Author: Sakshi Vispute
Revenue cycle management (RCM) in healthcare is the process by which health systems bill for services provided and generate revenue which is essential for the healthcare setup to maintain its financial viability and continue to provide quality care for its patients. According to the healthcare Financial Management Association, RCM can be defined as “All administrative and clinical functions that contribute to the capture,management, and collection of patients service revenue.” Revenue as misunderstood by many of us is not the profit, but instead, it is the total amount of money earned by an organisation before deducting any expenses or taxes. Revenue therefore has a significant impact on the profit and thus it is important to create the widest possible difference between the cost and revenue of the business. In healthcare, the management of revenue is done by following a cycle of events which are essential for the proper functioning of the medical practice and its survival. the steps involved in healthcare revenue cycle are patient registration, insurance verification and eligibility, medical documentation, coding and billing, claim submission, payment posting, and accounts receivable and collections etc. Let us now take a look at each of this steps in detail.
STEPS OF REVENUE CYCLE MANAGEMENT
This is the first step in the process which kick starts the revenue cycle. Scheduling is the vital step of the revenue cycle which when streamlined,will surely drive revenue as well as allow the healthcare providers to offer quality care. By keeping in mind the patients convenience and being flexible in scheduling the patients appointments reduces the no-shows incidents thus making it possible to capture a healthy revenue.By using automated reminders for emails and messages, the patient is engaged via online portal and effortlessly maintains the schedule to avoid long wait times.
It includes pre-registration and registration of the patient. Pre-registration is done prior to the visit of the patient to the hospital. It includes capturing patients data including names, patients demographics, medical history, insurance information, etc. Pre-registration helps both the patient and the provider.It gives an estimation of the cost that will be required for the particular service provided by the healthcare professional and thus reduces the probability of bad debts for the healthcare provider.
Registration solidifies the process of ensuring the patient’s information is 100% correct and there are no discrepancies in the form filled out by patient
3) Charge Entry and Capture
It is the phase in medical billing where the healthcare provider provides the information of the various services provided to the patient and then send the charges to the insurance companies.It is one of the most important step in the cycle as it makes sure that the hospital receives maximum compensation from its payers.
4) Utilisation Management
This is the step in which health insurance companies examine the request sent by the provider and confirms if the healthcare plan provides coverage for the medical service provided. Additionally, it assists the hospitals to lover the cost and evaluate if the suggested treatment is appropriate
5) Medical Coding
It is the process of translating the written descriptions of services, processes, individual requirements, and items into alphanumeric or numeric codes. These codes are useful to come up with insurance bills and claims for healthcare providers and patients.
6) Eligibility and Benefits Verification
It includes periodical checks related to the coverage and benefits provided according to the insurance plan. It is yet another prime step in revenue cycle management,which would offer a higher clean claims rate if done accurately
7) Claim Submission
In this step the hospital will submit the claims to the insurance companies so that the payment may be transferred as per the details of the contract. In the occurrence of mistakes or in any other challenges in the claim submission there would be delays in the payment processing and the health care providers receiving the claim amount.
8) Denial Management
If the payments is rejected by the insurance company, the accounts receivable management staff at the hospital the discrepancy which is causing the delay in the payment.In case of any mistake,the claim could get directed to the clearinghouse in which it is going to be assessed and cleared so that the claim could be routed back to the insurance companies with the correct amount of payment to be made.
9) Insurance Follow-up
This step includes secondary filing of claims and appeal procedure in case of denials, underpayments or nonpayments and maintaining proper follow ups with the insurance company in order to receive the payments correctly.
10) Patient Collections
Collecting the remaining due amount from the patients is one of the most challenging steps. Following up with patients regarding their dues with the proper explanation of the insurance coverage is crucial to ensure proper collections.
11) Financial Evaluation
Analysing the finances from the revenue cycle in the organisation to make meaningful decisions for the future and making changes in the RCM model wherever necessary is an important step in the cycle.
What Does Statistics Say?
The Healthcare Revenue Cycle Management market size in 2022 is $118.98 billion and is expected to reach $281.02 billion by 2030 with compound annual growth rate of 11.09%
The market is segmented on the basis of product, component, deployment mode, end user, and region. On the basis of product, the market is categorised into integrated and standalone RCM in which the integrated software dominates generating a revenue of more than $90 billion. This is attributed to the improved healthcare infrastructure, increased healthcare related expenditures to cater to the untapped markets among the developing nations, challenges faced during accounts receivable management and claim processing, and rise in need to reduce cycle time. On the basis of component, the market is segmented into software and services. The service segment dominated the growth in the RCM market in 2020,and is expected to maintain its dominance in the upcoming years. On the basis of deployment it is segmented into cloud based and on-premise deployment. The on premise segment dominated the growth in the RCM market in 2020, and is expected to maintain its dominance in the upcoming years. This is attributed to growing demand for mobile support systems for better customer engagement platforms. However, the cloud segment registered highest growth rate, as adoption of cloud revenue management solutions has grown among hospitals, physicians, and diagnostic and ambulatory care centres, owing to the transfer of increase in amounts of critical and confidential data. On the basis of end user, the market is divided into hospitals, physicians, and diagnostic and ambulatory care centres. The market is dominated by the physician segment in the year 2020. This is attributed to increased complexities of healthcare reimbursement methods, widespread adoption of electronic health records (EHR), varying model of payments, and change in regulations. By region the market is segmented into North America, Europe, Asia-Pacific and LAMEA. North America was the highest revenue contributor in 2020.However,Asia-Pacific is projected to grow at the highest CAGR in the upcoming years.
The healthcare sector has witnessed an upsurge in healthcare related expenditure in the recent past, and this trend is expected to prevail during the forecast period. The healthcare spending growth rate is attributed to the rise in medical prices, growth associated with the insured people, and increase in demand for advanced healthcare services. In addition the major factor that contributes to the growth of revenue cycle management in Europe includes, rise in healthcare expenditure among countries such as Germany, France, Sweden, UK, and others in this region. Furthermore, high spending patterns of hospitals and physicians among the developing nations of Asia-Pacific and LAMEA is expected to fuel the demand for RCM.
Key Players in Revenue Cycle Management Of Healthcare
Time management and productivity play key role in the healthcare RCM.
There are four key players involved in the Revenue Cycle Management of healthcare system namely:
It is important that all the four players align their goals and work in tandem so that the revenue cycle process runs smoothly.
How Should Be The Ideal Revenue Cycle Management System
An ideal RCM system should have the capability to shorten the billing cycle by assisting the medical billing department to produce more and more clean claims and less and less write-offs.It is important to choose a good revenue cycle management as it has the capacity to make or break the medical practice.Some of the key features that an ideal RCM possess are as follows
An RCM system supporting the above features will surely have a positive impact on the revenue cycle managing the financial as well as clinical aspects of care and at the same time will ensure a better and more transparent coordination.It is very much important to keep in mind before zeroing down on an RCM system to review the need and budget of the medical set up and accordingly select a system that fits within the budget as well fulfils the current and future needs.
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