What is the Healthcare Revenue Cycle?

Frequently Asked Questions

What is the Healthcare Revenue Cycle?

The Healthcare Revenue Cycle is defined by the Healthcare Financial Management Association as the set of all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue.

The healthcare revenue cycle is a complex process with numerous complicating factors. Some patients have no health insurance and may be billed directly for services. Others have Medicaid, Medicare, or the Children’s Health Insurance Plan (CHIP) and must be billed accordingly. Others have private insurance through a workplace, which could be coordinated through any of the myriad health insurance companies operating in the United States.

Patients and their insurance companies must be billed for services in accordance with the terms of their health insurance (coverage terms, deductibles, coinsurance, copay, etc.) and with the correct billing code that accurately describes the treatment or service that was performed. The healthcare revenue cycle is designed to manage the complexity of hospital billing cycles, maintaining cash flow that enables healthcare facilities to deliver the maximum standard of care to patients.

What are the Steps of the Healthcare Revenue Cycle?

Each healthcare facility must design its own process to optimize the way it deals with the healthcare revenue cycle while maintaining regulatory compliance. Healthcare facilities may differ somewhat in how they implement healthcare revenue cycle management, but most hospitals follow a similar process that can be summarized in four steps.

Step One: Start of Claim

The first major point of decision for any healthcare facility is whether to outsource revenue cycle management or manage the healthcare revenue cycle in-house. For small providers, it might make sense to develop in-house capabilities while larger facilities can save money by outsourcing through economies of scale.

Before performing a billable service or treatment, it is common for healthcare facilities to connect with the patient’s insurance company and obtain a pre-authorization indicating the coverage status of a procedure, medication, service or piece of equipment. Once the patient’s eligibility and benefits have been verified, the procedure may be performed and an insurance claim may be filed for the service.

Step Two: Claims Submission

The next step to collecting revenue for a performed service is submitting an insurance claim to the patient’s health insurance provider. In a process called medical coding, a skilled worker reads a description of a service that was provided and transforms the information into statistical code. Medical coding includes diagnosis codes that track health conditions and procedure codes that correspond to specific treatments.

Once a claim is created, it can be sent to the government or a private health insurance company for reimbursement.

Step Three: Claims Management

Claims management is the third step in the healthcare revenue cycle. It usually consists of three processes: payment posting, denial management, and appeals. When a claim is paid by the insurer, it must be correctly applied to the patient’s account through the payment posting process. A denied claim may be sent back to the healthcare provider from the government or a health insurance company, along with details about why the claim was not adjudicated.

Sometimes the patient is found to be ineligible for the service, but often an insurance company may simply request more information before paying a claim. Healthcare providers can submit an appeal against a denied claim, including more information as to why the claim should be paid.

Step Four: Accounts Receivable Management

Accounts receivable management is the final step of the healthcare revenue cycle. Sometimes patients fail to pay their medical bills on time or an insurance company denies a claim and leaves a patient with an outstanding balance. Hospitals should conduct follow-up on outstanding amounts owed in an effort to recoup funds. Bad debt may eventually be off-loaded to collections agencies if it becomes apparent that payment will not be forthcoming.

TigerConnect Streamlines Healthcare Revenue Cycle Activities

Healthcare revenue cycles are complex in nature and both labor-intensive and costly to manage. Healthcare providers must manage the revenue cycle effectively to maintain adequate cash flow and financial health.

TigerConnect helps support effective management of the healthcare revenue cycle by streamlining eligibility and authorization requests for healthcare providers. With TigerConnect, revenue cycle management and case management staff can collaborate seamlessly to capture insurance information, share patient photos and authorization forms, and improve the accuracy of data collection from patients.

The ability to streamline communications surrounding patient eligibility and authorization for treatments helps drive accuracy throughout the healthcare revenue cycle and reduce the likelihood of medical claims being denied.

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