The Revenue Cycle Process Paper
Hospitals have to make money from the services they offer to their patients/customers. The process of obtaining payment from customers/patients for services offered is called the revenue cycle (Varini, 2017). The revenue cycle in healthcare refers to all clinical functions and administrative functions that contribute to the effective collection and management of revenues from patients. It is the process involved in the collection of payments derived from patient medical bills (Meiryani et al., 2020). There are many steps that form the revenue cycle that follows best practices in billing and collection to make sure that all payments adhere to payer requirements. An effective revenue system helps healthcare facilities effectively manage all administrative and clinical functions.
Explanation of the Revenue Cycle process
Managing administrative and clinical data is sometimes a very difficult and arduous process that involves a lot of data that has to be weaved through different departments in a hospital. Capturing accurate data is the first step to successful data management. According to Levy, Ippolito and Jain (2021), the revenue cycle in healthcare entails the capture, collection, and management of patient data. In other words, the revenue cycle is the entire process of the patient billing process from registration until the last step of bill payment. Within the process of the revenue cycle, their specific list of responsibilities all contribute to maintaining order in the billing process as enumerated below.
Steps Involved in the Revenue Cycle
The first step in a revenue cycle process is pre-registration. This step begins even before a patient is enrolled in a system. One of the key functions performed at this stage is eligibility determination. This factor means that a hospital evaluates a patient/customer for their ability to pay for services offered. According to Levy et al. (2020 The Revenue Cycle Process Paper), this action is important because it helps healthcare facilities screen their patients’ ability to pay for services provided. This way, healthcare facilities do not run into losses by providing medical services to people who cannot pay. Pre-registration is the process of capturing patient/customer demographic information. At this stage, healthcare facilities capture critical information such as eligibility, and insurance information to determine the next course of action. The information collected goes to the patient’s insurance company as well as the provider’s management system.
- Patient Registration/Authorization
Registration is the second stage of the revenue cycle. At this stage, all the relevant patient information collected at the pre-registration stage is formally recorded into a provider’s patient record system. Important details such as demographic data and other relevant data are captured and stored in the provider’s patient record system. It is at this stage that healthcare providers collect Co-payment information to ensure they get paid for services delivered. This is the step where healthcare providers get critical information from patients/customers that can help them to get the payment processed and authorized by payers.
- Benefits Verification/charge capture
Charge capture is the third step in the revenue cycle in healthcare. This is the stage where providers determine the payment method that the customer/payment will use to pay for services delivered. Often, the billing method used depends on the customer’s payment information provided at the registration stage. This is where all charges are individually captured and the bills forwarded to insurance firms/payers
- Utilization Review
Utilization review is where a health organization confirms that the plan adopted can cover the medical services. This step also gives room to health facilities to minimize costs by making a determination of appropriate treatment.
This is another important step in the revenue cycle that helps hospitals run a smooth billing process. Hospitals handle large numbers of health and medical services which may bring confusion if not carefully managed. Hospitals use coding to help them identify written descriptions of items, services, procedures, and other billable services. It is these codes that hospitals use to claim payment from payers.
- Claim Submission
The sixth step in the revenue cycle is the submission of a claim. At this stage, a healthcare provider sends information to insurance companies for payment. The team responsible for revenue analyze the charges as well as the diagnosis code related to the charge before sending the information to payers. In this step, every service offered is separated by a code so that the payment information is clear. This is to ensure that all claims are clean to avoid delays in payment. After the billing department has coded all the services provided, the next step is for hospitals to submit the claims to insurance companies for payment to be released in accordance with the terms and conditions agreed upon.
- Remittance Processing and Insurance follow-up
Processing of remittance is the seventh stage in a revenue cycle. In this stage, after all, remittance claims have been sent out to the payers, the payers will send back the remittances. The remittances will include a detailed history of the services provided and their costs. At this stage, payers perform a determination of allowables which are what healthcare providers have in contract with insurance firms (Naus, Faint & Dwyer, 2018). At this stage, healthcare providers and insurance firms negotiate a contract where the latter confirms to the former how much money they will pay for the services rendered to patients/customers. It is at this stage where hospitals collect payment payers where bills were sent to.
- Patient Collections
In this step, healthcare facilities analyze the status of their accounts by monitoring all outstanding and unpaid balances. Here, hospitals decide to collect all pending payments or balances from patients (Rauscher & Wheeler, 2018). This step is critical because it helps hospitals avoid incurring huge debts from unpaid balances that could cripple their administrative and clinical operations.
The Key Responsibilities of People Who Work In the Revenue Cycle Process
There are many people that handle the billing process in a hospital setting.
- Administrative Staff.
There is personnel responsible for capturing patient information and data during the registration process. These personnel takes critical customer/patient information such as demographic data, patient medical history, and payment details.
- Billing Department Staff
This department is responsible for liaising with other departments to ensure that they have proper customer information before presenting them to the payers. The department also collects all the services and procedures provided to customers/patients and codes them into billable units before presenting them to payers. Besides, the billing department laisse with insurance firms to ensure that the process of getting payments is smooth and without hitches.
- Receiving Department
This is the department that is responsible for collecting the appropriate customer information critical for the billing process. The staff in this department typically process bills and ensuring customer information is correct before forwarding the same for payment.
A revenue cycle is a critical tool in healthcare that healthcare providers use for the collection and management of revenues obtained from patient bills. There are several steps involved in a revenue cycle that are critical for hospitals to effectively collect and manage revenues from patients. Preregistration is one of the critical steps in the revenue cycle. Other important steps in the revenue cycle in the healthcare industry include registration, charge capture, claim submission, and processing of remittance. A revenue cycle helps healthcare hospitals efficiently collect and manage revenues collected from patients/customers. Ideally, there are numerous departments and personnel involved in the revenue cycle process. Some of the important departments that deal with the revenue cycle include administrative staff, accounts receivables office, the billing office, and other departments. Each department plays a critical role in ensuring that the billing process moves on without any human drudgery and hitches.
References for The Revenue Cycle Process Paper
Levy, J., Ippolito, B., & Jain, A. (2021). Hospital Revenue under Maryland’s Total Cost of Care Model During the COVID-19 Pandemic, March-July 2020. JAMA, 325(4), 398. https://doi.org/10.1001/jama.2020.22149
Naus, F., Faint, C., & Dwyer, R. (2018). Are Hospital Efficiency and Quality of Care Affordable without External Revenue?. International Journal Of Applied Management And Technology, 17(1). https://doi.org/10.5590/ijamt.2018.17.1.03
Rauscher, S., & Wheeler, J. (2018). Effective Hospital Revenue Cycle Management: Is There a Trade-off Between the Amount of Patient Revenue and the Speed of Revenue Collection?. Journal Of Healthcare Management, 53(6), 392-404. doi: 10.1097/00115514-200811000-00008
Meiryani, M., Soepriyanto, G., Wahyuningtias, D., & Dewi, K. (2020). Accounting Perspective in Hospital. International Journal of Online And Biomedical Engineering (Ijoe), 16(08), 114. https://doi.org/10.3991/ijoe.v16i08.14721
Varini, K. (2017). Revenue management: A practical perspective. Journal Of Revenue And Pricing Management, 10(3), 288-289. doi: 10.1057/rpm.2011.8