Hospital revenue cycle management (RCM) begins before a patient even walks in and could continue long after the patient has left.The financial health of hospitals heavily depends on the quality of their RCM operations. In an industry as heavily regulated and evolving as healthcare, medical organisations must strive to maintain their bottom line just like every other for-profit corporation. In this guide, we will explore some ways of optimising revenue cycle management in hospitals that will prove beneficial for all stakeholders involved.
Elements of hospital RCM
Revenue cycle management for hospitals involves multiple processes that begin right from patient registration and end after the final payment. It mostly involves managing the financial and administrative elements of the patient’s care journey. Let’s have a closer look at those elements and their roles:
- Eligibility verification. This is the first step in the hospital revenue cycle management process. When patients are registered, their insurance coverage is verified to ensure that the medical services necessary will be covered. This is crucial since inaccurate verification often leads to claim denials, resulting in lost revenues for providers.
- Medical coding. Coding converts the medical services rendered into standardised alphanumeric codes, which are then used for billing to generate claims. Mistakes in coding are one of the main reasons for claim denials, and organisations often use software for accurate coding.
- Claim submission. Claims contain all the medical services rendered to patients in coded format, along with billable fees. They must be submitted accurately and within a specified time. Delays or mistakes in claim submission result in denials from insurance payers, leading to a lengthy process of appeals. Hospitals must follow up with the payers to know the status of their claims.
- Claim adjudication. This is when insurance payers adjudicate the claim to verify it and determine the amount to be paid to providers. Adjudication is when errors in claims are discovered or any violations of payer policies result in a claim denial.
- Patient payment. Hospitals collect a part of the payment from patients in the form of co-pays and deductibles. It forms a significant portion of the overall revenue.
- Denial Management. Claims can be denied for a variety of reasons. It is up to the hospital to manage denials and follow up with payers to know the reasons for the denial. Subsequently, the corrections are made, and the claim can be re-submitted. But this is a lengthy process and could take weeks.
- RCM Analysis. Revenue cycle management for hospitals involves a series of elaborate steps. The data from RCM can be analysed to garner useful insights. These highlight the pain points in the RCM process flow and allow hospitals to make informed decisions about addressing the causes of inefficiencies.
Challenges in hospital revenue cycle management
- Complex payer ecosystem: Hospitals must deal with health plans from numerous payers regularly, each with unique payment models and policies.
- Evolving regulations: Regulations for the healthcare industry change more than most other industries. This makes it difficult for hospitals to remain compliant and adjust their workflows accordingly.
- Interoperability. Revenue cycle management in hospitals involves multiple software systems working in tandem. Efficient RCM requires seamless data flow among those systems and the EHR, along with other software. Integrating them all can be challenging because of the varying data formats and information standards of those systems.
Strategies for optimising hospital revenue cycle management
Let’s talk about some strategies for improving the efficiency of RCM at hospitals:
- Technology adoption and integration. Implementing software for RCM that integrates with electronic health records (EHR) and other systems streamlines the entire process. All the components involved in RCM can function cohesively and exchange the necessary data without hassle. This ultimately improves revenue cycles in the long run.
- Automatic eligibility verification. Automating insurance eligibility verification lowers the chances of claim denials. Since different insurance payers would have different policies for coverage, it is important to use reliable software for verifying health plans before providing medical services.
- Claims scrubbing. One of the best ways to avoid claim denials is to implement solutions for scrubbing claims. These solutions assess each claim before its submission and highlight any problems, allowing the respective department to make corrections before submission.
- Denial management. A significant portion of claims are denied routinely. Hospitals must invest in suitable denial management solutions to handle denials better. Software would streamline and accelerate all the workflows in denial management, resulting in faster appeals and reimbursements.
- Data analytics. Data analytics solutions for hospital revenue cycle management help highlight the reasons for denials, rejections, and other inefficiencies. Knowing the reasons helps hospitals address the causes and improve overall productivity.
Improving revenue cycle management for hospitals is not only about the financial health of the organisation but also its ability to provide patient care. The secret lies in understanding the components of RCM and formulating strategies for solving problems. As innovations in artificial intelligence and blockchain emerge amidst evolving regulations and calls for value-based reimbursements, hospitals must embrace technology to meet new challenges and continue to provide quality care.
Ellen Diamond, a psychology graduate from the University of Hertfordshire, has a keen interest in the fields of mental health, wellness, and lifestyle.