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Why is RCM the Mainstay for the Health Industry?

In the U.S, the contribution of medical billing services stands inevitable. It’s more than difficult for the healthcare industry to overlook the importance of revenue cycle management; therefore, several organizations take involvement in enhancing the process and keeping a smooth flow for providers’ finances.

The process, however, isn’t very complex but requires extensive knowledge passing through several departments of hospitals. This post explores the vital functions involved with RCM, which help grow and maintain the hospital’s revenue stream.

  • Choosing between RCM software & outsourcing the work

As the first stepping stone, a professional should choose between in-house RCM software and outsourcing the work to a medical billing company. To decide on the same, one should analyze if they have got an IT professional in their in-house team. If the scale of operations is moderate, it’s a wise idea to go for the software. However, in the case of large organizations with limited or no such talents for managing such a responsibility, it’s better to outsource the task to the hands of professionals.

  • Pre-registration

Pre-registration is the stage that keeps both parties, the patient and the hospital, in a win-win situation. A patient gets to know the upcoming expenses in advance and can have peace of mind that there’s merely any chance to bear any extra costs during hospitalization.

On the other hand, for hospitals, this process raises the probability of patients paying off their bills on time with a minimal chance of bad debt. In addition, the process becomes streamlined and escalates patient satisfaction. It happens because the details like medical history, insurance, and payment information get clarified in advance. However, in case of medical emergencies, there may be some exceptions in the process. 

  • Registration

Once the pre-registration is done, it’s time for the hospitals to carry out a thorough check and validate the patient’s information. This process ensures the elimination of any errors that might turn out to be a barrier to receive payments from the patient. If any minor or major issue is encountered, the hospital informs the patient at the earliest to take proper measures and rectify the same.

  • Organizing medical services for billing

One of the most vital steps in revenue cycle management is generating a billing for the services rendered and sharing it with the associated insurance company. This is a stage that ensures the hospital about getting reimbursed for the expenses incurred.

  • Insurance company’s review

The sole purpose of this process is to provide a green signal towards the coverage of the medical services mentioned in the billing. In addition, the insurance company also ensures if the treatments mentioned are viable and steps to minimize the costs.

  • Coding

Coding stands as an essential step that involves the translation of written prescriptions, patient conditions, items, and services into an alpha-numeric code. With this process, the hospital maps the procedure and uses it to claim insurance and generate bills for patients. The codes need to abide by CPT guidelines and the modern ICD-10 coding system.

  • Claim submission

Indeed, claim submission can be considered as the foremost stage in the overall process. The reason is, claim submission is the key to receive reimbursement from the insurance company. It’s important to check the application thoroughly before submitting it. Any errors or flaws in this stage can increase the chances of denials and deduction in payments.

On the other hand, in most cases, health plans come with deductions and co-payments, which can be high or low, depending on the insurance company. The expenses, marked under deductibles or the percentage of co-payment asked from the insurance company, are to be paid by the patients before the insurance company takes over.

  • Reimbursement and denial management

This is the stage where the insurance company tally the procedures mentioned in the billing with their compensation limit and release the payments accordingly. This process does not take much time if the bills are appropriate and without any flaws.

However, inaccurate claims or lack of information from the patient’s end may lead to denials. Therefore, the role of revenue cycle management becomes imperative as proficient handling of RCM will, of course, minimize the chances of errors and get the reimbursement cleared in one go.

There could be plenty of reasons for rejection of claims like inappropriate data, erroneous information, etc. Whatever be the reason, a claim which suffers rejection gets back to the clearinghouse or hospitals’ A/R staff.

Then, the submission is reviewed and analyzed minutely for identifying errors and updating it accordingly with the latest information of the patient. Once done, it’s time for resubmission and clearance for the claim.

  • Insurance follow-up

The importance of insurance follow-up is essential for hospitals. Research says that one out of every five claims is processed or claimed correctly. Denials, non-payments, and underpayments are some of the most common issues hospitals face when dealing with an insurance company for claim settlement.

However, nowadays, hospitals can identify and adjust the amounts which they feel weren’t satisfactory enough in the next step of plaintiff negotiation.

  • Collections from the patients

As mentioned earlier, a specific payment amount is required to be incurred by the patients. In this stage, it’s crucial to monitor the outstanding payments and get them cleared from the patients.

These days, the deductibles on claims are getting high, which increases the patient’s responsibility for clearing their bills. It’s vital to track the amounts carefully and get them cleared from patients as these payments directly contribute to a hospital’s revenue.


Undeniably, a hospital’s efficiency in revenue cycle management plays a robust role in the balance sheets. The process is evolving, and it’s the sole responsibility of healthcare organizations to maintain transparency and a first-class patient-centric approach.

Each department should be capable enough to nail every hook of perfection, therefore, maintaining smooth, uninterrupted, and accurate contact data. The more efficient the process is, the better will be the hospital’s net revenue.

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