Revenue cycle management

Last updated

Revenue cycle management (RCM) is the process used by healthcare systems in the United States and all over the world to track the revenue from patients, from their initial appointment or encounter with the healthcare system to their final payment of balance. It is a normal part of health administration. The revenue cycle can be defined as, "all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue." [1] It is a cycle that describes and explains the life cycle of a patient (and subsequent revenue and payments) through a typical healthcare encounter from admission (registration) to final payment (or adjustment off of accounts receivables). A thriving healthcare revenue cycle reduces and prevents errors. Several factors contribute to errors, but an agile revenue cycle management framework can eliminate these challenges before they occur. [2]

Contents

Overview

The revenue cycle begins when a patient schedules an appointment and it ends when the healthcare provider has accepted all payments. [3] Errors in revenue cycle management can lead to the healthcare provider receiving delayed payments or no payment at all. Because the revenue cycle process is complex and subject to regulatory oversight, healthcare providers can turn over their revenue cycle management to companies that handle this complex process with specialized agents and proprietary technologies to manage healthcare provider revenue cycles. [4]

Proper revenue cycle management ensures that billing errors are reduced so that reimbursements from the insurance companies are maximized. Revenue cycle management teams are responsible for maintaining compliance with coding regulations, such as the ICD-10 code update. Using the right coding for services rendered by a practice ensures that insurance claims can be processed and that the practitioner is compensated for all of their services rendered. [5]

In 2014 the revenue cycle management market was valued at $18.3 billion [6] and at $260 billion in 2020. [7]

For remittance received in 2014, the average physician practice took 18 days to generate a claim after the date of service and had an 11% denial rate. [8]

Revenue cycle management is often considered a segment of the greater healthcare IT industry which includes HIS, RIS, EHR, PACS, CPOE, VNA, mHealth, healthcare analytics, telehealth, supply chain management, CRM, fraud management, and claims management. [9]

Registration

The first function within the revenue cycle is the registration function, which allows the service provider to obtain all of the necessary data needed in order to properly bill an insurance company (per the ANSI 837 5010 standards and requirements). The information that is usually obtained is the patient's full name, date of birth, address, email, phone number, marital status, gender, social security number, emergency contact, release of information, primary insurance provider information. Clerical errors that are made within patient registration processes are one of the biggest culprits that cause non-clinical denials from insurance payers. This can include many errors such as inputting an incorrect date of birth, not validating current insurance coverage/benefits, misspelling a guarantor's name, etc. Normally, these errors are usually easy to identify and amend upon submitting a new bill to most payers after correcting a mistake made in the registration department. It is critically important to monitor denials on a daily basis in order to identify how much denial ratio is generated from these clerical errors so that both training and education can take place with the appropriate staff within the registration department. .....

Medical coding

An important aspect of the revenue cycle is compliance with medical coding regulations. Such regulations generally require keeping track of what treatments are provided to patients and for what reason, and medical coding is a standardized way of record such information (and sharing it with third parties, such as insurers). Optimal coding compliance results in higher revenues and decreases claim denials from insurance companies. By achieving optimal coding, a medical practice can prevent disruption of the medical flow and avoid regulatory penalties. [10]

Billing/collections

Otherwise known as the Business Office or Patient Financial Services department, the billing/collections team are responsible for submitting a complete UB-04 claim (facility and ancillary billing) or a CMS1500 form (physician billing) to the insurance payers after a patient has received services for either an inpatient or outpatient type of visit. Usually, a third-party claim scrubbing system is then used to ensure that claims are clean and complete as possible, including edits that may automatically update the raw claim data received from the host system. The intention of this scrubbing is to inevitably avoid generating a potential denial from the payer, which can prolong reimbursement to a provider. The claim is then sent out from the provider to the payer in an ANSI 837 5010 standard format.

Denials can be sent back as a response to the claim from the payer stating a specific reason of why the claim cannot be adjudicated. This is where denial management processes help to ensure that there is an immediate resolution to these denials. Denial management can also help to identify if there are trending issues within a provider's workflow processes, whether it be clinical or clerical-related. Feedback should be provided to the responsible revenue cycle departments if any of them were the cause of the denial, especially with denial types such as medical necessity, registration/clerical entry errors, etc. In the current market scenario, there is a growing demand for revenue cycle management solutions.

