The healthcare sector has witnessed a significant transformation, particularly spurred by the COVID-19 pandemic. This crisis has accelerated the adoption of digital technologies and innovative care models, pushing healthcare providers to re-evaluate their financial strategies. One critical aspect that demands attention is revenue cycle management (RCM) in healthcare. Understanding what RCM entails, how it operates, and the steps providers can take to enhance financial health is crucial for sustaining operations in these uncertain times.
What is revenue cycle management?
Revenue cycle management (RCM) is a critical process in healthcare that integrates the financial and administrative aspects of patient care from start to finish. It ensures that healthcare providers receive timely and accurate payments for their services, thereby maintaining financial stability and operational efficiency. Without effective RCM, providers struggle with denials and delayed payments, hindering their ability to meet community needs. The challenge is exacerbated by rising costs, with the American Hospital Association reporting a 17.5% increase in hospital expenses between 2019 and 2022, and more than half of U.S. hospitals ending 2022 at a financial loss.
Leveraging AI, automation, and data analytics to optimize the revenue cycle can eliminate inefficiencies and maximize reimbursement.
Key steps in the healthcare revenue cycle
A typical RCM workflow aligns with the patient’s journey. Each touchpoint offers an opportunity to support patients with financial planning and ensure payers and back-office teams have the necessary information for prompt payment processing:
- Scheduling: During appointment booking, administrative staff verify insurance eligibility, ensuring transparent pricing and providing cost estimates to patients.
- Registration: Providers capture medical history, insurance coverage, and other patient demographics. Accurate front-end information reduces back-office errors and rework.
- Prior Authorization: Front-end staff check if the patient’s insurance requires prior authorization for services. Skipping this step can lead to costly denials and rework.
- Treatment and Discharge: Post-treatment, the back office collates billable charges and assigns medical billing codes to claims. Accuracy is crucial to avoid costly claim rejections.
- Claim Submission: Claims must be submitted accurately and promptly to prevent rejections and reimbursement delays. The goal is to submit clean claimsthe first time. If a claim is denied, it must be resubmitted as quickly as possible to avoid lost revenue.
- Collections: Once the claim is approved, the patient’s out-of-pocket costs are calculated and billed. Offering convenient payment methods increases the likelihood of prompt payment.
Challenges in healthcare revenue cycle management
Navigating healthcare claims is complex and costly. Providers often face cycles of inaccurate submissions, denials, corrections, and rebilling, delaying reimbursement. Manual processes exacerbate the problem. The Council for Affordable Quality Healthcare notes that automating claim status inquiries could save an average of 15 minutes per inquiry and save the industry $3.6 billion overall.
Additionally, providers are increasingly collecting from self-pay patients. Financial pressures and billing uncertainties mean many patients struggle to cover medical expenses. Prioritizing convenience, choice, transparency, and compassion is essential to improving the patient financial journey and increasing payment likelihood.
Strategies to improve revenue cycle management
Adopting a holistic approach built on data, analytics, digital tools, and automation can alleviate pressure. The following four strategies are likely to yield significant returns on investment:
- Automate patient access: Efficient patient access processes are crucial. Automated, data-driven workflows reduce errors leading to claim denials and rework. Online scheduling and digital registration verify patient information and apply business rules to ensure proper provider selection. Real-time eligibility information can generate accurate patient estimates, improving access to care and reducing billing friction.
- Enhance collections: Balancing patient collections with a positive financial experience requires a data-driven approach. Verifying patient identity and insurance coverage early in the cycle allows for accurate financial responsibility estimates and appropriate financial plans. Tools like Collections Optimization Manager can focus efforts on high-impact accounts, enhancing collection efficiency. Novant Health’s use of this tool improved patient experiences and achieved a rolling average ROI of 8.5:1.
- Streamline claims management: Automated claims management software integrated with customized edits ensures each claim is coded correctly before submission. Real-time processing with automatic alerts can flag issues pre-submission, improving financial performance. Solutions like Experian Health’s AI Advantage™ predict and prevent denials by assessing claims before submission and prioritizing resubmission efforts based on reimbursement likelihood.
- Increase reimbursement: Staying current with payer policy changes is vital to avoid payment delays and revenue loss. Automated access to policy updates ensures providers and payers are aligned, facilitating accurate and timely reimbursements. This strengthens payer-provider relationships and minimizes mismatches between expected and actual payments.
How healthy is your revenue cycle? Ourrevenue cycle management checklistis designed to help healthcare organizations catch inefficiencies and find opportunities to boost cash flow.
Evaluating your revenue cycle health
A comprehensive RCM strategy requires data, software, and training. Utilizing tools like Experian Health’s “Best in KLAS” solutions, built on proven technology and proprietary databases, can uncover new revenue opportunities. Experienced consultants can guide staff to optimize workflows for the best results.
Explore how Experian Health’s RCM solutions can create a seamless experience for patients, payers, and providers, ultimately driving more revenue for healthcare organizations.
