Revenue cycle management versus billing
Billing starts after the visit. Revenue cycle management (RCM) starts before it. Many of the denials a billing team works were decided at scheduling: coverage that had ended, a service that needed prior authorization, a provider not yet enrolled with the plan, a patient who did not know what they would owe. RCM puts those front-end steps under the same ownership as claims and payments, so a problem found on the back end is fixed where it began.
Front end: before the patient arrives
- Eligibility and benefits are verified electronically (the 270/271 transaction) before the visit, including copays, deductibles and whether the plan is still active.
- Prior authorizations are requested and tracked for the services and payers that require them. See prior authorization services.
- Provider enrollment is kept current so claims are not denied because a provider is not credentialed with the plan. See credentialing services.
- Patient financial clearance: patients are told what they are likely to owe, and uninsured or self-pay patients receive the good faith estimates the No Surprises Act requires.
Mid-cycle: documentation and coding
Coding turns the record into a claim. In an RCM engagement, coding findings are reported back to providers and to the front desk, so the same error does not return next month. Coding can be handled by our team or reviewed on top of your coders’ work — see medical coding services.
Back end: claims, payments and patient balances
Claims are scrubbed and submitted, remittances posted and checked against contracted rates, denials worked by reason code, and unpaid claims followed up before each payer’s filing limit. Patient balances are billed with clear statements and a support line. The day-to-day detail is the same as our medical billing service.
Reporting that connects the stages
The value of owning the whole cycle is in the connections. A monthly review covers the measures that show whether the cycle is healthy — days in accounts receivable, net collection rate, first-pass acceptance, denial rate by reason and by payer, and the age of outstanding balances — and, more importantly, the actions behind them. If you are deciding whether to keep the work in house, our comparison of outsourced and in-house billing covers the trade-offs.
| Measure | How it is calculated | What it tells you |
|---|---|---|
| Days in A/R | Total A/R ÷ average daily charges | How long it takes, on average, to collect |
| Net collection rate | Payments ÷ (charges − contractual adjustments) | How much of what you are owed is actually collected |
| First-pass acceptance | Claims paid or accepted on first submission ÷ claims submitted | How clean claims are before they leave |
| Denial rate | Denied claims ÷ claims processed | How much work and delay payers are creating |