Revenue Cycle Management Workflow | Complete Explanation with Easy Examples

 

INTRODUCTION 

RCM stand Revenue Cycle Management which is start when patient books as appointment and its ends when the hospital receives the full payment. so, these all workflow depends on the revenue cycle management (RCM).

This RCM cycle is very important for patient, Physicians, Insurance companies, medical billers, Medical Coders, charge entry, payment posting, AR calling, Denial Management, Quality Analyst, Team Leaders, Assistance managers, Operation managers, RCM Directors etc. 

This explanation is for freshes who wants to enter in medical coding or medical billing field as well as experience candidates can use for them interviews.

Have you ever wondered - 

• - How does hospitals actually earn money after treating a patient?
• - Who checks the insurance?
• - Who prepares the medical bill?
• - Why do claims get denied?
• -  Why are thousands of medical coding and billing professionals needed worldwide?

The correct answer is Revenue Cycle Management (RCM) in English

RCM Cycle in Hindi

Revenue Cycle Management

RCM is financial journey of patient and process of managing all clinical and financial activities required to receive payment for healthcare services.

In Below diagram we can see all steps which RCM cycle following. This cycle starts from the patient appointment and ends when the hospital receives the full payments.

Think of it like when we are going to restaurant and ordering food, you place an order and restaurant prepares food for you later delivery partner delivers it. restaurant will receive payments. Similarly, RCM cycle also work, Patient visits to hospital to book appointments and hospital provides treatments later insurance companies review the bill and hospitals will receive payments. The entire financial journey is known as Revenue Cycle Management.

Why is Revenue Cycle Management Important?

Hospitals may provide excellent services or treatment to the patient without revenue cycle management (RCM). But they may never receive payments because RCM helps hospitals for to get paid faster, to Reduce claim denials, improve cash flow, reduce billing mistakes, follow insurance rules and increase patient satisfaction. If hospitals do not get sufficient revenues, then hospitals won't grow. That's why all hospitals having RCM departments.

Revenue Cycle Workflow

This cycle starts from the patient visit or appointment and ends when the hospital receives the full payments. In below diagram there are 12 steps of RCM cycle.

Suppose, Patient visit to XYZ hospital with Knee Pain then how RCM cycle will work will see,

Revenue Cycle Management (RCM) in English

RCM Cycle in Hindi

1. 1) Patient Registration:

When patient visit hospital then needs to meet with receptionist and receptionist collects some demographic information of patent like, Name of patient, Date of birth, Insurance card, Contact details etc.

Example: When Patient gives his insurance card then hospital will create his patient ID.

1. 2) Insurance Eligibility Verification:

Once all demographic information submitted then hospital will check whether patients' insurance is active or not and will ask some questions to patient. 

like, 

- Is insurance being valid? 

- Is doctor in-network?

- Does insurance cover knee treatment?

Example: After verification, If all questions answers are Yes. then, hospital will be ready to give services to patient.

1. 3) Prior-Authorization 

This is optional or if required or when expensive treatments or procedures need to do that time need insurance approval before treatment. Hospital will request to insurance company for authorization of Expensive procedure (Example, MRI Scan, Joint Replacement, Expensive Injections etc.) without authorization insurance may deny the payments.

1. 4) Patient Encounter

Once patient enter for treatment doctor or physician will examine to patient and make documentation along with patient diagnosis like, Right Knee Osteoarthritis. Doctor will document everything. Documentation is extremely important because coding depends on documentation. 

1. 5) Medical Coding:

After Documentation, medical coders come into action, and they convert doctors' documentation into standardized code which may billed with alphanumeric code. They will be diagnosis codes by the help of ICD-10-CM book, Procedures by the help of CPT book, Hospital Inpatient Procedures by the help of ICD-10-PCS (USA).

Example: Diagnosis - Osteoarthritis

                Procedure - X-Ray, Injections Every service receives appropriate medical codes.

1. 6) Charge Entry:

Once finished coding part billing team will enter and on the base of Diagnosis codes, Procedure codes, charges, modifiers and units. they will enter everything into the billing software. This creates the patient's medical bill.

1. 7) Claim Submission:

After the billing team, the completed claim is electronically sent to insurance company to verify the claim. Insurance will review everything and will approve if claim is correct if claim does not correct then they will deny the claim or payment.

1. 8) Claim Adjudication:

The insurance team will check everything's like,

- Was treatment medically necessary?

- Were codes correct or not?

- Was authorization obtained?

- Is any duplicate claim?

- Is any missing documentation?

After this insurance makes one of three decisions:

1) Approval

2) Denial

3) Partially Paid

1. 9) Payment Posting:

After all verification, Insurance may send payment to hospital and billing team will post payment into hospital software.

If insurance paid only $800 out of $1000 then remaining balance need to pay patient is applicable.

1. 10) Denial Management:

If insurance denied payment due to some reasons like, due to invalid code, missing modifiers, authorization missing, documentation insufficient denial team will investigate and corrects the claim and again resubmit it. This is called Denial Management.

1. 11) Patient Billing:

If insurance doesn't pay everything then patient receives remaining bill.

Example: If Insurance paid $800 only out of $1000 then, Patient responsibility will be $200. Hospital will send invoice. Patient pay.

1. 12) Account Closure:

Once all payments are received, patient account becomes closed and revenue cycle will end. 

What is difference between Global RCM and India

       Global means USA, Canda, UAE, Australia which will follow Insurance driven healthcare, Electronic claims, medical coding mandatory, Specialized RCM teams, large denial managements and strict compliance. As compared to India globally having high demand for certified coders.

      In INDIA, many hospitals still receive direct cash payments. Insurance penetration is still growing but not like US.

Medical coding is mainly used in corporate hospitals, insurance companies and outsourcing firms serving international clients.

Government schemes and private health insurance are increasing the need for structured RCM, but adoption varies across hospitals.

OUTRO

 Now you know how hospitals earn revenue through a structured RCM process. If you are planning a career in medical coding or billing, understand RCM is one of the most important fundamentals.

Revenue Cycle Management (RCM) in English

RCM Cycle in Hindi

Thank You!