Accounting For Bad Debt Expense On Cash Flow Statement Revenue Cycle Management’s Importance in Healthcare

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Revenue Cycle Management’s Importance in Healthcare

The transition from fee-for-service to value-based care reimbursement in the healthcare industry affects traditional RCM (revenue cycle management) in different ways. Every healthcare organization or individual veteran practitioner must be financially balanced or strong to provide their uninterrupted services. This is the time where the best healthcare RCM service comes in.

Revenue cycle management in healthcare is a financial process that simplifies the control of complex administrative processes and clinical functions such as patient eligibility, claims processing, reimbursement, denied claims management and revenue generation.

RCM is the backbone of healthcare organizations that helps them pay their bills, manage their resources and more. According to a report by International Standards, in medical billing, more than 25% of claims are rejected and 40% of those claims are never resubmitted meaning huge revenue loss to healthcare organizations.

On the bright side, with the right RCM process in place, the healthcare sector can reap maximum benefits with minimal bad debt write-offs. To understand the exact phenomenon of healthcare revenue cycle management, first, you need to understand its basics in the medical billing process.

Basics of Healthcare RCM:

  • It starts from the appointment of the patient for any medical assistance and ends when the health institution collects their payments.

  • Initially, group health administrative staff manage a range of processes such as scheduling, insurance eligibility verification, and patient account creation.

“From a revenue cycle management perspective, accurate submission of patient information at the time of patient scheduling and registration improves a healthcare organization’s cash flow.”

  • After the treatment of the patient, the process of submission of claims begins. Advanced coder submits claims with appropriate ICD-10 codes, codes define reimbursement value, and approved codes prevent claim denials.

  • Then comes the important part of paying private or government money. They assess claim values, verify details like insurance coverage, contracts etc. and procedures for reimbursement.

  • Most claims are denied due to improper coding, incomplete patient records, patient chart errors, etc.

  • Then comes the end result of revenue cycle management i.e. maximum claims reimbursement. RCM helps healthcare organizations reimburse maximum claims on time with fewer denials.

  • After that, the healthcare group or individual veterans follow up AR in which they generate healthcare claims ie manually or automatically and send to various insurance companies.

  • In the final step i.e. payment posting, medical billing management software records each patient payment with accurate information including patient name, account number, denial information, service dates, etc. For future reference.

Importance in Healthcare:

It can help healthcare organizations to track their accurate financial growth performance. They can easily determine claim approval and rejection rates through proper RCM processes. With a seamless RCM process, healthcare organizations effectively manage their medical billing processes and address their claim denial issues.

Here are some key benefits of effective RCM:

  • Low claims rejected

  • Improved patient care

  • High reimbursement

  • A clean administrative record means no other fines or fees

  • Faster turnaround time for payment of claims

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