Improving revenue cycle management in health care

A revenue cycle management system can help hospitals streamline administrative and clinical tasks. This tutorial explains how RCM software is affected by EHR use and ICD-10.

Revenue cycle management in health care deals with managing both administrative and clinical functions related to patient services, according to the Healthcare Financial Management Association. Generally, this includes the processes and software systems needed for scheduling, registration, charging, billing, claims submission and payment collection. An RCM system helps a provider improve the bottom line by shortening the time between providing a service and collecting a fee for it, often by improving data accuracy. 

In recent years, federal regulations (including Medicare and Medicaid rules) have prompted health care providers to use electronic records for processing claims and receiving payments. Providers have not only achieved greater efficiency and better financial results, but they have also found it beneficial to integrate revenue cycle management systems with clinical applications, creating a link between health IT and clinical care issues. Today, patient care applications often contain an RCM element, tying procedure codes to billing codes. 

How and where is data collected in revenue cycle management software?

In revenue cycle management software, data typically starts being collected when a patient calls a provider to schedule an appointment. Further data is collected when the patient is registered, given care, billed and, finally, when accounts receivable gets a payment.

How can an organization avoid having claims denied?

Health care providers can reduce the number of claims that are denied by including in their revenue cycle management a claims denials prevention system. The system can track denials and pinpoint the root cause, amounts denied and the physicians involved. This helps determine denial rates and identifies patterns.

A useful denials prevention system involves not just technology but also collaboration among relevant departments throughout an organization, including accounting, coding, case management and compliance. Denials need to be reviewed, and process improvement efforts need to be identified, collaboratively.

How will EHR systems impact the accuracy of billing and revenue cycle management?

Under the HITECH Act, eligible health care professionals and hospitals are given financial incentives via Medicare and Medicaid programs to implement electronic health records (EHR) technology. If providers cannot show meaningful use of EHR technology by 2015, financial penalties will be imposed.

EHR technology is slated to promote accurate data processing, and they can help streamline the coding and claims processes. Codes can be captured in EHR systems and passed along to other systems, including the billing system. As a result, EHR systems can streamline coding and claims reimbursement, which also can lower the rate of denied claims, according to the American Health Information Management Association.  However, inaccurate EHR data can lead to a higher number of denied claims. To prevent this, claim scrubbers -- also known as claim editors -- can be used to improve data accuracy.

Many organizations have been eager to take advantage of EHR Incentive Programs, and in some cases they are using the opportunity to transition to a combined EHR and patient accounting system. This can have a considerable impact on hospital revenue cycle management, according to the Healthcare Information and Management Systems Society (HIMSS). New accounting systems that include changes in registration and scheduling can affect preauthorization procedures.

EHR systems also may cause changes in the way charges are captured and how claims are structured.  The systems should help automate and refine charge capture eventually -- which will be good for the revenue cycle -- but, in the near term, new charge capture procedures could complicate revenue cycle management, HIMSS warns.

The RCM component most likely to be affected by EHR is health information management, HIMSS advises. Workflow will be affected and more staff may be needed, so it is important that health care revenue management experts are involved to ensure that EHR implementation does not cause undue complications for their own teams.

How will ICD-10 impact the accuracy of billing and revenue cycle management?

The International Statistical Classification of Diseases and Related Health Problems, Tenth Edition, (ICD-10), which is maintained by the World Health Organization, greatly expands the roster of diagnosis and procedural codes. In the long run, the classification system, which the United States will adopt on Oct. 1, 2013, is slated to make coding more efficient. This could improve billing accuracy and efficiency. However, while the new coding system is being implemented, there is considerable potential for error and a negative impact on the revenue cycle.

"The market talks about ICD-10 the way they talked about HIPAA -- it is a big, bad scary monster that will cause you no end of grief with systems, people, and ultimately revenue," HIMSS wrote in a May 2011 white paper, The Future of Revenue Cycle: Preparing for Near-Term Change.  On the contrary, the organization said, "It is an opportunity to implement much more efficient coding that actually results in payment."

ICD-10 codes will include new types of information, and applications that use them -- billing, EHR and RCM, namely -- will have to be expanded to include new fields

After Oct. 1, 2013, claims that do not use the correct ICD-10 codes will be denied. Coding systems used internally and by vendors must therefore be made ready for the deadline, and coding teams must be trained on the new system.

Staff accessing patient data -- those involved in scheduling and registration, for example -- will need additional knowledge to accurately determine what is needed for pre-authorization for procedures. Payers may make changes to preauthorization requirements as part of the ICD-10 implementation.

Many charge capture systems still may not support ICD-10 -- whether they are part of a patient account system or EHR system -- and so the transition to ICD-10 will demand new training for charge capture personnel as well. What's more, payers may not have determined yet how they are going to deal with ICD-10, and different payers might use different methods for processing, HIMSS cautions.

A provider's business office is going to see the biggest affect from the way other teams deal with new regulations regarding EHR systems and ICD-10, according to HIMSS. ICD-10 codes offer greater specificity, which should improve the accuracy of reporting and eventually lead to fewer payment denials and delays. In the short term, however, as staff members adjust to new processes and technologies, there are likely to be more claims denied.

Let us know what you think about the story; email [email protected] or contact @SearchHealthIT on Twitter.

Next Steps

RPA in healthcare: Use cases 

Dig Deeper on Healthcare IT systems and applications

Cloud Computing
Mobile Computing