Revenue Cycle Management (RCM) Is a Process

Revenue Cycle Management (RCM) is crucial for the healthcare industry. It ensures the financial stability of healthcare providers by managing their finances and providing smooth operations. Multiple organizations play a role in the RCM process, including medical billing services and front-desk staff. Let’s look at how each department contributes to improving payments for physicians and clinicians.

What is Revenue Cycle Management?

RCM is a process that encompasses financial cycle management in healthcare organizations, whether they are small medical practices or large hospitals. To remain profitable, healthcare institutions must follow specific procedures. The key stakeholders in this process include physicians, patients, and payers.

Physicians and patients are directly involved in the care delivery process, while payers act as an engine and are crucial players. The revenue generated motivates both physicians and patients. The revenue cycle management process consists of various building blocks that ensure its successful execution. If there are loopholes or outstanding accounts receivables, it directly affects a practitioner’s income and can cause backlogs in pending claims.

If there are loopholes and outstanding accounts receivables, they directly affect the income of a practitioner. The aftershocks of a lazy revenue cycle can cause significant backlogs regarding pending claims for physicians.

Medical Billing Services in the US Play an Anchor Role

An effective revenue cycle management process in medical billing is what most medical practices strive to achieve. It is mainly the third-party medical billing and coding companies responsible, assuming they have the experience and skill set. It is interesting to compare medical billing services in the United States to an anchor. They connect the providers to the payers like an anchor connects a ship to the shore.

To run a productive healthcare RCM process, hiring an experienced billing service is imperative. Whether you believe in outsourcing the medical billing or using an in-house specialist, a slight deviation from a certain level of attention could mean failing at the whole process. Filing claims at the right time leads to quicker reimbursements. It requires specific skills and a combination of both novice and veteran billers.

9 Steps in Revenue Cycle Management

While there is no replacement for high-quality care, there is no denying the importance of following the nine steps of revenue cycle management.

As explained in recent publications, AI or Artificial Intelligence will boost the efficiency of a revenue cycle management system by acting as the digital employee to the physicians.

Revenue Cycle Management - ReferalMD Photo by Kindel Media on Pexels

Let’s look at the revenue cycle from beginning to end to educate ourselves in the best interest of care and healing.

  1. RCM Software or A Medical Billing Outsourcing Company

The first step in claims management is to decide whether to install RCM software in-house. Or do you hand over the task to a revenue cycle management company? Don’t fret because it gets easier when you outsource medical billing services with skilled IT personnel to file claims, work on denials, and appeal on your behalf.

To search for a billing company that fits your practice, physicians usually search for the phrase “medical billing companies near me” in Google. It gives you a list of companies close by.

Looking for revenue cycle consulting companies near you is only logical when you don’t have expert IT staff members in your medical practice. Running a small practice with able IT crew support is ideal for running an RCM software setup on local servers. However, larger organizations or those lacking skilled staff consider medical billing services in the USA as the best practice.

  1. Patient Pre-certification or Pre-authorization

What is it? When a patient comes in, they undergo pre-authorization. The physician’s office pre-approves the patient for specific treatments and prescription drugs through this process.

At this step, the payers or the insurance companies decide whether the prescription drugs, procedures, services, or equipment are medically necessary. Based on the decision, they will reimburse for the services rendered. The pre-authorization phase faces exceptions in case of a medical emergency.

Pre-authorization doesn’t necessarily mean the health insurer will cover its cost, so the process is repetitive and needs continuous verification. Double-checking any coverage-related doubts with the insurance company is always a good idea. This goes for both the providers and the patients.

  1. Insurance Eligibility and Verification

The process is downright demotivating over the phone because it demands a lot of patience. Therefore, a set function must be a part of the RCM software to cater to it. Artificial Intelligence could be pioneering in this recognition phase, as it will automate the process.

Once patients go through with the care delivery, the Explanation of Benefits (EOB) statement incorporates all the details of the services or treatments paid on their behalf by the insurance company.

  1. Charge and Code

When the patient checks in at the office, the visit transforms into a set of codes. There is a high probability of human error in these codes, which is why competent medical coders are the key players in this process. The principles must follow specific rules and concur with the CPT guidelines and the latest ICD-10 coding system.

  1. Co-payments and Deductibles

Each health plan comes with a deductible and a co-payment. Some have high, and some have low deductibles. Whatever the amount is, the patients pay the copays at the doctor’s office before returning home. The deductible is the amount fixed in a health plan you must pay before the insurance company starts paying for those health care services.

  1. File Claims

Submission of claims is a vital stage in the overall process because the reimbursement depends on it. If flawed, the chances for reduced payments or outright denials increase. When the biller prepares the claims, they are filed with the insurance companies via a clearinghouse. The clearinghouse makes sure they are clean and free from errors.

