Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid


What Is Healthcare Revenue Cycle Management?

The industry-wide transition from fee-for-service to value-based care reimbursement will bring changes to traditional revenue cycle management.

Source: Thinkstock

While hospitals, small practices, and larger healthcare systems are known for saving lives and treating patients, every healthcare organization needs to develop successful processes and policies for staying financially healthy. That is where healthcare revenue cycle management comes in.

Healthcare revenue cycle management is the financial process that facilities use to manage the administrative and clinical functions associated with claims processing, payment, and revenue generation. The process encompasses the identification, management, and collection of patient service revenue.

Without this key financial process, healthcare organizations cannot keep their doors open to treat patients. Healthcare revenue cycle management is the strategy that healthcare organizations use to pay the bills.

Through the next sections, we will explore the basics of healthcare revenue cycle management and how it impacts the healthcare industry.

What are the basics of healthcare revenue cycle management?

Healthcare revenue cycle management begins when a patient makes his or her appointment to seek medical services and ends when all claims and patient payments have been collected. However, the life of a patient’s account is not as straightforward as it seems.

To start, when a patient arranges an appointment, administrative staff must handle the scheduling, insurance eligibility verification, and patient account establishment.

Pre-registration is key to optimizing healthcare revenue cycle management processes. During this step, employees create a patient account that details medical histories and insurance coverages.

“From a revenue cycle perspective, getting the most accurate information up front starts with patient scheduling and patient registration,” Gary Marlow, Vice President of Finance at Beverly Hospital and Addison Gilbert Hospital, told

“That provides the groundwork by which claims can be billed and collected in the most efficient and effective manner possible,” he stated. “The last thing you want is getting a claim submission kicking back to them then having to work their way through the institution.”

Once a patient has been seen, it is time to create a claims submission. The healthcare provider or coder must identify the nature of the treatments received and the proper ICD-10 code. These codes signify how much an entity is reimbursed for highly specific treatments, which means that coders must select the most appropriate code to prevent claims denials.

“If you’re bringing in a certain amount of revenue, you can’t have expenses that exceed that revenue. It’s seems very basic but people don’t look at it that way.”

The provider also must complete charge capture duties, which documents services into billable fees.

After a claim has been created, it is sent to the private or government payer for reimbursement. But, healthcare organizations still need to oversee more back-end office task associated with claims reimbursements. This involves payment posting, statement processing, collections, and handling claims denials.

Once an insurance company evaluates the claim, healthcare organizations are usually reimbursed for their services depending on the patient’s coverage and payer contracts. In some cases, claims can be denied for various reasons, such as improper coding, missing items in the patient chart, or incomplete patient accounts.

For anything that is not covered by insurance, healthcare organizations must notify and collect payments from the patient.

The goal of healthcare revenue cycle management is to develop a process that helps organizations get paid the full amount for services as quickly as possible.

However, healthcare revenue cycle management is unique because bills and claims are usually processed over a long period of time. Oftentimes claims go back and forth between payers and providers for months until all issues have been resolved and patients do not always have the funds available to immediately pay medical bills.

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How can one be successful at healthcare revenue cycle management?

In simple terms, healthcare organizations must stay in the black and maintain profitability to be successful at healthcare revenue cycle management. In this section, we reveal some tips for maximizing revenue cycle and ensuring claims are paid quickly.

“If you’re bringing in a certain amount of revenue, you can’t have expenses that exceed that revenue. It’s seems very basic but people don’t look at it that way,” said Neerav Jadeja, Administrator at Paradise Valley Hospital.

“Healthcare is constantly changing so maintaining financial stability is challenging…We are always looking to ensure we are reimbursed for the services we provide and to improve our communication with our payers on claims to ensure financial stability and balance our large charitable care contributions.”

Successful healthcare revenue cycle management strategies focus on front-end tasks to help claims move along. Many errors occur in the first stages of a patient’s account and these issues can carry through the revenue cycle to disrupt claims reimbursement.

It is especially important that providers verify insurance eligibility during pre-registration to ensure that insurance companies will reimburse the healthcare organization for medical services provided. According to a ClaimRemedi survey, the top reason for claim denials is eligibility issues.

Source: Thinkstock

“Competitive and transparent pricing of services, high quality clinical outcomes, and effective billing and collection process are becoming more important than ever,” maintained Derek Bang, CPA, CGMA, Chief Innovation Officer at Crowe Horwath LLP. “The front-end of the revenue cycle must be diligent with determining Medicaid eligibility and assist uninsured patients understand their coverage options with the insurance exchanges.”

Healthcare organizations should also effectively manage claim denials and develop procedures for quickly resolving claims reimbursement issues. From improper ICD-10 coding to a missing signature on a patient’s charts, claims can easily be denied based on technical or clinical problems.

Claims denials have also been on the rise as federal agencies work to combat healthcare fraud, waste, and abuse. For example, Medicare Part A and B claim denials have increased by 12.5 and 9 percent respectively in light of several new integrity initiatives, such as the Recovery Audit Program, which aims to identify improper Medicare payments and collect overpayments.

