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Breaking Down the 7-Step Healthcare Revenue Cycle

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The Healthcare Revenue Cycle is an approach used by healthcare organizations to track patient bills right from the first appointment to the moment they settle their service bill. The healthcare revenue cycle is a complex process with several complicating factors. The cycle is designed to handle the complexities of medical billing cycles while still allowing healthcare institutions to provide patients with the highest level of care. This article goes over each of the processes involved, what they entail, what might go wrong during the revenue cycle, and how to avoid errors.

1. Preregistration

Preregistration is the first and most critical stage of the healthcare revenue cycle. Preregistration enables a healthcare provider to instantly obtain demographic data, insurance details, and eligibility information through a medical insurance claim clearinghouse, often during the appointment booking phase. The data is transmitted to the patient’s insurance provider and then sent through the physician’s case management system, which notifies the insurer about the patient’s coverage, deductibles, co-payment, co-insurance, and, in some instances, whether the patient requires a referral.

The preregistration step allows a health provider to get the finances right from the start and cancels out any future payment-related questions. Numerous errors can be skimmed over if a provider does not have a rigorous preregistration process. Review your preregistration process to ensure a smooth start to your billing process.

2. Registration

Registration ensures the end-to-end integrity and accuracy of a patient’s information. The provider verifies the patient’s identification credentials such as contact and insurance details at this stage. Providers must secure this data every time it is accessed.

At this stage, the medical facility obtains co-payments and, if special attention is to be offered, the receiving physician ensures that authorization of referral is in place. Skipping the authorization of referral will lead to denied reimbursement for service rendered. After financial paperwork is signed, insurance benefits are then allotted. If these measures are skipped, there is a high possibility of financial ramifications upon auditing.

3. Charge Capture

Charge capture, the 3rd phase of the health revenue cycle, can be conducted in various ways. Health providers can automate the process to automatically feed data from its paperwork into the case management billing system. The alternative is doing things the traditional way, with reception staff manually keying in the information or forwarding it to billing.

Both systems have their pros and cons, as charges such as those for ancillary services can be missed in either case, resulting in lost revenue. Ensure you’re appropriately coding fees and relaying them to the health insurer to eliminate missing charges.

4. Claims Submission

This stage involves transmitting information to the insurance provider after recording charges. The team in charge of the revenue cycle will examine all the diagnosis codes to determine accuracy and consistency. They’ll inquire as to whether the diagnosis proffered justifies the procedure performed. If multiple services are administered, they must be differentiated and coded accurately.

Scrubbing claims involves ensuring that your claims are clean and are correctly loaded into the system. Insurance providers will settle claims more promptly if they arrive accurate and clean. The claims are sent from your case management system to a clearinghouse, which receives and distributes the claims to the various carriers.

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5. Remittance Processing

Remittance processing is the 5th step in the cycle. Once a health provider relays their claims to the insurer, they will receive their remittances. The hospital and the insurance carrier negotiate the contract, after which the insurance firm specifies how much payment they will make for each item.

“Post and go” is a common error made during this step. If no one evaluates the reports, providers may lose their right to appeal and rectify any mistakes. Health providers should examine their charge schedules to ensure they are in tune with changing rates, contracts, and allowable.

6. Insurance Follow-up

The American Medical Association estimates that one in every five insurance claims is erroneously processed. Insurance follow-up, the 6th step in the revenue cycle, ensures this is rectified. Health providers examine not only the payments but also the non-payments. What happens to items that the provider was not reimbursed for? The accounts receivable (A/R) report shows all of the items whose payments have been delayed for a length of time. This analysis will reveal whether or not the provider is faltering at doing insurance follow-ups or why it is taking so long to receive payment. The provider can then remedy it where necessary.

7. Patient Collections

In this final step of the healthcare revenue cycle, patient balances and entitlements are computed, generating a statement. Outstanding accounts are carefully monitored, and the balances of various patients’ payments are tracked. To avoid piling up your patient collections, ensure you set up a uniform policy in place for obtaining deductibles and co-payments. The policy should comprehensively outline your institution’s financial expectations.

Why Use a Medical Billing Clearinghouse?

Many processes are involved in submitting an efficient claim, beginning with the hospital preparing the claim for services rendered. It is vital to streamline the claims process and the revenue cycle continuum to maximize revenue. This involves looking for ways to enhance the claims and billing process. Carrier-specific error scrubbing for insurance claims shortens claim processing from days or weeks to minutes or even seconds.

Electronic medical billing clearinghouses have established synergies with multiple insurance carriers by ensuring software compatibility and learning their systems over extended periods. This helps medical clearinghouses explain denials to providers and provide suggestions on how to meet insurance company claim requirements.

Medical clearinghouses can handle individual or multiple transactions and furnish client dashboards with real-time claim updates. There’s also the advantage of simply managing claim documentation through one portal rather than creating separate accounts for each insurance carrier for direct billing.

Final Word

If you’re facing any challenges with managing your healthcare revenue cycle, consult an expert to evaluate your processes. Investing time to clean up your revenue practices today will subsequently pay off.


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Orem, Utah 84097
Support: (800) 840-9152
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