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Revenue Cycle Management: What is it & Why it’s Important

You can be an excellent urgent care center and still lose money to poor revenue cycle management processes — and not even realize it’s happening. But optimizing this part of your business doesn’t just impact your bottom line; it can make work easier for your staff and paying easier for patients.

To help you understand where to focus your energy, we’ll clear the confusion tied to revenue cycle management and explain what you can do to see results as early as next month. This covers:

Click on any of those links to jump ahead or read on to discover what you can do today to get paid faster and recoup more money owed.

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What is Revenue Cycle Management (RCM)?

In healthcare, revenue cycle management — RCM — is the entire process of identifying, managing, and collecting patient service revenue. It covers all the administrative and clinical functions associated with the revenue cycle, from preregistration to full payment for services rendered.

What is Revenue Cycle Management In Healthcare?

Successful revenue cycle management combines technology, standard operating procedures, well-trained staff, and — for some clinics — a third-party billing service to ensure an optimal revenue return. Without an efficient and well-executed revenue cycle management process, your staff may have to spend a lot of extra time and rework on denials and rejections.

Here are some high-level details about healthcare revenue cycle management that can help you understand what to leverage.

Technology can help you reduce exceptions, improve efficiency, increase accuracy, and stay compliant. Most automated billing tools are integrated into practice management software. We expand on this a bit further in the last section on RCM software.

Your standard operating procedures will align staff on appropriate actions to take. Note that you should establish best practices in each area of the revenue cycle and include those in your SOP. Learn about best practices in the section “How to get the Best ROI With RCM.”

Training your staff should be ongoing and touch multiple areas. The front desk is responsible for handling most of the revenue cycle, and they need to understand how to identify and avoid common mistakes, as well as feel comfortable asking patients for payment. In addition, your providers need to be trained in accurate coding — something that has been a challenge since COVID-19.

While some smaller clinics can manage urgent care billing on their own, some find it more cost-effective to place billing management in the hands of a billing company with expertise in healthcare versus adding a designated billing specialist to the team. At a certain growth point, using a reputable medical billing company will simply be the easiest and most profitable way to manage your actual billing. If you have a trusted revenue cycle management partner, chances are good they can provide that service as well.

Benefits of Revenue Cycle Management

Outside of visit volume and visit types, revenue cycle management has the biggest impact on your revenue potential. More often than not, when something happens on the back end of the rev cycle, like rejections or denials, it’s a sign that something went wrong on the front end.

That’s why successfully managing the revenue cycle means setting up your own internal processes to ensure things like:

  • You’re current on all contracting and credentialing
  • Staff understands the nuances of your top 5-10 payers
  • Staff knows how to read and interpret Real Time Eligibility, and what to do with the results
  • Staff is consistent with the standard operating procedures you have defined

Get the most from your revenue cycle management by using our front desk checklist PDF to ensure cleaner billing.

Revenue Cycle Management Process Explained in 8 Steps

Healthcare revenue cycle management covers the entire revenue cycle process, which includes:

  1. Preregistration – collection of patient information (like insurance info) before the patient arrives (often through online patient engagement)
  2. Registration – collection of patient information not captured in the preregistration
  3. Charge capture – translating medical services into billable charges
  4. Coding – accurately coding the visit
  5. Claim submission – submitting billable fees to insurance companies
  6. Remittance processing – patient billing and resolution
  7. Insurance follow-up – collecting payment from insurers
  8. Patient collections – collecting outstanding/late balances

You can find more information on these individual processes in the section “How to get the Best ROI With RCM.”

Revenue Cycle Management - Billing & Operations

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  • Details on billing non-credentialed and non-contracted providers
  • 7 common missteps in urgent care coding and billing and how to avoid them
  • 10 KPIs to watch in your urgent care

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Important Revenue Cycle Management Metrics

You can’t manage what you don’t measure. In order to gauge where you need to improve and how well your optimizations are working, you’ll need to determine key performance indicators (KPIs) that make sense for your goals. While these can vary by clinic, there are ten foundational KPIs that we recommend for most urgent cares. (Pro tip: close out reporting at the end of every month.)

As a courtesy service, Experity’s revenue cycle management team also provides a free billing analysis to anyone who would like to know where they can improve. Some of the below metrics are scored along with some others that will be personalized to your clinic. If you’d like to find out where to start improvements for your rev cycle management, simply request one.

Get Started with a Free Billing Analysis

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KPI #1: Average Revenue Per Visit

The average revenue per visit is the total amount received per visit from both the patient and the payer. Average revenue shows actual payments received per visit. It also helps determine projected cash amounts.

KPI #2: E/M Code Distribution

E/M code distribution shows the use of code levels by staff. E/M codes directly affect reimbursement amounts. Code levels 1 through 5 tell payers the level of visit complexity and dictate the charges for services rendered.

