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Revenue Cycle Management (RCM)

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What is Revenue Cycle Management (RCM)


Healthcare revenue cycle management (RCM) is the medical billing cycle that physicians, hospitals, medical facilities and other healthcare entities use to manage the administrative and clinical aspects of preparing and processing claims, payments and generating revenue as per the standards of the industry. RCM includes but not limited to submitting and following up on medical claims with health insurance companies in order to receive timely payment for the services you provide. Further it includes the processing of patient’s cost share (deductibles, copays, coinsurance) billing and payments as well. Sometimes it is included the calculations, reporting and analysis of revenue targets and overall turnover of a practice. A good and intelligent RCM service should cover all the aspects of revenue in terms of cost and profit dimensions and helpful in making decision, setting future goals from business point of view.

The revenue cycle starts when a patient schedules an appointment and it includes all the administrative and clinical formalities, processes, and EHR/EMR technology associated with a patient visit.

The billing department (either internal/in-house or outsourced) is the key factor for many primary clinics, healthcare facilities/centers, hospitals and others however, the ultimate capability of effective billing and generating revenue from claims is determined by many functions that occur before coding and financial processing and reimbursement begins.



How Revenue Cycle Management (RCM) can be more effective?

All billing department staff must know clearly about their duties and performed their assigned tasks timely with perfection and efficiency to ensure the maximum productivity and success of the overall revenue cycle. With a shift toward new reimbursement models and the growth of insured individuals, health center staff is faced with understanding and managing individual departments of the entire process including:


  • Patient dealing (scheduling, handling upfront and after visit collections)
  • Getting knowledge of coverage and plan benefits to ensure revenue
  • Obtaining necessary approvals from insurance before visit
  • Checking and verifying medical records and other documents in terms of claim processing
  • Understanding the importance of the demographic and insurance information they collect and record


Trained, experienced and dedicated professional staff, documented policies and procedures, complete understanding of roles and responsibilities, the effects on other functions within the cycle are very important for effectiveness of RCM. So as per many industry surveys, outsourcing is the more convenient way to make RCM efficient as compared to manage it in-house specially for large centers and practices.

Advantages of outsourcing the RCM


  • Focus on Patient Care: The healthcare and medical industry are continually changing. Outsourcing RCM services to an RCM partner will help medical professionals keep tabs on compliance rules and enable them to focus on patient care. Monitoring RCM all day long will only distract them from maintaining high standards in medical diagnosis and intervention.
  • Manage Light Staff: With the RCM partner taking care of day- to- day RCM activities like billing, reimbursements, registrations, and patient check-in/check-out, the healthcare facility can shed staff. Coping with fewer staff members will allow them to focus on their medical practice and network with other professionals.
  • Timely Reimbursements: With professional billing agents working round-the-clock, your outsourcing RCM partner can ensure timely reimbursements. As it does not handle medical functions, it can collect and verify all details of patient enrolment, check on insurance, document the diagnosis and treatment, and give the correct medical codes. When this is done, there is little room for errors. The billing firm will provide an exact picture of the dues realized at consistent intervals. This helps healthcare professionals gain a snapshot of their earnings in real-time.
  • Fewer Interruptions in Cash FlowsMedical billing outsourcing servicesare equipped with software and hardware solutions to handle billing. Once the relevant documents are received from the practice, medical billing is done, and all procedures like insurance verifications and AR collections are followed up within a day or two. This improves cash flow. Free of administrative work, doctors can focus on activities that help professional learning, like attending a seminar.
  • Reduction in Billing Errors: With trained staff and technology at hand, an outsourcing RCM firm will never commit standard billing errors like entering the incorrect name of the patient, and wrong CPT codes. Error-free billing helps a healthcare facility improve its reputation.
  • Maintaining Regulatory ComplianceIn-house billingmay not provide enough time to staff to keep abreast of regulatory changes and compliance issues. An outsourcing RCM partner will introduce administrative workflows that guarantee compliance activities. A healthcare facility will not need to worry about industry regulations, payer policies, and compliance
  • Optimize Reimbursements: Professional expertise in billing and coding helps optimize reimbursements. An RCM outsourcing agency can apply the correct coding and rules, resulting in better refunds.
  • Enhanced Monthly Cash Flow: Think of a situation when your staff may go on vacation; the RCM function is affected as claims have to wait till they return Interruptions in billing will affect timely reimbursements and indirect cash flow. Outsourcing to an RCM partner will ensure a steady revenue cycle and enhance cash flow.
  • Improved Profitability and Efficiency: With the RCM services being outsourced, healthcare physicians have ample time to focus on healthcare improving clinical efficacy. With a devoted revenue management team managing these issues, the revenue of the physician practice is dramatically enhanced.
  • Streamlined Operations: There is a misapprehension that, by outsourcing, you would be losing control over your healthcare business and revenue. In fact, outsourcing RCM gives healthcare professionals more control and transparency.
  • Account Receivables (A/R): An effective RCM partner helps healthcare practices follow up AR reconciliations from insurance providers. Accounts receivable follow-ups are critical and help healthcare service providers focus on patient practice. Outsourcing to an RCM partner who has an experienced team of A/R specialists, who have worked with several insurance firms and are conversant with policy handling will ensure payments are streamlined.
  • Stronger Financial Performance:

Increased Revenue. Other than reducing the overheads of salaries for an internal team, expenditure on office equipment, technology upgrades, outsourcing RCM helps you obtain payments that you are legally permitted to collect, leading to an increase in revenues.
Reduced Costs. Managing your own RCM operations can be expensive; it requires dedicated employees with ongoing training and oversight. Shifting this overhead to an outsourced RCM firm can save you expenses and time associated with in-house operations, thus boosting profitability.
Less Capital Expense.
 Maintaining an in-house RCM system requires substantial infrastructure and resources, as well as technology and investment. Outsourcing RCM empowers you to focus on operating expenditure, rather than on capital investment. This, in turn, gives you more scalability, tractability, and control of revenue.