Revenue cycle management (RCM) encompasses all the administrative processes related to financial transactions between patients and healthcare providers. It focuses on how these transactions are managed from start to finish. Key processes in RCM include:
Pre-authorization — The process begins when a patient schedules an appointment. The provider gathers essential information, such as personal details and medical history, and verifies the patient's insurance eligibility to set up their account.
Medical Coding — Next, healthcare data such as test results, diagnoses, and procedures are converted into standardized codes. This coding system ensures effective communication between healthcare providers, office staff, insurers, and other involved parties.
Claims Submission —The provider submits the coded details of the patient's treatment to the insurer, who reviews the claim and determines whether it will be approved or denied.
Payment Collection —If the insurer approves the claim, the provider receives reimbursement. However, insurance often doesn’t cover the full amount due, so the provider must follow up with the patient to collect the remaining balance.
Service Review and Reporting —After payment is collected, the data from both the revenue cycle and clinical treatment is reviewed. This analysis identifies potential issues and opportunities for streamlining and improving the process.
It’s important to note that while revenue cycle management and medical billing are often used interchangeably, they are not the same.
RCM covers all the processes outlined above, whereas medical billing focuses specifically on tasks related to claims, such as coding, submission, and payment collection. In this context, RCM is a more comprehensive, end-to-end workflow that incorporates billing as a crucial component.
The revenue cycle is influenced by various unpredictable and dynamic factors, both internal and external. These changing elements often add complexity to revenue cycle management, making each case uniquely challenging.