Related Research Articles

<span class="mw-page-title-main">Medicare (United States)</span> US government health insurance program

Medicare is a federal health insurance program in the United States for people age 65 or older and younger people with disabilities, including those with end stage renal disease and amyotrophic lateral sclerosis. It was begun in 1965 under the Social Security Administration (SSA) and is now administered by the Centers for Medicare and Medicaid Services (CMS).

<span class="mw-page-title-main">Health Insurance Portability and Accountability Act</span> United States federal law concerning health information

The Health Insurance Portability and Accountability Act of 1996 is a United States Act of Congress enacted by the 104th United States Congress and signed into law by President Bill Clinton on August 21, 1996. It aimed to alter the transfer of healthcare information, stipulated the guidelines by which personally identifiable information maintained by the healthcare and healthcare insurance industries should be protected from fraud and theft, and addressed some limitations on healthcare insurance coverage. It generally prohibits healthcare providers and businesses called covered entities from disclosing protected information to anyone other than a patient and the patient's authorized representatives without their consent. The bill does not restrict patients from receiving information about themselves. Furthermore, it does not prohibit patients from voluntarily sharing their health information however they choose, nor does it require confidentiality where a patient discloses medical information to family members, friends or other individuals not employees of a covered entity.

Health insurance or medical insurance is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among many individuals. By estimating the overall risk of health risk and health system expenses over the risk pool, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to provide the money to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization, such as a government agency, private business, or not-for-profit entity.

Medical billing is a payment practice within the United States healthcare system. The process involves the systematic submission and processing of healthcare claims for reimbursement. Once the services are provided, the healthcare provider creates a detailed record of the patient's visit, including the diagnoses, procedures performed, and any medications prescribed. This information is translated into standardized codes using the appropriate coding system, such as ICD-10-CM or Current Procedural Terminology codes—this part of the process is known as medical coding. These coded records are submitted by medical billing to the health insurance company or the payer, along with the patient's demographic and insurance information. Most insurance companies use a similar process, whether they are private companies or government sponsored programs. The insurance company reviews the claim, verifying the medical necessity and coverage eligibility based on the patient's insurance plan. If the claim is approved, the insurance company processes the payment, either directly to the healthcare provider or as a reimbursement to the patient. The healthcare provider may need to following up on and appealing claims.

In U.S. health insurance, a preferred provider organization (PPO), sometimes referred to as a participating provider organization or preferred provider option, is a managed care organization of medical doctors, hospitals, and other health care providers who have agreed with an insurer or a third-party administrator to provide health care at reduced rates to the insurer's or administrator's clients.

Medical practice management software (PMS) is a category of healthcare software that deals with the day-to-day operations of a medical practice including veterinarians. Such software frequently allows users to capture patient demographics, schedule appointments, maintain lists of insurance payors, perform billing tasks, and generate reports.

Reimbursement is the act of compensating someone for an out-of-pocket expense by giving them an amount of money equal to what was spent.

An independent medical review (IMR) is the process where physicians review medical cases in order to provide claims determinations for health insurance payers, workers compensation insurance payers or disability insurance payers. Peer review also is used in order to define the review of sentinel events in a hospital environment for quality management purposes such as to look at bad outcomes and determine whether there was any mis-diagnosis, mistreatment or any systemic problems involved which led to the sentinel event.

Utilization management (UM) or utilization review is the use of managed care techniques such as prior authorization that allow payers, particularly health insurance companies, to manage the cost of health care benefits by assessing its appropriateness before it is provided using evidence-based criteria or guidelines.

Health information technology (HIT) is health technology, particularly information technology, applied to health and health care. It supports health information management across computerized systems and the secure exchange of health information between consumers, providers, payers, and quality monitors. Based on a 2008 report on a small series of studies conducted at four sites that provide ambulatory care – three U.S. medical centers and one in the Netherlands, the use of electronic health records (EHRs) was viewed as the most promising tool for improving the overall quality, safety and efficiency of the health delivery system.

Based on the National Council for Prescription Drug Programs standard, all pharmacy software systems contain information fields for both a primary and secondary insurer to pay for patient's prescription. The co-pay card appeared in 2005 as a means by which pharmaceutical marketers could, by offering an instantaneous rebate to patients, combat their challenges to prescription pharmaceuticals, including generic competition, lack of patient compliance and persistency, and an access to the physician population. As of January 2017, in the United States, coupon cards for more than 600 prescription medications are available.