KPI #3: Ancillary Revenue Per Visit

Ancillary revenue per visit is how much revenue you receive per visit for procedures and services above the cost of the visit. Urgent cares often have a contracted amount for an office visit E/M code with payers—so ancillaries are in addition to that amount. Ancillary charges can be labs, injections, x-rays, or medical equipment.

KPI #4: Front Desk Collection Average

Front desk collection rate is the percentage of collections gathered by the front desk from patients before they leave the clinic. A larger percentage captured at the front desk is typically reflected in a higher percentage of overall collections per visit.

KPI #5: Days in Accounts Receivable (A/R)

Days in A/R is the amount of time your charges are sitting in accounts receivable. This is the revenue you have yet to get paid for, divided by the average daily charges at your clinic. The lower your days in A/R, the quicker the turnaround for reimbursement.

KPI #6: Percentage of Accounts Receivable Over 120 Days

This metric is the percentage of A/R being held for over 120 days. The longer your A/R isn’t collected (in 90 to 120+ days) the more likely it is you have serious collection issues—and lower overall reimbursement rates.

KPI #7: Days to Bill

Days to bill is how long it takes your billing team to get claims submitted. Faster days to bill means fewer days in A/R and faster reimbursement from insurance and patients. However, faster days to bill is not worth causing claim quality to suffer. If speed is causing an increase in claim rejections, it means more days in A/R and slows the revenue cycle.

KPI #8: Days to Pay

Days to pay is the amount of time it takes a payer to pay a claim. Quicker reimbursement means fewer days in A/R and faster revenue realized.

KPI #9: Visits Per Clinic Per Day

The best payer contract rates won’t matter if you don’t have any patients coming through the door. You won’t reach a profit without adequate patient volume. An urgent care business plan should designate breakeven and profit points tied to visits per day.

KPI #10: Door-to-door Time

This is the amount of time it takes from the moment a patient enters your clinic to when they leave. In urgent care, lower door-to-door times increase the number of patients you can see. The more efficient the visit, the more revenue opportunities.

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KPI Cheat Sheet

Understand 10 foundational KPIs for RCM. This PDF defines these metrics, explains how to calculate them, and provides advice on how to use them. Download it and start using it today.

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Factors That can Affect RCM

Of the 400+ billing audits the healthcare revenue cycle management experts from Experity have performed, most clinics were confident in their ability to get claims out and post cash efficiently. And while they were right, those tasks only account for about 30% to 40% of the revenue cycle.  By mistaking RCM for just billing, they were blind to numerous gaps that were delaying payment.

Full revenue cycle management covers all the steps that your staff and patients take that lead to you getting paid. Because front desk staff plays such a pivotal role in RCM, a lot of the challenges in this process are tied to them. However, there are also several things that are within the manager’s control, and some things that are not within anyone’s control, but it is the manager’s responsibility to troubleshoot. Here are some common roadblocks in RCM.

High staff turnover: It takes time to get any process running as perfectly as possible, so when you frequently have to train new people or are running a lean team, it can be very difficult to maintain a healthy RCM.

Failure to implement or execute SOPs: Certainly something that helps with the high turnover problem, clear SOPs and the expectation to follow them can minimize mistakes and missteps that hurt revenue cycle management . EVERY clinic should have them.

Lack of follow-up: We see many clinics whose front desk staff does a fantastic job with much of the rev cycle, but drops the ball when it comes to following up on collections. If you do not follow up, you likely will not get paid. Period.

Inconsistent or incomplete reporting: Your metrics tell you the story about how well you’re doing. If you’re not pulling numbers on a regular basis, it will be much harder to identify problems and causality. See the next section for help with KPIs.

Contracting and credentialing: Aside from follow-up on collections, this is one of the biggest roadblocks to getting paid. We have a section dedicated to this topic below.

How to Get the Best ROI With RCM

Measuring your KPIs will help you see where to improve, but they don’t tell you how. Here are some actionable tips that our experts recommend to help your staff optimize the full revenue cycle.

Preregistration and Registration

Registration and eligibility errors are the single biggest reason for exceptions. This is a great place to start when you’re optimizing your process. Offering patients the ability to preregister online will not only save precious time for your staff but also help reduce data input errors. Once the patient is at the clinic, your staff can also utilize insurance eligibility features like Real Time Eligibility (RTE) or Real Time Verification (RTV). This will tell you immediately if the patient’s insurance coverage includes the service. Most importantly, your staff needs to have an action plan for when RTE or RTV shows that the patient is not covered. Coach your staff to either ask for a credit card or set up a payment plan.

Charge Capture and Coding

When the American Medical Association came out with new coding guidelines for COVID-19 in 2021, it was the first time in 25 years providers have had to learn new codes — and keep up with frequent changes to them. The best way to ensure that your coding is always accurate is to provide ongoing training. Experity is diligent about offering webinars and other resources to help clarify what medical services translate to which billable charges:

This blog is regularly updated to reflect the most recent E/M codes for COVID-19.

This downloadable PDF simplifies the information in the above blog.

