What is Revenue Cycle Management?
What is Revenue Cycle Management? RCM in Healthcare
It’s never a story we like to read, but it’s a story that should catch our attention: “Hospital X is closing its doors.” Or maybe a less extreme version: “Hospital X is operating with negative margins.”
When most people think of hospitals, patient care is what comes to mind. But for hospitals executives, their hospital is a business striving to stay financially stable in an industry stacked against them. This is why Revenue Cycle Management exists. Revenue cycle management refers to hospital services and processes that can increase cash flow and help achieve sustainable financial improvements.
The Basics of RCM
The easiest way to understand the Rev Cycle process is to look at it through the cycle of an individual patient. There are 3 stages of the patient journey: 1) Pre-Visit, 2) During Visit, and 3) Post-Visit. Not all patients follow this journey (e.g. Emergency Care), but each stage is still utilized.
For Pre-Visit, administrative staff start with patient scheduling, insurance verification, and creating or updating a patient account in the EMR. Mistakes or inefficiency at this stage cause ripple effects for the remaining journey. And this usually means delayed revenue for the hospital.
The actual appointment or hospital visit can get granular, but for the sake of this article, we’re focused on how the patient visit affects revenue. Every visit, operation, or procedure has a claim(s) created and submitted. Hospitals have coders trained in ICD-10 (the “language” of medical coding) that correspond to treatments and procedures. As with any language, there can be misinterpretations or mistakes that cause delays. And just as you’d expect, delays cost the hospital revenue.
This claim is then sent to the patient’s insurance company (private or government-sponsored) to process the responsibility of the patient versus insurance. For the hospital, accurately capturing codes and claims submissions are crucial to getting reimbursed for treatments and billing for their services.
The Post-Visit stage is everything that happens once the patient leaves the facility. Healthcare is different than many industries in that rarely does the hospital provide their services and know exactly who will be paying them for what. There are many factors that are specific to the patient’s insurance and then how quickly a patient pays their bills (which can also take a long time). But this stage is extremely important for hospitals to control what they can to see revenue quickly. Inaccurate codes, claim denials, or administrative errors on the patient account means hospitals may not see revenue for weeks or months.
Hospitals aren’t often equipped to handle the back-and-forth nature of the Post-Visit, and this is where revenue gets lost. You may already be thinking of many ways that efficiency and quality are important in each of these stages, but we’re going to conclude this article by focusing on one tactic in particular: concurrent coding.
Using Concurrent Coding to Improve RCM
As mentioned already, accurate and efficient coding is a crucial step in Revenue Cycle Management. Concurrent coding means that the time from the patient visit to coding the chart to submitting the claim is all done within a 24-hour period. It’s not uncommon for hospitals to have a coding backlog where they performed the services days, weeks, or in worst case scenarios, months ago and haven’t submitted a claim yet. Concurrent coding ensures that the coding team is coding charts the same day or night as services are being performed.
The quicker the coding team can get a chart coded and claim submitted, the quicker the hospital is seeing revenue. But you can’t neglect quality for speed in this process, or you’ll start the “anti-revenue cycle” of denials and mistakes that cause delays. It should go without saying that having a high-quality, skilled coding team is essential for hospitals. Unfortunately, coding teams are notorious for being a high-turnover, low-performance environment. Having a reliable, high quality team that can concurrently code keeps hospitals from becoming the next financial headline.
To read a case study of how we helped a hospital go from $120 million of coding backlog to concurrent coding, click here.
If you’re in need of Revenue Cycle solutions in coding, claims management, or pre-service verification, contact us today.