4 Revenue Cycle Management Functions That Promote Financial Health
In a perfect world, health care professionals would be able to focus exclusively on patient care. The reality of the industry, though, is that each facility is tasked with running a business as well.
Managing a full spectrum of business elements is just as important as managing a patient load when it comes to operating a successful health care facility.
After 15 years in the industry, we at Sigmund have served a wide variety of behavioral health and addiction treatment facilities.
Across all types of operations, we have found that it is common for a poor revenue cycle management (RCM) experience to drive facilities to search for a new EHR.
Even when you provide A+ treatment, a failing business infrastructure can impede treatment and operational success.
What is RCM?
Short for revenue cycle management, RCM tracks the revenue generated by patient care throughout the life cycle of a patient. Effective RCM systems foster excellent financial health at any facility.
RCM has a substantial impact on the quality of patient care and treatment outcomes.
Though this may not seem obvious on the surface, these two processes are directly linked to the functionality of a health care facility.
Billing and revenue management generate the resources that fund every treatment aspect.
As a result, efficient and effective RCM facilitates high-quality treatment for patients.
A facility has two choices when it comes to RCM:
- Using a third-party RCM service
- Using an EHR that contains RCM tools in the platform itself
Both choices can be equally successful.
In some cases, it is a matter of preference. In other cases, it may depend on the size of an operation.
Some larger enterprises require an external RCM service to deal with the high volume of bills and revenue they generate.
No matter the approach, RCM best practices are universal.
This article will highlight four important functions throughout the revenue cycle that contribute to a facility’s financial health:
- Referral/Marketing Source Tracking
- Automated Insurance Coverage Confirmation
- User-friendly Claims Creation/Claims Follow-Up
- Robust Reporting
1.) Referral/Marketing Source Tracking
An effective RCM is triggered into action before a patient steps foot in the office.
High level RCM tools are comprehensive. They merge financial necessity with optimal practice management. Lesser RCM tools are more rigid in their function.
For example, a proactive RCM system can track how a facility is getting patients in the door through referral and marketing source tracking tools.
Many RCM tools and/or services cannot accommodate this level of practice management. Less functional RCM programs may require external software to manage referral sources.
If an RCM can monitor and organize how patients are being referred to their services, a facility can better understand how to allocate advertising and marketing resources.
Over time, a facility’s RCM may show that most of their patients are coming from referrals from private providers rather than various marketing sources (newspapers, commercials, social media ads, etc.).
Or maybe their RCM shows that they are getting great responses from their social media ads, but no return on investment from TV commercials.
An effective RCM provides such actionable data that informs a facility where to best apply their resources.
In a competitive health care market, every penny counts.
An RCM should ensure that every penny is in the right place for maximum return on investment across the entire operation.
2.) Automated Insurance Coverage Confirmation
As soon as a patient is scheduled for their first appointment, optimal RCM tools kick in to facilitate the financial aspects of registration and admission.
A great feature to look for at this stage is automated insurance verification.
Once a patient is registered, quality RCM features can automatically send a message to the patient’s insurance provider to confirm their coverage.
This way, a facility is aware of any potential revenue loss for treating that patient from the start.
Admissions staff can then prepare for a patient that poses a coverage issue. Knowing that a patient is coming in with, say, expired or invalid insurance, allows staff to address the issue as soon as possible.
Some RCM functions take insurance verification a step further with a prior authorization for prescriptions feature.
This tool allows a clinician to confirm that the medication they prescribe to a patient is listed under the patient’s insurance policy.
As a result, patients are guaranteed to leave their appointment with a prescription that they will be able to fill without issue, thus enhancing customer satisfaction
Automatic insurance verification is a great example of the subtle ways strong RCM features can ensure a smooth revenue cycle.
These early functions are just as important to a facility’s financial health as the more obvious RCM tools later in the cycle.
3.) User-Friendly Claims Creation/Claims Follow-Up
Workflows are the backbone of any highly functional EHR experience. They automate routine tasks in the system to take on as much of the computing burden of staff as possible.
Workflows generally accomplish two things:
- Increased efficiency
- Elimination of human error
In the case of RCM, workflows provide critical assistance in creating claims and following up on rejected claims.
Effective RCM tools give a facility the option for both automated and manual claims creation.
Automated claims creation promotes maximum efficiency at this stage. This approach speeds up the process and reduces the chances of releasing incorrect claims to the clearinghouse.
However, RCM tools that provide the option for manual entry as well suggests the platform/service is rather robust and functional.
Furthermore, manual entry may be an important feature for a facility that buys a new EHR with built-in RCM tools. The flexibility to manually enter claims may help a staff that is not especially tech-savvy in their initial adoption of the software.
The simple presence of the manual approach they are used to can help quell fears until they are comfortable with the newer technology.
Once claims are submitted, the clearinghouse scrubs the claims, or checks them for errors. If a claim is clean, the clearinghouse passes it along to the corresponding payer.
If any claims are incorrect, they are rejected by the clearinghouse and sent back to the facility to fix. This is where intuitive workflows really shine.
Strong RCM workflows organize rejected claims in a highly visible interface, such as a dashboard, that makes corrections easy.
Ideally, a user should be able to immediately see which claims were rejected so that they can act on them promptly.
There should be no confusion about which claims have been rejected. Furthermore, a very small number of clicks, if any, should be required to get that information.
Be mindful that some RCM tools manage rejected claims in ways that are more conducive to reconciliation than others.
For example, a less effective RCM workflow may require filters to identify rejected claims.
This runs the risk of introducing human error into the system. A user may forget to filter for a certain payer or specific program and miss a necessary follow-up altogether.
The best RCM workflows simply present rejected claims in a clear, accessible way so that users can address rejections quickly, or notify the proper staff.
The more efficiently users are notified, the faster they can work on correcting claims to get them paid.
4.) Robust Reporting
Reporting tools are very important for monitoring the financial health of a facility.
Financial reports give a facility an objective view of its finances through metrics such as:
- Monthly Finance Summaries
- Patient Balances
- Account Activity by Provider
- Accrued Revenue
- Unbilled Revenue
Being able to report on and track the billing performance of a facility provides valuable insight into the health of revenue.
Reports give a facility the context to identify financial processes that need improvement.
In a hectic clinical billing environment, certain negative trends can fall through the cracks.
Using an RCM product with dynamic reporting capabilities allows a facility to remain on top of the entire business.
As a result, deficiencies are corrected before they become too big of an issue
Keep in mind that some RCM reporting tools offer more customization than others.
In the best case scenario, financial reporting is so robust that it allows a facility to report on precise parts of the revenue cycle.
The more targeted the reporting, the easier it is to find the root of a financial issue and remedy it as efficiently and accurately as possible.
Now that you have a better idea of the ways that RCM protects and promotes the financial health of a facility, we hope you feel more equipped to make an RCM decision for your operation.
Curiously, RCM is an aspect of our industry that does not always get the appreciation it deserves.
We find that a bit ironic. It is not uncommon in our field for a very talented staff to get derailed by poor revenue management.
We have also seen how effective RCM can facilitate a high level of patient care, extended operational success and financial health for many facilities.
Our main exposure to these success stories is through our customers, who often come to Sigmund with pain points from a poor RCM experience.
If you would like to see how one, or both, of these RCM approaches looks and feels in real-time, schedule a demo today!