What is Revenue Cycle Management?
In healthcare revenue cycle management (RCM) is a process by which providers track and manage their revenue. In simple terms—it’s your billing process.
Healthcare revenue cycle management encompasses everything from claims submission and payment processing to patient and insurance collections. It also involves following up with payers when claims are denied, which industry sources put at anywhere between 5-25% of claims submitted.
Health system billing issues can stem from a variety of reasons, but the most common are due to simple human error, such as data entry mistakes and coding errors. Additionally, many PT outpatient clinics, hospice agencies and other healthcare organizations still manage billing through highly manual processes, making it easy for staff to miss important steps such as verifying patient eligibility or ensuring the required referrals and authorizations are in place.
Unless the healthcare organization checks these details before care is administered, the patient could be stuck with the bill. This often leads to lost revenue for the provider and health systems, given how difficult it can be to collect on overdue or delinquent payments.
Effective Revenue Cycle Management Strategies
Healthcare EMR and billing solutions, including rehab therapy software, and hospice billing software, should have capabilities to streamline billing processes and support a smooth RCM process.
The reality of healthcare revenue cycle management processes is that many providers operate with limited staff, time and resources. Moreover, many staff at healthcare organizations multitask in various roles, which can make it difficult to stay on top of coding changes, payer requirements, patient paperwork and collections.
That’s why many healthcare organizations are now looking at outsourced RCM services to support their billing process. According to research, the global healthcare RCM outsourcing market is expected to grow from $11.7 billion in 2017 to $23 billion by the end of this year (2023).
When deciding your revenue cycle management strategy, it’s helpful to identify key factors that could impact your decision, such as your budget, management style, comfort level and current infrastructure.
The remainder of this article will delve into the history of revenue cycle management.
The History of Revenue Cycle Management (RCM)
As mentioned above, revenue cycle management (RCM) is the process of managing a healthcare facility’s financial operations from initial patient access and contact to final payment for services rendered.
Revenue cycle management is an essential part of healthcare administration, as it ensures that medical facilities are properly reimbursed for their services to their patient population.
The history of medical billing and revenue cycle management is an interesting one, as it has evolved over time to become a critical component of the healthcare industry.
Early Days of Revenue Cycle Management
The origins of revenue cycle management can be traced back to the early days of healthcare administration, when healthcare facilities relied on paper-based systems to manage their financial operations.
This manual process involved medical services centered around collecting patient information, filing claims with insurance companies, and tracking payments. The system was labor-intensive and prone to errors, which led to delayed payments and inaccurate financial records.
In the 1970s, with the rise of computer technology, healthcare facilities began to adopt solutions to help manage their financial operations. This shift allowed for the shift to processing claims faster and more accurately, which improved the overall efficiency of the revenue cycle management process.
The introduction of these systems also allowed for the creation of standardized billing codes, which made it easier to submit claims to insurance companies, also resulting in better reimbursement.
Introduction of HIPAA
In 1996, the Health Insurance Portability and Accountability Act (HIPAA) was introduced, which set standards for the electronic exchange of healthcare information.
The HIPAA regulations required healthcare facilities to adopt standardized electronic billing practices, which further improved the efficiency of the revenue cycle management process.
The HIPAA regulations also introduced the concept of the “covered entity,” which refers to any healthcare business that transmits electronic health information.
Covered entities are required to comply with HIPAA regulations, which include standards for the security and privacy of electronic health information.
This regulation led to the adoption of more robust electronic billing systems, which improved the security of patient information.
Evolution of Revenue Cycle Management
In the early 2000s, with the adoption of electronic medical records (EMRs), revenue cycle management began to evolve rapidly. EMRs allowed healthcare providers to capture patient information more accurately, which improved the accuracy of billing and coding.
EMRs also allowed for the automation of many revenue cycle management processes, which improved efficiency and reduced potential errors.
With the rise of value-based care, revenue cycle management has become even more critical for healthcare providers. Value-based care is a payment model that rewards healthcare providers for delivering high-quality care and penalizes them for poor outcomes.
The value-based care model has increased the complexity of revenue cycle management, as healthcare organizations must now track a broader range of metrics to ensure they are providing high-quality care.
The rise of consumerism in healthcare has also impacted revenue cycle management. Patients are now more involved in the financial aspects of their care, and they expect to have access to transparent pricing information.
Providers must provide price transparency and offer payment options to meet the demands of patients.
Future of Revenue Cycle Management
The future of revenue cycle management is likely to be shaped by several trends:
The adoption of artificial intelligence (AI) and machine learning (ML) is likely to revolutionize the revenue cycle management process, as these technologies can help healthcare providers automate many of the manual processes involved in billing and coding.
The use of blockchain technology is also likely to play a role in the future of revenue cycle management. Blockchain technology can help healthcare providers improve the security and privacy of patient information, which is critical for compliance with HIPAA regulations.
Another trend that is likely to impact revenue cycle management is the increasing use of telemedicine. Telemedicine allows healthcare organizations to deliver care remotely and implement a clinically driven revenue cycle, which can improve access to care and reduce costs.
By improving clinical functions and implementing a financial process and business process to improve financial outcomes, healthcare professionals can increase capturing patient payments and lead to better patient satisfaction and patient care.
To learn more about how we can help improve your RCM processes and maximize reimbursement, schedule a demo with a dedicated solution specialist.