Understanding the Importance of Revenue Cycle Management

Simply put, Revenue Cycle Management allows hospitals and other medical establishments to ensure the timely collection of payment from individuals and insurance providers. In order for this to happen, RCM makes use of a number of tools in the form of software applications in order to retrieve and analyze data as well as check for eligibility for medicaid and other coverages.

Time to Rethink Revenue Cycle Management

As the dust settles on the changes brought about by healthcare reform, the need for a ‘culture shift’ regarding how hospitals approach their patients will become much clearer. At present, many hospitals focus on providing appropriate care while compensation is sorted out later. Unfortunately, this type of system presents certain challenges, which current revenue cycle management processes are ill-equipped to handle.

A recent report from the Healthcare Information and Management Systems Society (HIMSS), titled Rethinking Revenue Cycle Management, identifies four of these challenges, namely: rapid growth in consumer payments, reduced payer reimbursement rates, an ever-changing regulatory environment, and shifting consumer expectations. If hospital executives want to survive as healthcare evolves and becomes more patient-oriented, they will have to shift their focus on revenue cycle management and rethink their front-end management systems.

A proactive approach must be taken to collecting payment upfront. This helps ensure that patients understand how to get what they are eligible for and educate them on how to control their out-of-pocket costs. 

Shifting to this kind of focus will be difficult for many hospitals, as it involves the complete overhaul of many systems. There really isn’t much choice in the matter, though. Hospital sectors must start realizing that caring about compensation is essential to providing quality care for patients as the healthcare system expands and changes, lest they run the risk of losing their business.

How to Improve Hospital Revenue Cycle Management

To maintain a steady income for your health facility, you need to counter the effects that come with cash flow declines as well as changes in margins and the accumulation of bad debts. This may seem challenging, but with a good revenue cycle management plan, you will be able to achieve your goals. Here are a few solutions you can use to improve the revenue cycle management of your hospital:

Pre-Screening Patients for Medicaid Eligibility

Growing financial pressures are forcing hospitals to re-evaluate the question of what makes good revenue cycle management. Processing claims and payments isn’t enough. Hospital administrators need to be able to maximize their ability to capture revenue from all of their patients – regardless of their current financial situation.

Healthcare Requires Cash: Revenue Cycle Management

No one expects to pay cash when they go to a hospital. After all, the usual reason for going is a medical emergency. Hospitals are typically paid by the patient’s health insurance. The problem is, this means that the facility will not receive payment until all the paperwork is done; which can throw a spoke in paying the bills for its maintenance. The functions and processes in capturing, managing, and collecting revenue in a healthcare system is known as revenue cycle.

The Most Important RCM Metrics You Must Measure

Revenue cycle management (RCM) is tough enough work as it is. Still, most of the burden can be eased by keeping close watch of five major metrics, namely:

FPRR – AKA the first-pass resolution rate, the FPRR points to the share of a practice’s claims which get paid upon only the first submission. Keeping track of this metric ensures a bird’s-eye-view of a practice’s RCM processes, from verifying insurance eligibility to coding and billing.

Ethics of Maximizing Reimbursement

Behind every instance of your patients flashing their Medicare or Medicaid card is a three-step process for filing your reimbursement. Proper coding comprises two-thirds of the task, which is why it's important to get the codes right. Aside from the ICD-9 (soon to be phased out in favor of the ICD-10), practitioners have their own local codes.

Physicians use the current procedural terminology (CPT®), a coding system maintained by the American Medical Association developed in 1966. The CPT® is updated yearly to include as many treatments and diagnoses as possible. The codes evolve along with the evolution of medical technology and recent discoveries in the field.

Why is Revenue Cycle Management Necessary?

Running a health practice is simultaneously a rewarding and challenging endeavor. On the one hand, you get to heal people of what ails them; on the other, there’s a mound of paperwork you need to accomplish. Then there’s also the issue of collecting payments from the patients you’ve treated.

To make daily operations smoother, many hospitals and clinics utilize what’s called a revenue cycle management (RCM) system. This tool, which is a type of software, offers two key benefits: