What is Healthcare Revenue Cycle Management?

Revenue cycle management is the process used by healthcare systems in the United States to track revenue from patients from their initial appointment or encounter with the healthcare system to their payment of balance.

Revenue cycle starts with the appointment or hospital visit and ends when the provider or hospital gets paid fully for the services provided.

The seven steps of revenue cycle include preregistration, registration, charge capture, claim submission, remittance processing, insurance follow-up and patient collections. This article reviews each of these steps, what’s entailed in them, what can go wrong within the revenue cycle process, and how to prevent missteps.

1. Preregistration.

Preregistration is the first and most vital step in the revenue cycle process. Preregistration allows the medical practice to capture demographic information, insurance information and eligibility in real-time through a clearinghouse, often while the patient is still on the phone. Information goes to the patient’s insurance carrier and flows through the provider’s practice management system, then tells the provider the patient’s coverage, deductible, co-insurance, co-payment, and in certain instances, if a referral is needed.

During preregistration, the practice can discuss financial expectations of the patient, including time of payment and no-show/cancellation policy. The preregistration process allows a practice to set the financial tone at the beginning and prevents questions about payment. If a practice doesn’t have a tight preregistration process, there are many areas that can get missed. Check your preregistration process to get your revenue cycle process off to a strong start.

2. Registration

Registration solidifies the process of ensuring the patient’s information is 100% accurate from start to finish. During registration, the provider makes sure the patient’s address, phone number, date of birth, guarantors, and insurance information are correct, and it’s critical they secure this data each time a patient is treated.

During registration, the provider collects co-payments, and if it’s a specialist, they will ensure a referral or authorization is in place to treat the patient. If that step is missed in a specialist’s office, it is unlikely they will get paid for that service in the end. During registration, financial forms are signed, and insurance benefits are assigned. In the event these steps are missed and the practice is audited, there’s the risk of financial repercussion.

If you are unsure about your registration process, consult an expert to review it. Making sure step two in the revenue cycle process is clean and thorough will save you headaches in the long run.

3. Charge Capture

Charge capture, step three in the revenue cycle process, can be done a couple of different ways.
It can be automated, where the information automatically flows into the practice management billing side based on what the provider puts in their documentation. The other option is the old-fashioned way, where front desk staff enter information or send it to billing, where it’s manually keyed in.

There are advantages and disadvantages to both approaches, as there are charges that can be missed either way. One commonly missed charge includes ancillary services, which results in revenue left on the table. To prevent missing charges, make sure you are coding charges and getting them to the insurance carrier correctly.

If you are concerned that you may not be accounting for all charges, consult an expert to review your charge capture process. As part of a revenue cycle audit, an experienced advisor can follow a charge from start to finish, uncover missing charges, and identify miscoded charges. Making sure you are capturing your charges correctly is an important piece of the revenue cycle process.

4. Claim Submission

Claim submission includes sending information to the insurance carrier after the charges have been entered. The revenue cycle team will look at the charges, the CPT code, and the diagnosis code. They will ask whether the diagnosis will support the procedure performed. If two services are provided, those need to be separated and coded correctly.

Claim scrubbing is the process of making sure claims are clean and going in the door correctly. If a claim gets to the insurance carrier clean, it will get paid a lot faster. The process includes sending the claims from your practice management system to a clearinghouse, which acts as a mailroom, taking in the claims and sending them to the different payers.

The transmission report shows claims sent, claims coming back in, and claims dropped, while the rejections report identifies incorrect codes. Make sure you review both reports as part of the claim submission process. The sooner errors are identified, the sooner they can be fixed, and the sooner the claims will get paid.

If you have questions about the claim submission process, consult an expert to help you sort it out. It’s better to have clear answers on the front end than wait until it is too late to correct a problem.

5. Remittance Processing

Step five in the revenue cycle is remittance processing. Once a practice’s claims have gone out, they will get remittances back. The explanation of benefits shows the practice what they got paid for the services provided. During this process, allowables are determined. Allowables are what the provider has contracted with the insurance carrier on a service provided. The provider and carrier negotiate the contract, at which time the insurance company will confirm how much they will pay for each service.

One common mistake during the remittance process is “post and go.” As electronic posting has become the norm for the revenue cycle, a practice can encounter problems when they post remittances and never look at them again. For example, if a carrier does not pay or something is set up incorrectly in the practice management system, the error could get missed in the “post and go” scenario. If no one is reviewing the process or the reports, a practice could miss the chance for an appeal and thus an opportunity to correct a mistake.

Another element of remittances are fee schedules, which are the amounts providers charge for each of their services. Providers should review their fee schedules on an annual basis to make sure they are in line with adjusting rates, contracts, and allowables. Evaluate your feels regularly to make sure you are not leaving money on the table.

The final piece of the remittance process includes write-offs, both contractual and non-contractual. Contractual write-offs are unpreventable, as they involve contracted rates with carriers and payers.

Are the other hand, non-contractual write-offs are avoidable; they include write-offs that would have not happened with a tight process in place, either at the beginning, the end, or somewhere along the way. Avoidable write-offs are generally the result of a breakdown in the provider’s remittance process and can be prevented by looking at reports. Red flags include no authorization, no referral on file, and claim not submitted in a timely manner.

There are multiple points in the remittance process that can affect your revenue cycle. If you are unsure about your remittance process, consult an expert to do a deep dive.

6. Insurance Follow-up

The next step in the revenue cycle process is insurance follow-up. In this stage, practices look at not only what has been paid, but also what has not been paid. What happens to the items that don’t get paid?

The accounts receivable (A/R) report shows everything that’s sitting in the insurance and/or patient buckets for a period of time. This report will show if insurance follow-up is broken and why it is taking so long to get it paid.

An important piece of insurance follow-up is determining the structure. Questions to ask include:

  • Are people assigned certain carriers?
  • Is your billing team cross-trained?
  • Do you have more than one billing person who can work on Medicare?
  • Is the practice management team working this insurance?
  • Are you seeing any noticeable changes on the aging monthly?
  • Are claims being appealed or are they being resubmitted?

If you are concerned your insurance follow-up piece is broken, bring in a consultant to advise you on how to fix it.

7. Patient Collections

The most difficult part of the revenue cycle process is patient collections. The best time to get money from a patient is when they are in your office. For that reason, it’s recommended that front desk staff are trained to collect at the time of service. To prevent the collections backlog from snowballing, make sure you have a standard policy for collecting copayments and deductibles that sets the financial expectations for the practice.

Just as important is making sure routine patient statements go out. The best practice is a daily statement cycle – your patients will get one statement every 30 days, but statements to go out more quickly, allowing you to get your revenue cycle moving better and your cash flow gets accelerated.

Clean up your patient collections so you don’t have to bring in a bill collector. If you are having trouble with your process, consult an expert for help.

If you are struggling with any part of your revenue cycle process, consult an expert to review the steps. Taking time to clean up your processes now will pay off in the long run.