The healthcare reform debate in the United States has been a political issue focusing upon increasing medical coverage, decreasing costs, insurance reform, and the philosophy of its provision, funding, and government involvement.

Cost-shifting is an economic situation where one individual, group, or government underpays for a service, resulting in another individual, group, or government overpaying for a service. It can occur when one group pays a smaller share of costs than before, resulting in another group paying a larger share of costs than before. Some commentators on health policy in the United States believe the former currently happens in Medicare and Medicaid as they underpay for services resulting in private insurers overpaying. Although the term cost shift is used in the field of healthcare these days and there are many studies about it, other fields have more or less used it. For example, its origins go back to the environmental economy where cost-shifting referred to the practice where corporations pass the harmful consequences and negative externalities of economic production to third parties and communities whether those that are part of the production circuit or are in some way beneficiaries or those that are outside this circle, K.W. Kapp, is one who coined the concept. This concept is also used in the American legal system, especially since the cost of electronic discovery has increased dramatically due to a large amount of raw information and the urgent need to extract relevant data, its processing, and analysis. In the past, each of the plaintiffs and defendants had to bear the cost, but later many of those who prepared the summons demanded the transfer of the cost because they thought they would have to pay for something they did not do. In this regard, some courts have agreed to shift part of the costs to the complainant.

An explanation of benefits is a statement sent by a health insurance company to covered individuals explaining what medical treatments and/or services were paid for on their behalf.

In the United States, the chargemaster, also known as charge master, or charge description master (CDM), is a comprehensive listing of items billable to a hospital patient or a patient's health insurance provider. In practice, it usually contains highly inflated prices at several times that of actual costs to the hospital. The chargemaster typically serves as the starting point for negotiations with patients and health insurance providers of what amount of money will actually be paid to the hospital. It is described as "the central mechanism of the revenue cycle" of a hospital.

Clinical documentation improvement (CDI), also known as "clinical documentation integrity", is the best practices, processes, technology, people, and joint effort between providers and billers that advocates the completeness, precision, and validity of provider documentation inherent to transaction code sets sanctioned by the Health Insurance Portability and Accountability Act in the United States.

Change Healthcare is a provider of revenue and payment cycle management that connects payers, providers, and patients within the U.S. healthcare system. The name also refers to a company founded in 2007 which subsequently became part of the current conglomerate. The company operates the largest financial and administrative information exchange in the United States.

Prior authorization is a utilization management process used by some health insurance companies in the United States to determine if they will cover a prescribed procedure, service, or medication.

RLDatix is a global enterprise software company offering software and services tailored to healthcare organizations. The technology platform is designed to support hospitals and other providers with risk mitigation, regulatory compliance, and workforce management resources.

De facto denial or functional denial is a situation that can occur in health insurance and workers' compensation insurance when a claim is not denied outright, but in practical terms it is not covered. If cost reduction by an insurer is the reason for de facto denials as part of utilization management, it can lead to healthcare rationing through denials of care or coverage, delays in care, and unexpected financial risks to patients.

References

  1. ↑ "Healthcare Financial Management Association, Online Glossary".
  2. ↑ "Driving Value: Taking the Healthcare Revenue Cycle to the Next Level" . Retrieved 15 Jun 2022.
  3. ↑ "Revenue Cycle | Patient Business Services | OHSU". Ohsu.edu. 2013-04-16. Retrieved 2015-08-26.
  4. ↑ "Show Me the Money... A Look at the Revenue Cycle from the Billing Perspective". Library.ahima.org. Retrieved 2015-08-26.
  5. ↑ "How to Improve Your Revenue Cycle Processes in a Clinic or Physician Practice".
  6. ↑ Murphy, Brooke. "25 things to know in revenue cycle management". www.beckershospitalreview.com. Retrieved 2016-10-27.
  7. ↑ "Revenue Cycle Management Market Share Report, 2021-2028". Grand View Research. Retrieved June 17, 2021.
  8. ↑ Bermender, Jeremy. "Revenue Cycle Management". Remit Data. Retrieved 6 December 2016.
  9. ↑ "Common Revenue Cycle Management Pitfalls to Avoid". 31 August 2015.
  10. ↑ "Regulatory Impact on Revenue Cycle Management— Think You're Prepared? Think Again" . Retrieved 12 October 2016.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.