.
- Clearinghouses are essential for healthcare providers to submit electronic claims to insurance companies. Insurance companies require electronic submissions for many reasons, including faster processing times, reduced errors, and the ability to track claims more efficiently.
A clearinghouse is a third-party service that processes and submits electronic claims to insurance companies on behalf of healthcare providers. They act as a middleman between the provider and the insurance company, translating the provider’s data into the format required by the insurance company.
Clearinghouses also perform several other functions, including checking claims for errors and discrepancies, verifying patient insurance coverage and eligibility, and tracking claims throughout the entire revenue cycle process.
Using a clearinghouse can help streamline the revenue cycle process and reduce the likelihood of claim denials or rejections. This is because clearinghouses are equipped with sophisticated software that can detect and correct errors in claims before they are submitted to insurance companies.
In addition to processing claims, clearinghouses can also provide valuable analytics and reporting tools that can help healthcare providers track revenue and identify trends in their claims data. This information can be used to improve billing and collections processes and ultimately increase revenue for the practice.
However, it’s important to note that not all insurance companies require electronic submissions through clearinghouses. Some insurance companies still accept paper claims, while others have their own proprietary electronic claims submission systems. Healthcare providers should check with their insurance companies to determine their specific requirements for claims submissions.
Using a clearinghouse for electronic claims submissions is an essential component of revenue cycle management for healthcare providers. It can help streamline the revenue cycle process, reduce errors, and increase revenue for the practice. Providers should work closely with their clearinghouse and insurance companies to ensure that all claims are submitted accurately and efficiently. - Claims Adjudication – Claims will either be approved or denied by your payer based on their policies and procedures for determining eligibility for reimbursement based on specific criteria such as diagnosis code(s), patient age etc. Claims adjudication is the process of reviewing and processing a healthcare claim to determine the outcome of the claim, which can be paid, denied, or pending. The claim adjudication process typically involves a thorough review workflow from all parties involved, including payers and providers, to determine the outcome of the claim. For better or worse, this process has become more automated and auto-adjudicated with the help of advanced technology in recent years. With the latest AI algorithms, you may have seen in recent news how some major insurance companies are under investigation due to their auto adjudication processes violating state and federal laws that ultimately hurting the providers and the clients. Some steps of the claim adjudication process can include initial processing review, automated review, manual review, payment determination, and payment appeal procedures.
If a healthcare claim is denied, it means that the insurance company or payer has determined that they will not pay the claim. However, it’s important to note that a denied claim is not the same as a rejected claim. A rejected claim is a claim that has not been fully processed by the insurance payer, whereas a denied claim is one that has been fully processed and the payer has decided not to pay. In the case of a denied claim, the reasons for the denial can vary and may include invalid codes, lack of medical necessity, or missing information.
If your claim is denied, there are several steps you can take to try to appeal the decision. The first step is to identify the reason for the denial and gather any necessary information or documentation to support your appeal. You can then file an appeal with the insurance company or payer, and the appeal process may involve additional reviews and documentation.
It’s worth noting that not all denied claims are recoverable, and as many as two-thirds of rejected claims are recoverable. All that to say that a strategic approach and timely follow-up can increase the likelihood of successfully appealing a denied claim. - Billing – Once a claim has been adjudicated successfully by an insurance company it will then be sent electronically or manually depending upon how they prefer their providers to send them their bills; however most providers prefer electronic billing because it saves time & money!
- Collections – If there are any outstanding balances remaining after all previous steps have been completed then you can continue to send escalating letters, eat the cost, or refer out to collection agencies for a fee which means sending out letters threatening legal action if full payment isn’t received within 30 days etc. For many insurance companies, the clock is ticking so as a service provider you only have so long that you can submit your claim. As you can see, the claims process is quite complicated and time consuming; however, it is absolutely necessary in order for healthcare providers to stay in business.
The Takeaway From All Of This
Neglecting your revenue cycle management is a dangerous gamble that no business can afford to take. The consequences of poor RCM can be disastrous, leading to financial instability, damaged reputation, and even the complete collapse of your enterprise. By implementing effective revenue cycle management strategies, such as utilizing technology, streamlining processes, and investing in professional expertise, you can safeguard your business’s financial health and secure its continued success. Don’t wait until you’re in crisis mode to take action—prioritize your RCM today and reap the rewards of a well-managed, thriving business. Remember, the key to maintaining a strong and prosperous organization lies in diligently managing its lifeblood: its revenue cycle.
Thanks,
Neil Colvin
CEO / Founder
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