Revenue cycle management (RCM) is the financial process, utilizing medical billing software, that healthcare facilities use to track patient care episodes from registration and appointment scheduling to the final payment of a balance.
RCM unifies the business and clinical sides of healthcare by coupling administrative data, such as a patient's name, insurance provider and other personal information, with the treatment a patient receives and their healthcare data.
Communicating with health insurance companies is a key component of RCM. When a patient schedules an appointment, the physician's office or the hospital staff typically check the patient's reported insurance coverage before the visit. After an insured patient receives treatment for a given condition and supplies any applicable copayment, a healthcare provider or coder categorizes the nature of the treatment according to ICD-10 codes. The hospital or care facility then sends the care summary with ICD and Current Procedural Technology codes to the patient's insurance company to see what portion of the care will be covered by insurance, with the patient billed for the remainder.
The revenue cycle includes all the administrative and clinical functions that contribute to the capture, management and collection of patient service revenue, according to the Healthcare Financial Management Association (HFMA).
Here is what's involved in the revenue cycle:
Charge capture: Rendering medical services into billable charges.
Claim submission: Submitting claims of billable fees to insurance companies.
Coding: Properly coding diagnoses and procedures.
Patient collections: Determining patient balances and collecting payments.
Preregistration: Collecting preregistration information, such as insurance coverage, before a patient arrives for inpatient or outpatient procedures.
Registration: Collecting subsequent patient information during registration to establish a medical record number and meet various regulatory, financial and clinical requirements.
Remittance processing: Applying or rejecting payments through remittance processing.
Third-party follow up: Collecting payments from third-party insurers.
Utilization review: Examining the necessity of medical services.