In the face of crisis, healthcare has undergone a transformative shift. The COVID-19 pandemic accelerated this revolution, pushing providers to embrace digital technology and innovative care models. Now, as they strive for financial resilience in uncertain times, providers must examine the revenue cycle management (RCM) in healthcare process as a whole: what it is, how it works, and the practical steps providers can take to improve their organization’s financial health now and in the future.
Revenue cycle management(RCM) connects the financial and clinical aspects of care by ensuring that providers are properly reimbursed for their services, through accurate and efficient billing and claims management processes. If providers are battling denials and delayed payments, they’ll struggle to meet the needs of their communities. It’s a growing challenge as costs continue to grow: the American Hospital Association reports that hospital expenses increased by 17.5% between 2019 and 2022, and more than half of US hospitals closed out 2022 at a financial loss.
Optimizing the revenue cycle with AI, automation and data analytics can help root out inefficiencies and maximize reimbursement.
Steps in the healthcare revenue cycle
A typical healthcare revenue cycle management workflow tracks with the patient’s journey. Each touchpoint is an opportunity to support patients with financial planning and check that payers and back-office teams have the information they need to expedite payment:
- Scheduling –When the patient books an appointment, administrative staff verify the patient’s insurance eligibility. This is a chance tomake sure pricing is transparentand give the patient an estimate for the cost of care.
- Registration –Next, the provider captures the patients’ medical history, insurance coverage and other patient demographics. Correct patient information on the front end reduces the errors that cause rework in the back office.
- Prior authorization–Front-end staff check whether the patient’s insurance providerrequires prior authorizationfor the procedure or service they need. Skipping this step can lead to costly denials, rework and patient experiences.
- Treatmentand discharge –After treatment, the back office will collate billable charges and assign a medical billing code to the claim. Accuracy is paramount, as reworking claim rejections can be an expensive drain on resources.
- Claim submission –Then, the claim must be submitted to the payer. Accurate and timely submissions prevent rejections and reimbursement delays. The goal is tosubmit clean claims the first time. If a claim is denied, it must be resubmitted as quickly as possible to avoid lost revenue.
- Collections–Once the payer approves the claim, the patient’s out-of-pocket costs are calculated and billed. Providing a range of convenient payment methods will increase the likelihood of prompt payment.
Common challenges in healthcare RCM
Claims and collections are two of the top healthcare revenue cycle management challenges. Navigating healthcare claims is complex and costly. Providers can get stuck in a cycle of inaccurate submissions, denials, corrections and rebilling, which delays reimbursement. The problem is not helped by reliance on inefficient manual processes to track and monitor claims. TheCouncil for Affordable Quality Healthcarereports that automating claim status inquiries could save an average of 15 minutes per inquiry, and save the medical industry $3.6 billion overall.
On top of seeking payments from payers, providers are collecting increasing sums from self-pay patients. With financial pressures and uncertainty around medical billing and coverage, many patients are unable to fully cover their medical expenses. To improve the patient’s financial journey and increase the likelihood of payment, it is crucial to prioritize convenience, choice, transparency, and compassion.
How to improve revenue cycle management in healthcare
A holistic approach built ondata and analytics, digital tools and automation help ease the pressure. The following four tactics are likely to yield the greatest return on investment:
1. Automate Access
A healthy revenue cycle begins with quick, accurate and efficient patient access processes. An automated, data-driven workflow reduces the errors that lead to claim denials and time-consuming rework. Online scheduling and digital registration processes verify patient information and incorporate automated business rules to ensure they only book with the right provider. Real-time eligibility information can also be used to generate accurate patient estimates, to further improve access to care and reduce friction around patient billing.
2. Increase collections
Maximizing patient collections while fostering a positive patient financial experience can be a delicate balance. Patient access staff must be the patient’s advocate, while also keeping an eye on the organization’s ability to collect what’s owed from both patients and payers. A data-driven approach allows staff to verify patient identity and insurance coverage early in the revenue cycle. Patients can be given upfront estimates of their financial responsibility ahead of service and offered appropriate financial plans to make it as easy as possible for them to pay – all through their preferred communication channels. A tool like Collections Optimization Manager allows providers to focus their efforts on the right accounts, through highly predictive patient segmentation. Novant Health used Collections Optimization Manager to prioritize high-impact accounts in-house and deliver a more compassionate patient experience, resulting in an overall rolling average return on investment of 8.5:1.
3. Streamline claims
Financial performance can be improved with automated claims management. By integrating claims management software with customized edits into the workflow system, providers can review every line of every encounter and verify that each claim is coded properly before being submitted. Encounters can be processed in real-time with automatic alerts to flag any issues before the claim is submitted. Experian Health’s new AI Advantage™ solution helps providers predict and prevent denials by checking claims before they are submitted and calculating the probability of denial. It also evaluates and segments denials that do occur based the likelihood of reimbursement following resubmission and prioritizes the work queue, so staff make best use of time.
4. Increase reimbursement
Healthcare organizations that don’t stay current on payer policy and procedure changes risk payment delays and lost revenue. Providers and payers need to be on the same page, to quickly resolve mismatches between expected and actual reimbursement amounts. Automated access to the right data means providers can be reimbursed accurately and quickly while strengthening their relationships with payers. Providers can avoid payment delays and lost revenue with automated payer policy and procedure change notifications.
How healthy is your revenue cycle? Our revenue cycle management checklist is designed to help healthcare organizations catch inefficiencies and find opportunities to boost cash flow.
Getting the most out of revenue cycle management software
A successful revenue management strategy has three essential ingredients: data, software, and training. Experian Health’s “Best in KLAS” revenue cycle management solutions are built on proven technology and proprietary databases, to make it easier for staff to find new opportunities to bring in revenue. Experienced consultants are on hand to guide staff and ensure workflows are set up for the best results.
Find out more about how Experian Health’s revenue cycle management solutions create a frictionless experience between patients, payers and providers, and generate more revenue for healthcare organizations.