This on-demand webinar talks through some of the most confusing coding situations related to COVID-19.

Claim Submission

If your front desk is doing thorough work on the front end, and your providers are documenting accurately, your claims will already be cleaner. To further perfect the process, identify the most common mistakes made when submitting claims, and build best practices around identifying these mistakes and correcting them before submitting the claims.

Insurance Follow-up

This is often considered the dirty work of healthcare revenue cycle management RCM. If you want to get paid, you need to have a protocol to call or submit an online inquiry to insurance companies for payments. We recommend that for each payer, you establish a cadence to follow-up every 30-45 days. Reserve time to do this follow-up and set separate cadences for each payer — you don’t want to get backlogged on work by contacting everyone on the same day every month.

Patient Collections

This is another difficult area for many clinics because few people like to ask patients for money. Two things you can do to be better about this are A) find out which staff is most comfortable doing this, and B) coach them with a script so they know how to go about it. For example:

“Hi, how are you – sorry you’re not feeling well. Ok Let’s see. You have a $25 dollar copay. Want to give me your credit card and I’ll take care of it? Oh! I see from the last time you were here, you owe $10. Is it OK if I just go ahead and put that on here as well?”

BONUS TIP: Use credit card on file to eliminate clunky processes. With a stored credit card, you just need permission from the patients to use that card for balances owed, circumventing extra conversations.

Get more tips on RCM SOP best practices in this urgent care billing optimization blog >>

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Is Your RCM as Healthy as You Think? Find Out.

This scorecard covers ten best practices that indicate you’re doing what you can to get paid on time. Take five minutes to see how you measure up against the industry’s best.

Download the self-evaluation

Contracting and Credentialing

The biggest mistake we see clinics make is unknowingly not having providers properly credentialed and linked to payer contracts. Some common reasons are that the contract changed and the clinic did not realize, rules were misunderstood, or the clinic added services without updating the payer contract. This can happen so easily, and at a huge cost. The potential risks of noncompliance include:

  • Recoupment of payments
  • Loss or suppression of contract
  • Penalties
  • Serious legal consequences

Clearly you don’t want any of these things to happen. Here’s how to avoid the top five mistakes we see around contracting and credentialing.

  1. Be aware of payer contract physician oversite requirements. The state requirements that apply to your clinic are the minimum requirements. Your payer contract can say something different so long as it follows the state’s minimum. A lot of clinics miss this; be sure to thoroughly review and understand each payer contract.
  2. Use Locums properly. Put simply, Locums ONLY applies when a physician is filling in for another physician.
  3. Update payer contracts every time you add a level of service. If you don’t do this, the provider could be set up incorrectly for all types of services being offered. If they’re not covered, you could end up giving services away for free.
  4. Respond to recredentialing notices. Payers each have their own requirements for recredentialing, and there are deadlines to get information submitted. Pay attention to these notices and update all contact information or you could risk going out of network.
  5. Routinely check your credentialing status. There’s always a termination clause in payer contracts. See how long that’s in effect, and use that timeframe to reach out and see if anything has changed. Note that payers often publish newsletters with credentialing changes — if they do, that’s another easy way to stay on top of updates that pertain to you.

Learn more tips to avoid common missteps in the on-demand webinar Hidden Revenue Cycle Mistakes That Hurt Most Urgent Cares >>

RCM Software and Services

In this day and age, it doesn’t really make sense to not rely on software in your urgent care business. You’d have to be a pretty small clinic to not benefit from RCM applications in your practice management software. They help you optimize your revenue and reduce workloads for your staff. Aside from that, your patients are used to the conveniences of technology. If you’re adding pain to their experience by making it feel archaic, they may not return if given a choice.

In the same vein, finances and payments are of the most difficult aspects any consumer has to deal with. In healthcare, it’s even less fun. So as part of your overall RCM, finding ways to make paying bills easier is a huge boon for you.

Here are some features that you can find in modern healthcare revenue cycle management services:

  • RTE or RTV
  • Credit card on file
  • Payment processing
  • Coding recommendations
  • Payer contracting and credentialing
  • Invoicing
  • Rejection and denial management
  • SMS text capabilities (e.g., text balance reminders)
  • Expert support

Ultimately, you want RCM functionality within your EMR/PM and an integrated RCM service to handle medical billing. For the best return on investment, you want to work with an RCM vendor who acts as more of a partner than retailer. We saw how quickly everything changed with COVID-19. Some clinics weathered those changes better than others because their solutions partners were working closely with them to provide necessary support and functionality.

If you’re ready to demo RCM services, we’d love to show you what Experity can do for you. Simply fill out a request and we will take it from there. But if you’re on the fence, we can still make this easy. Our RCM health check is not a sales pitch. It’s a free service to show you where you can make improvements in your RCM. So you not only get a chance to know us better, you walk away with actionable advice.  Are you ready for a better year?

Yes, Show Me How to Better My RCM I’m Actually Ready to Demo

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