Fri. Jul 12th, 2024

Simply put, RCM describes the process of collecting payments from patients in the healthcare industry.

Healthcare revenue cycle management must change as the industry shifts from fee-for-service to value-based care payment.

Despite their respective reputations for saving lives and treating patients, hospitals, small offices, and huge healthcare systems all require robust operational and financial frameworks. So, this is where healthcare revenue cycle management comes in.

Healthcare revenue cycle management refers to the financial process through which healthcare institutions manage the administrative and clinical tasks connected with claims processing, payment, and revenue creation. Revenue from patient services is tracked, managed, and collected in this procedure.

Maintaining financial stability is essential for healthcare providers to continue providing essential services to their communities. Healthcare revenue cycle management is used by establishments to rake in cash and pay for operational costs. If you want to get more information about the Revenue Cycle Management Company in Texas, you should visit

Revenue cycle management fundamentals in the healthcare industry

In the healthcare industry, the revenue cycle starts when a patient requests an appointment. Once all patient payments and claims have been received, the procedure is complete. However, a patient’s account does not lead a simple existence.

When a patient first makes an appointment, the administrative team is responsible for setting up the patient’s account, verifying the patient’s insurance, and arranging the appointment.

Pre-registration is essential for efficient revenue cycle management. During this stage, workers establish a patient profile that includes pertinent medical information and insurance information.

As Sue Plank, director of patient access at Goshen Health, explained to RevCycleIntelligence, “from the hospital’s perspective, our ability to enter the correct insurance, verify accurate demographics for the patient, and collect the patient’s financial responsibility at the front end all reduces rework throughout the revenue cycle and ultimately reduces potential denials.”

After seeing a patient, healthcare providers are responsible for creating a claims submission and performing charge capture.

Providers and coders are responsible for assigning the correct ICD-10 code to each service rendered, which in turn establishes the rate of payment from the patient’s health insurance. It is possible to reduce the frequency of claim rejections by carefully selecting service codes.

The services rendered are recorded as chargeable charges in the charge capture procedure.

Once a claim is completed, it is submitted by the practice to the applicable private or public payer for payment. Yet this is just the beginning of the revenue cycle management for healthcare institutions. Payment posting, statement processing, payment collections, and claim rejections are all back-end office procedures that need to be supervised by organizations.

Based on the patient’s coverage and the terms of the payer contracts, healthcare organizations may be reimbursed for their services once an insurance company reviews the claim. For many causes, including incorrect coding, missing elements in the hospital file, and inadequate patient narratives, claims may be rejected.

If a patient’s medical expenses exceed their insurance’s coverage, the healthcare provider is required by law to inform them and recover the difference.

Management of the revenue cycle in healthcare focuses on streamlining the process by which providers are paid for their services rendered.

However, in revenue cycle management, billing and claims processing often takes place over a prolonged period of time. Claims between payers and providers may often go back and forth for months before any problems are resolved. The payer will decide whether to pay the provider after reviewing the claim during the remittance processing phase or not.

As patients do not always have the money to pay medical bills immediately, revenue cycle management may be a protracted process.


Simply put, for revenue cycle management to be successful, healthcare businesses must be profitable. There are a variety of methods that establishments may use to optimize the revenue cycle and guarantee prompt payments.

Optimizing the front end of the revenue cycle and giving patients first priority is essential for a healthy bottom line. Claims reimbursement may be delayed if mistakes occur in the front-end processes that assist move claims ahead. Tasks like confirming insurance coverage are crucial to ensuring that medical centers get paid by insurance providers.

Data from Hayes Management shows that mistakes in front-end processes including eligibility verification, registration, and authorization continue to be among the leading causes of claim rejections, particularly for COVID-19 inpatient treatments.

This was especially useful during the recent COVID-19 epidemic, when several health systems had gone digital to improve front-end operations.

Contactless registration is safer for both patients and staff thanks to computerized patient intake, as explained by Plank. “They may check their personal information, photograph their insurance card and picture ID, and electronically read and sign their permission at their leisure,” the website explains.

Effective claim rejection management and the establishment of processes to swiftly address reimbursement concerns for denied claims are essential necessities for healthcare businesses. Claims may be readily rejected due to technical or clinical difficulties, such as incorrect ICD-10 coding or a lack of a patient’s signature on their file.

Hospitals will expect a 23% rise in claim rejections from 2016 to 2020, continuing a trend of steady growth.

Claims might be less likely to be denied if organizations invest in software that automates coding and insurance verification, provide patient education on healthcare expenses, and provide appropriate staff training. It is also important for healthcare facilities to monitor claims and look into their rejections on a frequent basis.

Outsourcing revenue cycle management to a third party may assist businesses balance money and patient care when healthcare providers confront an economic crisis owing to the epidemic.

However, providers need to watch out for their own interests, since several hospitals have found that increasing claim rejection rates after outsourcing their revenue cycle management.

Successful healthcare revenue cycle management programs are also implemented by several providers with the use of data analytics. Payers are increasingly demanding that healthcare providers report on a wide range of quality, patient satisfaction, and healthcare cost metrics in order to obtain their full reimbursement. Health care systems have also benefited from the use of data analytics to improve care coordination and value-based care.

Data analytics may be used by healthcare organizations in the form of dashboards and alerts to facilitate the administration of huge amounts of information and the dissemination of information to staff about revenue cycle management objectives. By monitoring the claims process, analytics may also aid in forecasting claim outcomes.


The constant evolution of healthcare laws makes it challenging for businesses to establish and stick to consistent revenue cycle management practices.

One of the most difficult aspects of revenue cycle management for healthcare providers is obtaining payment from patients at or before the time of treatment.

It is preferable to collect money from patients before they leave the office, but this is not always possible. According to 2020 data gathered by InstaMed, more than three quarters of healthcare providers report a collecting time of more than a month for patients.

High deductibles and other financial difficulties prevent many people from paying their medical bills in full immediately. It is important for healthcare providers to balance the need to collect payments on time with the risk of losing patients.

As a result of the widespread spread of COVID-19, healthcare professionals have been compelled to adopt innovative methods of patient gathering. Some hospitals, for instance, have expanded payment plans for patients, while others have shifted when bad debts are written off. Other service providers have also permitted patients to defer or extend payments.

Aspects of the revenue cycle that might be difficult to handle include coding and charge capture. Incorrect coding by staff employees is a potential source of claims reimbursement problems.

Healthcare providers should engage in ongoing staff education programs that emphasize the need of accurate coding, thorough chart recording, and periodic reviews of financial policies. It has been shown that investments in such training programs provide positive returns in the form of decreased turnover and fewer medical mistakes.

The prior permission procedure is another revenue cycle management obstacle that providers must overcome. Prior authorization means that both the clinician and the patient must wait for the health insurance company to provide its approval before proceeding with treatment.

The No Surprises Act’s prohibition on “surprise billing” has also posed a difficulty for those in charge of the revenue cycle. Out-of-network providers cannot charge customers more than their in-network cost-sharing amount under this regulation, protecting consumers from unexpected bills. In addition, the policy forbids any kind of back-end charging.

Due to the new policy’s implementation date of January 1, 2022, providers may need to modify their revenue cycle processes to ensure compliance.


Health information technology and electronic health record systems have improved the effectiveness of healthcare revenue cycle management. The lifetime of a claim is monitored, payments are collected, and issues with claim rejections are addressed by many businesses with the use of automated systems. In the end, these innovations allow for a reliable flow of money.

Seventy-five percent of hospitals and health institutions in the United States used revenue cycle management software during the COVID-19 epidemic.

As revenue cycle management tasks are increasingly performed remotely, technology and automation have proven useful.

Automating typical problems in healthcare revenue cycle management including payer-provider relations, proposing suitable ICD-10 codes, monitoring medical billing procedures, and even scheduling patient visits has proven beneficial for many providers.

Artificial intelligence (AI) is also being used by providers to streamline revenue cycle management. Ai can keep an eye on massive amounts of data and alert providers to specific indicators, such as the reason a claim was refused.

AI is “pretty uniquely good” at evaluating variables and coming up with an ever-improving success rate of getting to the right outcome across all process steps, according to Joe Polaris, senior v.p. of product and technology at R1 RCM Texas, a revenue cycle management vendor. “Whether it’s matching a patient with the right provider, estimating out-of-pocket costs, or coding the claim, those are things that have long lists of variables associated with them,” he said.

The use of AI and robotics in the healthcare industry may also aid in the fulfillment of previous authorizations.

Value-based care, advances in healthcare technology, and the threat of a worldwide pandemic are just a few examples of the ways in which the healthcare revenue cycle has had to adapt in recent years. If healthcare providers want to provide their patients the best treatment possible and be paid for their efforts, they need to know where they are in the revenue cycle at all times.