Author: Mugdha Tendulkar
Healthcare systems specifically hospitals are known for saving the lives of millions of patients globally and often face the risk of facing monetary adversity. If you’re the hospital owner, won’t you worry about managing the expenditure which is exceeding your income? Forget about profits, you won’t even be able to fulfill the basic needs of a healthcare system.
In order to solve this critical issue, proper financial planning is crucial and prevents a healthcare system from going ‘bankrupt’. We might assume that how the hospitals procuring 6-digit bills from us go bankrupt, but the overall medical costs for surgery, diagnosis, electricity & many more contribute to the major expenditure of a health care system.
What is Revenue Cycle Management Process?
The revenue Cycle Management (RCM) Process is basically a financial process that comes into play from the moment the patient makes a mere appointment in the hospital and ends when it pays its final bill.
This is a regulated process of keeping track of all the expenses so that the whole financial structure will benefit both the patient and the hospital to keep up with its ever-increasing expenses. You might think what is the need for a specific process for managing the finances, don’t businessmen plan the revenue model for their companies, what makes RCM different and at the same time necessary?
It is the dynamic situation at the hospital that creates chaos in the financial system. In business, there are dynamic risks that turn out to be either profit or loss; a definite outcome. But in the operation theatre, when the patient is having blood loss, we don’t wait for the patient’s family to pay bills first instead we just transfuse blood into the patient as at that particular moment saving a life is the ultimate goal above anything else.
This is the dynamic condition that leads to an end-minute surge in the costs that equally harms the hospital as well as the patient’s family.
Healthcare systems cannot ascertain the outcomes as profit or loss instead it is a daily struggle between life and death; which necessitates a separate financial process for healthcare systems.
RCM is divided into different chunks of procedures, as mentioned:
As mentioned the RCM comes into action when the patient makes an appointment; the concerned hospital administrative staff have to carry out some important formalities. They have the responsibility of scheduling appointments, insurance eligibility verification & establishing patient accounts.
They need to collect patient data in order to create their account and keep a record of the services they benefit from the hospital. The first step towards creating a patient account is known as ‘Pre-registration’. It is vital for augmenting the RCM process. The administrative staff creates a patient account that incorporates the medical histories & insurance coverages of the patient.
In order to nullify potential denials and rework at a later stage, it is essential to verify the authenticate the patient’s demographic details and insurance information. The core aim of this step is solely safeguarding the patient’s and hospital’s financial stability.
After the appointment, the staff should create the claims submission & complete the charge capture duties.
The healthcare provider then assigns an ICD-10 code that coincides with the treatment which helps to determine the amount of reimbursement the hospital will receive for the services they have provided to the patient. The selection of an appropriate code for the treatment is crucial to avoid further denials.
The charge capture process then deduces the services into a payable bill.
Once the claim is created, it is subjected to further verification by the government or private payers for the purpose of reimbursement. This might hint that the RCM process has come to an end for a hospital, as the final verification has to be done by external payers but there is much more to pay attention to at this level.
The staff needs to supervise the backlog tasks related to reimbursements. These tasks include payment posting; statement processing; payment collections & claim denials.
When the insurance company assesses the claim, the healthcare providers normally receive their reimbursements for their services rendered, depending on payer contracts & patient’s coverage. Talking about the odds, the claims might get denied owing to varied reasons like incomplete patient charts & patient accounts, and improper coding of the services.
For the hospital expenses that the insurance fails to cover, the hospital must procure the required amount from the patient. It also becomes necessary to maintain transparency in the finances.
The objective of RCM is to intricately fabricate a process that ensures full payment to the healthcare providers for the services they provided to the patient as swiftly as possible.
The necessity that urged the creation of RCM was the continuous back-and-forth movements of claims between the service providers and the payers for months. This continues till both parties resolve the issues mutually.
During the so-called ‘remittance processing’, the payer will either approve or deny the claim which ultimately affects the income of the healthcare providers.
The RCM process usually takes a long period of time as patients with financial difficulties require time for paying the bills.
How to succeed in the RCM process and cope with the difficulties?
Succeeding in such a time-consuming & tedious process requires the employment of various strategies.
