What is Revenue Cycle Management in Medical Billing?


Hospitals earn profit by delivering care services to patients. The total amount of services provided to a patient are summed up to arrive at the total value of care delivery. This means the journey of a patient through a careful process is vital to determine a final amount for hospitals to bill the patients. 

With health insurance companies usually making the payment for the services that hospitals deliver, they expect the hospital to provide an accurate account of the costs incurred by them during a patient’s treatment. The financial process of monitoring patient journey and determining the costs incurred by a hospital in the treatment process is called revenue cycle management (RCM) in medical billing.

Why is RCM Important?

RCM functions by amalgamating the business and medical aspects of the care process to get a bird’s eye view of the patient journey. RCM processes involve the creation, management, and collection of the costs involved in a patient’s care process. Medical billing is a crucial component of a hospital’s revenue cycle. Without it, the hospital s simply cannot function.

This is because medical billing services are needed to note down treatment data in the form of CPT codes based on the ICD 10 convention. The codes are a part of a globally accepted standard for recording the treatment given to a patient. It is the medical biller who arranges for payments between a hospital and the patient’s insurance company by creating ‘claims’ that are submitted to the payer.

The slightest of mistakes from the medical biller or even in the medical coding process can result in denied claims. This means, the hospital does not get reimbursed for the services provided to the patient. Such a situation can be worrisome for both the hospital and the patient since the cost of their treatment has not been recovered.

Revenue cycle management in medical billing enables a hospital to streamline its claims submission process and keep a track of all account’s receivables. 

RCM Systems and Services

RCM systems are software suites that integrate with the Electronic Health Record (EHR) system of the hospital. They capture all the important details that are necessary to make up an accurate insurance claim and comprises of the following processes:

Charge Capture: All the medical services given to a patient are organized into changes that a patient is billed for.

Coding: Recording of medical procedures against the appropriate CPT codes.

Patient Collections: Finalizing the amount that is billable to the patient.

Utilization Review: A review of the necessity of a medical procedure in the treatment process.

Claims Submission: The submission of the ‘treatment bill’ to the insurance company. 

Follow Up with Payers: A follow up schedule is created to monitor accounts receivables from the insurer.

RCM systems, together with an efficacious process can vastly improve the bottom line of any medical practice irrespective of its size. Revenue cycle management in medical billing is essential to the long-term profitability of a hospital.

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