Step by Step Breakdown of the Healthcare RCM Cycle in Medical Billing

Revenue Cycle Management (RCM) is the fiscal life blood of any healthcare organization, as the care provided to the patients will be converted into proper and prompt reimbursements. The lack of a powerful RCM system may slow down payments, increase denial rate, and decrease the inflow of revenues.

The RCM process can be complex, but the process can be broken down into steps to make it easier to learn and to undertake. The following is a breakdown of each healthcare RCM cycle stage.

1. Registration and Insurance Verification of Patient

It starts with the first contact with the patient, such as when he/she makes an appointment or registers at the check-in counter. This is the level at which critical demographic data like name, date of birth, contact details and insurance cover are collected by the provider’s office.

Here insurance check-up is of utmost importance. Providers can ensure that they have not been denied any benefits by ensuring that they have already confirmed the eligibility and the benefits before it is too late.

As an example, in the case where a patient has a plan that involves requiring some authorization before the procedure is carried out, this can be obtained before the services are provided. Automated eligibility verification systems are becoming the foundation of many healthcare organizations, resulting in less manual error and eliminating important time.

2. Charge Capture and Medical Coding

The provider notes are converted into standardized medical coding ICD-10 diagnosis, CPT/HCAC services and procedures once the patient has been treated. This will help in making sure that the complete services will be documented in order to be billed.

Coding is very critical as:

• It makes sure that it is compliant with the requirements of the payers.
  
• It eliminates underbilling (lost revenue) and overbilling (compliance risks).
  
• It lays the basis of claim submission.
  

An example is when a patient is undergoing an MRI, then the coder would provide the appropriate CPT code of the imaging process and attach it to the ICD-10 diagnosis code to prove medical necessity. In the absence of such a relationship, the assertion can be refused.

3. Claim Submission

Claims are made ready and submitted to insurance payers once charge capture and coding are done. The majority of suppliers submit it electronically via clearing houses that can identify mistakes prior to the claim being sent to the insurer.

The aim here is to file a clean claim one without errors, omissions or incorrect codes. Clean claims have been shown to increase first-pass payment significantly. Providers with high clean claim rates have quicker reimbursements, and lower accounts receivable (A/R) days.

4. Payment Posting

Once a payer processes the claim, they return an Explanation of Benefits (EOB) or an Electronic Remittance Advice (ERA). Posting of payments is the process of entering such payments to the account of the patient in the practice management system.

At this point, the billers will be checking the payment against the contracted rates of payment. In case underpayments are detected, they will be able to raise a red flag and appeal. Posting of payments also enables the providers to monitor unpaid payments and reconcile financial information.

5. Denial and Appeal

One of the most significant problems of healthcare billing is denials. They are realized in case the claims are denied because of such problems like:

• Lacking or wrong patient information
• Coding errors
• Lack of prior authorization
• Coverage limitations

A well-planned denial management process entails the identification of the root cause of problems, making corrections and submitting claims on time.

As an example, when a claim is denied due to the mismatch of the procedure code and diagnosis code, coders may make changes to the claim and furnish supporting documents.

6. Billing and Collections of Patients

Patients pay a part of the bills after insurance modifications (copays, coinsurance or deductibles). During this phase, effective communication is important. Mixed up or procrastinating statements usually lead to unpaid balances.

Best practices include:

• Giving detailed bills that are easy to comprehend
• Giving several payment methods (online payments, mobile payments, credit cards, and installments)
• Reminders to make payments on time sent through email, text or phone

Enhancing patient financial experience is not only more effective in improving collections, but also enhances the trust and satisfaction.

7. Continuous Improvement and Reporting

RCM cycle does not stop with collections, but continuous monitoring and improvement should be the main factors.

The reports that providers prepare are used to analyze performance indicators including:

• Average days in A/R
  
• Denial rates
  
• Net collection ratios
  
• Payment turnaround times
  

Routine audits and performance reviews enable practices to find the bottlenecks, streamline the processes, and educate employees on the issue-based trends. As an illustration, in case denials are habitually as a result of absent pre-authorizations, the practices are able to modify their front-end procedures to make sure that checks are made during registration.

Conclusion

The healthcare RCM cycle is not merely a back-office operation, but it is a strategic process and one that has a direct influence on the financial stability of a practice. All the stages should run smoothly starting with the time a patient books an appointment up to the last step of collections and reporting.

Cash flow improves significantly in providers who invest in proper coding, effective workflows, denial management and patient friendly billing systems. Furthermore, the use of technology and regular training of staff members will help to keep the cycle continuing without issues and adapt to the changing payer regulations as quickly as possible.

Overall, an effective RCM process enables healthcare organizations to worry less about billing headaches and to be more concerned with what matters the most, providing quality care to patients.

FAQs

Why is there such a high rate of claim denials?

Typical reasons include absence of patient information, erroneous coding or the absence of prior authorization. When these problems are dealt with at the initial stages of the cycle, it minimizes the denial rates.

What can providers do to increase reimbursements?
Providers can greatly reduce payment turnaround times by ensuring a high clean claim rate, utilizing automation tools, and providing good denial management practices.

How important is technology in RCM?
Efficiency is improved using technology which verifies eligibility automatically, receives claims electronically, tracks payment, and uses progressive analytics. This cuts down human error and manual work.