Episode 29: Revenue Cycle Management: What is it? Why is it important to you?
Revenue cycle management refers to the process of identifying, collecting and managing a practice’s revenue from payers based on the services provided.
In order to be financially viable, you have to be compensated for the services you provide. No one can run a business providing services and paying expenses without collecting money.
The revenue cycle begins when the patient makes the appointment and ends with successful payment collection.
The first step in the revenue cycle happens when the patient schedules an appointment. Your best chance of beating the revenue cycle management game is to collect your money upfront. Pre-registering patients allows you to determine the patient’s financial responsibility.
Key points:
- You need to have explicitly spelled out policies and procedures for your staff to follow.
- You need someone in your office figuring out eligibility and then coordinating that information.
- Know and collect what is due upfront
Next step–the patient visit
You need to complete your notes and drop the charge in a timely fashion. The clock doesn’t start ticking with regard to when the insurance company has to pay you until they get your claim.
Human error can wreak havoc on your revenue cycle. Coding mistakes, billing errors because of duplicate data, missing information and misspellings all result in lost revenue. In order for a claim to go to the insurance company and be processed, it has to be a clean claim.
Once the claim get to the insurance company, the provider has less control over how long it takes for payment. However, knowing the rules of what’s a covered benefit, what’s defined as medically necessary and what documentation you need can go along way to saving you and your staff from the denial-appeal cycle.
Communicating with health insurance companies is a key component. Neglecting to manage the claims process after submission can result in pending, rejected or denied claims, or ones that were never received. In addition, you need to determine where problems originate if there are issues with specific procedures or codes, can help increase awareness and reduce recurrences.
Once the insurance company pays the claim, they'll send you an electronic payment directly into your practice checking account and an explanation of benefits. From there you either submit the claim to the secondary or move the accounts receivable to the patient's responsibility.
If you collected the money that the patient is responsible for upfront, there should be nothing left after the insurance pays. But, if this is not the case, you now need to send the patient statements.
Send out three statements—every 2 weeks. After that, decide whether you want to write off the remainder or turn them over to collections.
Knowing what the revenue cycle is and all of its components is only part of the story. Even if you outsource part of your revenue cycle management you can’t outsource all of it. You need to have staff that is knows how to work the revenue cycle.
But the key is having a clear set of policies and procedures for every step of it that you control and actively manage it. Nobody watches your money like you.
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