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Revenue Cycle Management

Revenue Cycle Management is the process of monitoring and managing the charges (revenue created by charge volume) in conjunction with the reimbursements and insurance correspondence (revenue received). It consists of tracking outbound charges to ensure they have been properly received by the payers, reconciling reimbursements received against the outbound charges to identify items with no payment or incorrect payment amounts, and following up with payers to resolve any claim denials or requests for additional information in order to complete the claim processing. Each payer has a defined time frame, typically ranging from 10 to 30 days, in which they anticipate to complete processing of a “clean” claim. A “clean” claim is one with valid active insurance subscriber information, no coding errors, no diagnosis errors or omissions, and all required referrals and / or authorizations. Managing the remittances in a timely manner enables a faster and more efficient “Revenue Cycle” as charges are sent out and corresponding reimbursements are received.

The number of Days in Accounts Receivable, or DAR, is an important benchmark of the time it takes to turn a claim around from date of service until date of complete payment. The longer the charge is on your Accounts Receivable (AR), the less likely you will be to collect for the service you provided. These are important reasons to hire a billing company who can provide experienced staff at a lower cost to you than hiring your own staff. They can benefit from savings available through the higher volume of services they handle and greater efficiencies due to high skill levels that is hard to duplicate in individual practice settings.

Establishing billing and collections policies is the first step in successful revenue cycle management. Hiring billing staff with the proper skill sets is equally important. Measuring and monitoring key performance indicators is an on-going operation that is essential in being able to detect and respond to denial trends, incorrect reimbursements and possible billing errors.

The second tier in Revenue Cycle Management is planning for patient financial responsibilities. Although it is the second tier in the Revenue Cycle, this plan needs to be clearly in place before the services are rendered and claims are submitted. Set up clear Financial Policies for your patients and make sure your patients understand their financial obligations.

  • Explain clearly any amount that needs to be collected towards the deductible and/or co-insurance is the estimate of the contracted fee.
  • Inform the patient that he/she will receive a statement for any remaining balance.
  • Develop a standard fee schedule for Self-pay patients. use a standard fee schedule.
  • Collect at time of service.
  • Be transparent in your billing practices and communicate all possible charges.
  • Have a space on the financial policy and benefits form for the patient to sign acknowledging they understand the policy.

Capturing charges is the next key to successful cash flow. Develop a system of cross checks to ensure you are capturing all your charges and entering the data accurately into the claim. Careful scrutiny of remittance details ensures that 0 payments or payments that are less than the expected amount will be identified for follow up and resolution. All these steps must work together to create a successful Revenue Cycle Management Process.

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