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What is Revenue Cycle Management?

Jho Outlaw

January 31, 2018 By Jho Outlaw


what is revenue cycle managementRevenue cycle management (RCM) is a term that is so ubiquitous in healthcare that, at times, the full breadth of what it entails and its importance can be lost. So, I thought I’d use this post to discuss a seemingly simple question: “What is Revenue Cycle Management?”

While there are several definitions for RCM, I like to think of it as all of the activities taken to ensure you’re an ambulatory surgery center (ASC) that receives the maximum and appropriate revenue for a patient’s encounter, from when their appointment is first booked through when their balance is paid.

One way to understand this critical component of any healthcare provider’s financial performance is to break down the processes that comprise successful RCM. For an ASC, RCM processes typically include the following:

  • Patient management: Within RCM, patient management includes all the steps required to bring patients to the facility for their procedures, such as scheduling, gathering of required documentation, registration and collection of patient out-of-pocket expenses.
  • Claim preparation and submission: Following completion of a procedure and required documentation, an ASC's business office or RCM partner fills out and submits the claim. The claim is the request for payment sent to a health insurer so the ASC can receive reimbursement for those services provided to the patient. Information that must be provided on the claim include patient contact information; insurance policy information; diagnosis; date(s) of service; and procedures provided and their corresponding medical codes and modifiers. The objective is to submit a clean claim, which is one that is free of errors and not likely to face denial by the insurer.
  • Claim management: Submission of a claim does not ensure correct payment (or sometimes any payment at all). It is through the claim management process that claims are tracked from their filing to eventual receipt of payment. If completion of this process encounters obstacles (e.g., lost claims, incomplete claims, requests for additional documentation, denials), effective claim management is designed to address these problems and increase the likelihood of proper payment in a timely manner.
  • Accounts receivable (A/R) management: The longer claims and patient bills are unpaid, the longer money for services already rendered is unavailable to an ASC. And the longer payments are not captured, the less likely it is that the ASC will receive the payment (or full payment) at all. A/R management helps ensure payments are captured and done so in a timely manner. For delayed payments, an effective A/R management process allows the ASC or RCM partner to monitor the status of unpaid or partially paid claims and bills and identify appropriate actions to bring in those payments while maintaining customer-focused service.
  • Follow up: There are laws that dictate the amount of time an insurance company can take to pay or deny a claim. Many insurance companies will try to use as much of this time as possible, which contradicts the desire of an ASC to receive payment as soon as possible. With an effective process for following up with insurance companies on submitted claims, an ASC can identify the status of those claims and learn of potential denials faster, enabling a quicker response and resolution.
  • Reporting: The production and analysis of reports on RCM performance are vital to catching potential problems early and identifying opportunities for improvement throughout the complete RCM process. The generation of reports provide a means to benchmark internally and externally and monitor whether changes to a process deliver expected, sustainable results.

Each of these processes is equally critical to successful ASC RCM. If performance in any area suffers, overall RCM will suffer. Surgery centers must understand every processes' components and work to maintain a high level of performance throughout the complete revenue cycle if they wish to grow their bottom line.

eBook: Guide to Revenue Cycle Management for Surgery Centers

Topics: Revenue Cycle Management

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