What is revenue cycle management?
Revenue cycle management (RCM) describes the way a healthcare organization keeps track of revenue. The “cycle” starts with the initial visit and continues through payment of the last bill. It encompasses the steps the organization must take to receive payment for services rendered.
Greenway research shows only 62% of practices review delinquent claims, only 59% of secondary claims are filed, and only 32% of patients who owe money receive a collection letter. An effective revenue cycle management strategy addresses each of the necessary steps to collect, ensuring profitability for your practice and, ultimately, increased capability to focus on patient care.
You may work in a medical office, or even work closely with medical billers, and still wonder what revenue cycle management means, or how revenue cycle management works. Read on for details.
What is the revenue cycle management process?
According to Greenway’s medical billing best practices e-book, the RCM process consists of these three functions:
- Revenue generation: Like any other business, practices must generate revenue to sustain operations. Reducing scheduling gaps and being proactive about capturing patient information and copays up front are two ways a practice can ensure revenue generation.
- Revenue capture: From the time a clinical appointment begins until the patient walks out the door, the activity that occurs must be documented and coded properly for a practice to receive the highest level of payment.
- Revenue collections: Typically, back office billing allows a practice to collect revenue. Back office billing functions such as billing, posting, and collecting payments round out the revenue cycle management process.
Benefits of a revenue cycle management system
Practices are dedicated to providing quality care. But to keep the doors open, they need to collect. In the face of declining reimbursements, constantly changing payer rules, and new regulatory requirements, practices may struggle to manage collections on their own.
If you’ve explored various billing options, you may be curious about the benefits of revenue cycle management. It often begins with a partnership. A billing partner can bring experience in revenue cycle management, plus a team that collaborates with yours to set and achieve financial goals. The partner can handle billing and collections for your practice, simplifying processes, reducing costs, and improving the bottom line.
What are revenue cycle management services? They may include the following:
- Managing denials
- Claim scrubbing and coding assistance
- Enhancing charge entry
- Increasing collections
- Increasing financial collections
- Offering training and best practices
Ideally, the team will collaborate with yours through communication and shared technology access. Together, you will establish goals for your practice measured in terms of key performance indicators (KPIs) such as days in A/R, clean claims ratio, net collections ratio, and percentage of claims below 60 days. These metrics reflect the most important factors impacting reimbursement.
Revenue cycle management is important because, for many practices, it’s key to getting paid in an increasingly complex system.
“Having Greenway Revenue Services team is almost like having a secondary financial team, an accounting team, overlooking your audits, correlating, so everything checks out at the end of the day.”Xavier Anderson, General Manager, Valley Day & Night Clinic
Proactive revenue cycle management
Consider the example of Allergy, Asthma & Immunology Associates, a practice that partnered with Greenway Revenue Services, Greenway’s revenue cycle management service. At this practice, money was coming in, but payment posting had fallen behind.
Once the partnership began, the practice noticed an improvement in its payment posting, which helped further decrease its already low average days in A/R.
“Now we have a very good system set up, and they get posted very quickly,” Carmela Hewitt, Assistant Practice Manager, said in a recent case study. “I think that’s what expedited our days in A/R, because it’s physically posted to the account as fast as possible.”
What is revenue cycle management? For Allergy, Asthma & Immunology Associates, it’s a focused partnership that involved collaborative issue resolution, more efficient and timely patient collections, and regular, ongoing communication.
Revenue cycle management challenges
Billing has come a long way from being a strictly back office function. Today, the front office and clinical staff take part in the process too. Since providers and staff members new to the financial aspects of running a practice may find billing challenging, many seek education and guidance from a billing partner to help them understand and excel in their roles.
Although it can be complex, it’s helpful to understand why revenue cycle management is critical to the financial performance of healthcare providers. Consider these three challenges a billing partner can help address:
- Process orientation: By standardizing and optimizing billing — regarding the processes as a “cycle” that involves all staff — a practice can weed out the billing missteps and errors that detract from financial performance. Whether it’s miscommunication with a patient at the front desk or loss of important information, focusing on the process can improve these challenges.
- Understanding the value of information: With so much data coming through a practice, it can be difficult to identify the data that’s critical. A billing partner can show providers how to manage critical information to optimize revenue. A billing partner can also educate staff on the particulars of contracts to help them negotiate payments. Education on edit reports, explanation of benefits forms, and additional claims information are just as important.
- Following up: The key to effective collections strategies is following up. Otherwise, appeals, collection letters, and payment plans could go unanswered until it’s too late to collect.
MEDICAL BILLING COLLECTIONS STATS*
- Only 62% of practices review delinquent claims
- Only 59% of secondary claims are filed
- Only 32% of patients who owe money receive a collection letter.
*Greenway Health research
In addition to improving billing and claims processes, a billing partner can address resource and staffing-related challenges. When you shift the workload to a revenue cycle management team, your practice has less of a need to hire, train, and manage billing staff.
The decision to outsource depends not only on finances, but also on the possible need to improve staff productivity or morale. Your practice may decide to reallocate staff to patient-facing roles, to handle special projects, or to focus on value-based care. Your practice and its needs are unique. Your vendor should be aligned with your goals.
Outsourced revenue cycle management
Does RCM outsourcing make sense for your practice?
If you believe your practice would benefit from a billing partner, there are certain revenue cycle management and medical billing questions you may want to ask. Do they have a comprehensive billing strategy? Are their employees certified and familiar with industry best practices? How does their revenue cycle management process work? Check out this infographic for additional questions to ask.
Greenway Revenue Services works with all areas of your practice — front office, clinical, and back office — to help you achieve your financial goals. We offer collaboration, experience, data analysis, and A/R follow-up.
“Having Greenway Revenue Services team is almost like having a secondary financial team, an accounting team, overlooking your audits, correlating, so everything checks out at the end of the day,” said Xavier Anderson, General Manager of Valley Day & Night Clinic, featured in this case study.
In 2020, growth strategy firm Frost & Sullivan honored Greenway with its North American Ambulatory Revenue Cycle Management Customer Value Leadership Award.
The award recognized Greenway’s ability to strengthen client relationships through superior products and services that deliver a “clear, demonstrable return on investment,” according to the firm.
To learn more about Greenway Revenue Services, click here.