Front-end optimization & emphasizing patient access is pivotal in determining the success of RCM. Front-end tasks and insurance eligibility verification can be employed to increase the chances of assured reimbursement.
Some of the front-end tasks like registration, authorization, and eligibility verification are found to be the reasons that lead to claim denials, particularly in COVID-19 patients.
Effective communication with insurance companies is one of the key factors in RCM. The insurance coverages of the patient are prior checked by the hospital administrative staff upon appointment made by the patient.
The use of technology for assistance in this whole process is surely fruitful. The tasks which were done before manually had fair chances of rejection due to human errors like incomplete patient charts, signations & demographic verification.
When this process is mediated by technology, the whole process gets phenomenally streamlined thereby increasing the chances of assured reimbursements from claims. The use of Artificial Intelligence (AI) is used to store the enormous data generated and also to provide reasons behind a claim denial. RCM process has many odds but AI helps to arrive at the right solution that ensures everyone’s benefits be it claim denial, calculation of out-of-pocket costs et cetera.
In order to fasten up the whole process, electronic systems keeping track of the data are used such as Electronic Health Records (EHR) and medical billing systems that compute the costs even when the patient is going through the care process.
Most healthcare systems use software that automates coding and insurance eligibility verification. Hospitals generally use data analytics to ensure the success of the RCM process. Hospitals should ensure value-based care services, quality care and satisfaction of the patient should be the crucial objectives to ensure full reimbursement from payers.
The use of technology also hints at all the possible reasons behind a claim denial by the insurance company, which not only reduces the time period of the process but also helps the healthcare provider to rectify the mistakes thereby further diminishing the chances of denial.
Data analytics manages a large volume of data collected & notifies employees about their RCM goals through alters and notifications. They also predict claim results by tracking their progress.
RCM and Value-based care
Another effect RCM systems have on the healthcare ecosystem is the transition from payments for the service provided to value-based reimbursement.
This is a more fundamental approach for tackling patient care and financial policies. These RCM systems when coupled with AI also provide detailed patient reports indicating what portion of their population is suffering from which diseases.
They also monitor the claims data and also identify any potential ambiguities in the reports thus collected to further improve the efficiency of the process.
The legislation Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) governs this principle gives importance to value-based care and value-based reimbursement rather than computing the whole empathy provided to the patients into a mere 6-digit bill.
This law recognizes that there is much more associated with patient care and the empathy provided to them at the healthcare organization on humanitarian grounds.
Challenges faced in the RCM Process?
It is arduous to maintain stable RCM policies in this revolutionizing healthcare sphere.
The most strenuous yet important challenge faced is the collection of payments on time from the patients especially at or after the services are offered.
It is very easy to think about an idealized situation but when real-life problems come into play it becomes very difficult to collect the payment on time.
Most of the patients are facing financial struggles which contribute the most to delayed payments to the hospitals. This creates a need for the employment of various strategies to collect payments on time.
It is observed that a significant amount of claims have been denied due to improper coding.
Healthcare providers should educate their employees regularly that guide proper code assigning, chart documentation & financial policy reminders through training sessions. These sessions might also involve a reduction in medical errors & lowering turnover rates.
Claim denials at a later stage not only delay payment to the healthcare providers but also lead to other strenuous tasks to accomplish by the staff. They include reiterating the whole RCM process from scratch to find out the exact reason behind the denial.
Reworking the whole process takes an ample amount of time thereby deteriorating the efficiency of the staff. These are the challenges faced when the whole process is regulated manually, without the intervention of technology.
With the advent of technology, at least the time needed to find the reason behind the denial can be as ascertained in a lesser amount of time and the associated individuals might directly rectify that specific mistake rather than reworking the whale process.
Another challenge faced by healthcare providers is the prior authorization process. When the hospitals face prior authorization requirements, it is necessary for the patient and the hospital to wait for the health plan to get authorized before providing/receiving any treatment.
RCM evolves continuously with the ever-changing healthcare system including value-based care, technology & development, global pandemics et cetera. RCM thus significantly simplifies the whole reimbursement retrieval system and all the associated issues faced by the healthcare service providers.
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