The Crucial Role Patient Collections Plays in Revenue Cycle Management
Jun 17, 2021
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Revenue cycle management plays a crucial role in the healthcare industry. In fact, for any institution or organization, the revenue cycle is essential to keep their financials afloat and to keep funding their operations. This is especially true in healthcare as they are in charge of the people's health and safety.
Although some health institutions say that the RCM is not their focus but instead on the people's health, they still need to pay for their medical supplies, staff salaries, operation costs, etc. With the healthcare costs steadily rising throughout the years with their adoption of various technologies, the burden it gives to patients and providers is also getting heavier.
Due to the increasing cost of healthcare, people are demanding more transparency and a higher level of care from healthcare providers. With all of that in mind, the crucial role of patient pay is emphasized in revenue cycle management. But what really is revenue cycle management, and what does it mean in healthcare?
What is Revenue Cycle Management in Healthcare?
The Revenue Cycle Management of simple RCM is how a healthcare institution or organization manages its finances and related processes with different steps of patient care from top to bottom. It starts with the patient first going to the hospital as they are scheduled for an appointment and then proceeds to have services provided by the hospital. This also includes patient scheduling that offers the opportunity to gather essential information in claims processes.
The RCM also includes coding the medical services to the system and the billing insurance. With the verification of insurances, the RCM will identify the total costs of all the services and for the treatment. That said, with faster technology, the claim transmission will be quick and accurate, which allows for greater flexibility.
After the medical services have been rendered, another crucial RCM process starts managing the patient accounts and accounts receivables, which is one of the main cash flows of a healthcare institution. While every provider has their own method of RCM, RCM typically revolves around the finances and administrative side of the healthcare institution. Since healthcare providers are now leaning more toward value-based care, the process of medical billing has significantly changed recently.
The Importance of Patient Collections
As we all know, healthcare insurance providers are not the only ones responsible for paying on claims; patients are categorized as payors too. However, because of the constant changes in the claims process, many people are confused about how it works. In fact, based on a recent survey, almost 50% of all patients are confused about how their medical billings work.
This happens even though patient pay has a significant role in a provider's cash flow. But even then, based on recent years, the awareness of the inconsistency of the country's healthcare has increased the population of people who are more willing to learn and pay their medical bills themselves instead of relying on insurance.
Two factors increase the population of self-pay patients, which are the healthcare reforms and coverage denial.
With the enrollment to healthcare getting more and more complicated, many patients are opting for high-deductible plans to have lower monthly payments and because some medical expenses are tax deductible, which is, in hindsight, a perfect plan. This is also becoming a trend in employer-sponsored healthcare plans. The most common and widespread federal healthcare insurance plan is the silver state exchange plan.
This requires people to pay them at least 40% of the total expenses to the provider. Coverage denial, on the other hand, happens when a payor opts for self-pay. However, these cases are inconsistent since it's entirely situational, like a missed premium payment, the lack of coverage offered, or a mistake in claims.
In any event of these situations happening, the responsibility of the payment lies on the patient. Not only that but there are also cases where the patient opts for self-pay and avail prescription cards because there are instances where they can save up to 80% on prescriptions and pay less on medical bills that way instead of relying on healthcare insurance.
So why is payment collection important in RCM in healthcare?
Every single day that a claim is unpaid in the system is your physician, practice, or facility not getting paid. This is the same even when the payor is the patient. Revenue is the lifeblood of healthcare professionals, and if the patient doesn't pay up their part of the bill, then your healthcare provider will not be paid.
Not only that, but according to a recent survey, 63% of people didn't know they have a payment responsibility in each healthcare episode. The good news is that 74% of insured consumers are genuinely willing and can pay their medical bills out of their pockets. The current challenge that national healthcare is facing is making sure that they can pay them effectively and efficiently.
Final Thoughts
Since patient pay plays a significant part in the revenue cycle management of institutions and facilities, payment collection should also be an aspect that the government and private institutions should pay attention to. Without the proper attention to the patient pay, a large portion of medical bills, in general, will be unpaid, making RCM rendered immobile. Thus, it's time to make the patient collection much more efficient and easier for payers.
Author Bio:
Annalise Weathers is an excellent writer who mostly writes about fashion, sports, and social commentaries about current events. She also likes to write about things that interest her like pets, health and lifestyle, and financing. In her downtimes, she can be mostly seen working on her personal projects or lounging in her room to relax and browse the internet. She usually has different hobbies and right now, she is trying to learn Mediterranean cuisine.
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