Healthcare Revenue Cycle Management - Introduction

Imagine going to eat at a restaurant, but there's a twist. The menu is large and looks delicious, but there are no prices. You ask the staff about the price of a dish, but they don't know either. They'll have to get back to you. You order anyway and eat. Then the restaurant gets a call. There's some haggling. The restaurant tells you they've split the bill. Someone else has promised to cover most of your meal, but you need to leave $10 to cover the tip. And actually, you might get another bill in the mail in a few weeks. Other than that, you're free to go. This is healthcare industry payments in a nutshell. In the healthcare world, patients often don't know what they'll be asked to pay. Similarly, providers often don't know what they'll ultimately get paid. A leading reason for this is that the bill is split between the patient and the payers that represent them. The so-called payers can be private insurance companies or government programs like Medicare, Medicaid, or TRICARE, a health program for military personnel. Healthcare providers, or HCPs for short, often treat hundreds or even thousands of patients a day, all represented by different payers. This means splitting hundreds of different bills between hundreds of different parties. It's easy to see that, for an HCP, getting paid on time and in full doesn't simply manage itself. In fact, an entire function has emerged to tackle this challenge—revenue cycle management, or RCM for short. RCM is an essential part of the HCP value chain. It's how providers maximize what they actually get paid—the reimbursement value. For HCPs, maximizing reimbursements is one of the most critical revenue levers. And pulling this lever requires careful management and documentation across the patient care journey. The various RCM-related activities are generally grouped into three stages. The front-end cycle is the stage up until the episode of care begins. The mid-cycle is the stage during and just after the episode of care. And the back-end cycle is the stage when the bill gets tallied, sent, and settled. Across these stages, providers face a number of challenges. One challenge is that the payers, like health insurance companies, are incentivized to pay only what is required and nothing more. Payers demand concrete, detailed documentation, and any mistake or missing data can be a reason to deny or delay payment. Another challenge is that all of this documenting, recording, and accounting requires a significant amount of effort from highly paid clinical and administrative staff. And HCPs are often labor-constrained as it is, so putting extra attention on RCM, while important, can be difficult and costly. In healthcare, getting paid can be an expensive business. In this primer, we'll cover the ins and outs of RCM, including the key activities, technologies, and metrics relevant to each of the three stages. The front-end, mid-cycle, and back-end.