Internally, when practice management software connects with the medical billing software, it will initialize the operational process of the revenue cycle management. The billing company follows up with the insurance company in light of those claims. It ensures the payer is reimbursed on time.

  1. Reimbursement for the Services Rendered

It is time for the insurance company to pay up. The payers match the procedures with their charges under the coverage limit. If the bills are appropriate, the acceptance process becomes smoother and returns maximum reimbursements.

Denials are inevitable for erroneous claims, incomplete patient information, or other issues. Most low-dollar claims tend to pile up unless the RCM plays to its full potential.

  1. Manage Denials

The claims that suffer rejection are resubmitted soon after they are scrubbed for coding mistakes. The resubmissions or appeals process demands critical screening with a finger on the pulse of the latest coding guidelines. In addition, minute details are checked against the patient profile, making the billers work directly with the payers.

  1. Collections

When there is reduced reimbursement from the payers, the health plan does not cover all the services. The billers must send those outstanding payments to the patient(s) and follow up.

Medical billing services do rigorous follow-ups until the patients finally pay up.

Cost of Healthcare of America and Revenue Cycle Management Photo by Bermix Studio on Unsplash

With all the above steps in place, it helps streamline the complex revenue cycle management process. Physicians need a proper team of individuals to carry the process toward the finish line by successfully executing these stages. On the contrary, the denial rates, even for a couple of veteran billers, are about 10%. As long as they don’t back down and continue to work for acceptance & maximum reimbursement, the payers will pay for your services as a healthcare professional.

Steps for HIPAA Medical Billing Outsourcing

First, physicians must acquire the services of medical billing companies nearby. Second, they must see if they demonstrate HIPAA compliance. OCR audits only spare those practices with a credible security system, providing maximum safety to protected health information (PHI). Any covered entity or business associate choosing to violate HIPAA is subject to hefty fines and jail time.

Medical billing services charge 3 to 7 percent of the total collections as their fee.

The top attributes of a genuine medical billing service provider are as follows:

  1. Medical Claims Scrubbing – While the billers prepare those claims, the coders keep a close eye on any mistakes before they are ready for submission. Certified coders from organizations like AHIMA can kick it up a notch for providers.
  2. Follow-Up – A good medical billing company will stay on its toes until a claim returns positive results. It regularly follows up on pending lawsuits and exhibits accounts receivable (AR) management.
  3. Denial Management – Not every claim passes through the strict criteria of the payers in the first go, which is why active billers re-work denied claims for the physician through accurate resubmissions. They do everything in their capacity to reimburse your services successfully.
  4. Weekly Reporting – When the physicians give you responsibility for their finances, you must email them a detailed report regarding the performance of their claims. You may do it on a weekly or bi-monthly basis. The frequency of those reports depends on the Business Associate Agreements (BAAs).
  5. Dedicated Accounts Manager – Reliable medical billing services appoint an accounts manager to act as a liaison to the physician because communication is an integral part of the contract. It also includes an additional support team of individuals to address any issues in the claims.

The Revenue Cycle Management Flow Chart

When the administrators remove any obstacles in the process, it puts claims on the path of first-time acceptance. The following diagram represents an RCM flow chart’s true magnificence.


RCM process steps


The Vendors

A long list of revenue cycle management vendors provides a permanent solution to your financial cycle needs. However, selecting the right one may be difficult, given the range of services and bonus features that come along. Some of those solutions integrate with the certified EHR systems to speed up the entire system.

Performance Calibration

How do we know if the billing service is performing well?

The question is simple, and it needs a straightforward answer.

We know a billing company performs well with increased collections and a consistent cash flow. In other words, there are no hiccups.

Simply put, the volume of interactions with the insurance companies requires in-house or outsourced medical billing services to manage your finances. When they are established, you can focus on patient care, confident your revenue stream is in good hands.

In Conclusion

To stay positive, with excellent billing support comes a much healthier practice (financially). Success requires attention right from the beginning when a patient comes in to receive care. The person sitting at the reception will run patient eligibility checks and commence the pre-authorization phase.

Nobody said the medical billing process is easy, but it becomes highly manageable with the proper steps (add billing specialists) in place. Use the right medical billing software, RCM tools, and potentially third-party medical billing services to put your practice on its way toward financial freedom.

Learn how ReferralMD’s prior authorization tool can improve your revenue.

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Jacob Michael has been writing for various industries in the past. Currently, his focus is on the US healthcare industry, and it is his passion to share his opinion in the best interest of the company & the providers. is a health IT consultancy & a MIPS Qualified Registry in 2018.

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