To resolve claim denials, the American Hospital Association found that 43 percent hospitals have spent more than $10,000 in the first quarter of 2016 to manage claim denials and 26 percent have invested over $26,000.

Many claim denials can be avoided by training staff on completing upfront tasks, such as using billing forms and talking to the patient about medical costs, as well as investing in revenue cycle software that automates coding and insurance verification. Healthcare organizations should also regularly track claims and investigate causes of denials.

Many providers also use big data analytics and health IT solutions to run successful healthcare revenue cycle management programs. With more payments being tied to value-based care models, healthcare organizations must report on numerous measures for quality care, patient satisfaction, robust health IT use, and healthcare costs in order to receive full reimbursement rates from payers.

Big data analytics has helped healthcare organizations manage large volumes of information and inform employees of revenue cycle management goals, especially through the use of dashboards and alerts. Analytics can also help to predict claim results by tracking its lifecycle.

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What are some of the challenges with healthcare revenue cycle management?

With ever-changing healthcare regulations and new reimbursement models, it can be difficult for healthcare organizations to maintain stable healthcare revenue cycle management policies.

One of the top revenue cycle management challenges for healthcare organizations is collecting payments from patients at or before point-of-service. While collecting payments before a patient leaves the office can save time and efforts with collections, most providers say that it is an arduous task, as reported an Avality Research study.

“Internally, all healthcare facilities should have an education component. Hospitals are losing money.”

Collecting at point-of-service has become ever more complicated since many patients cannot afford to pay medical bills upfront and many deductibles are risen. Healthcare organizations struggle with ensuring that debts are collected while not pressuring the patients so much that they seek care at other facilities.

 “The front-end of the revenue cycle must be diligent with determining Medicaid eligibility and assist uninsured patients understand their coverage options with the insurance exchanges,” explained Derek Bang, CPA, CGMA, Chief Innovation Officer at Crowe Horwath LLP. “There must be greater focus on point-of-service cash collections, given the growing amount of patient responsibility for payment.”

Another substantial challenge to healthcare revenue cycle management is tracking a claim through its entire lifecycle. Healthcare professionals should be monitoring claims processes closely in order to pinpoint where errors are being made.

Revenue could potentially be lost if providers cannot identify where issues originated and resolve errors quickly. Providers can usually receive automated alerts that address why payers are routinely denying claims for specific procedures or codes.

Staff training has also become a significant pain point for many healthcare organizations. Many claim reimbursement issues stem from human errors, such as improper coding, missing items in a patient’s account, and insurance eligibility issues.

Healthcare organizations should invest in regular employee education programs that promote proper coding techniques, comprehensive chart documentation, and financial policy reminders. These training sessions have been linked to better return on investment, such as lowering turnover rates and reducing medical errors.

“Internally, all healthcare facilities should have an education component. Hospitals are losing money,” Ginalisa Monterroso, CEO of Medicaid Advisory Group, told “Everybody's walking in with the wrong insurance. Everybody's walking in with the wrong drug coverage. What the executives are missing internally is that education component.”

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How does technology help drive healthcare revenue cycle management?

Health IT and EHR systems have helped to streamline and provide more accuracy to healthcare revenue cycle management strategies. Many organizations use technology to track claims throughout their lifecycles, collect payments, and address claim denials. Ultimately, these technologies facilitate a steady stream of revenue.

Approximately 4,201 hospitals have already invested in healthcare revenue cycle management technologies, which have been especially useful for handling both traditional fee-for-service claims and value-based reimbursement arrangements as the industry transitions to new payment models.

Healthcare revenue cycle management solutions are expected to become even more popular. Investments in healthcare revenue cycle management software and services are predicted to grow by 15.51 percent over the next couple of years. The total spent on revenue cycle management solutions around the world is also projected to reach $7.09 billion by 2020.

Many providers have benefitted from automating common issues with healthcare revenue cycle management, such as payer-improving payer-provider communications, recommending appropriate ICD-10 codes, monitoring medical billing processes, and even scheduling patient appointments.

While these technologies can be expensive, some providers choose to consolidate with other healthcare organizations to invest in healthcare revenue cycle management solutions or outsource some revenue cycle management functions, such as collections.

“Generally speaking, in order to strengthen the revenue cycle management, embracing technology within the revenue cycle is key,” stated Chad Sandefur, Director and Healthcare Analyst at AArete. “Having the platforms to seamlessly facilitate provider-payer interactions are really integral. In many cases, it’s mostly about bad debt avoidance. With that in mind, there are a few specific points. Some of these specific five might not be the most glamourous, but certainly on the element of embracing technology, they are critical.”

Healthcare revenue cycle management is continuing to evolve and keep pace with rapid changes to the healthcare ecosystem, such as value-based care. Healthcare professionals should always be aware of how their revenue cycle is doing in order to provide appropriate care and receive appropriate reimbursement.

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This article was originally published on June 14, 2016. 


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