A brief walkthrough of the revenue cycle management

The outsourcing industry caters to various types of industries. Any outsourcing service helps these sectors augment their overall efficiency, more so, aid in their development. 

Outsourcing is not just applicable to firms in the business segment. Instead, other sectors like the government, healthcare, or aviation can take full advantage of what its services have to offer. 

Speaking of the healthcare industry, given its fast-paced and busy nature, outsourcing helps immensely improve workers’ productivity. Especially with the healthcare revenue cycle management.

The healthcare revenue cycle management helps alleviate the hard-pressed workload of healthcare workers and professionals, giving them more room to do other important things. 

Revenue cycle management: the backbone of the healthcare industry

Revenue Cycle Management (RCM) is when healthcare facilities use medical billing software. This financial process allows these facilities to track all the patients’ activities from registrations, appointments, and payments. 

An RCM connects both the business clinical part of the healthcare industry through its administrative data. The primary role of this software is to communicate with a patients’ insurance company. 


When insured patients undergo treatments or receive supplies, healthcare providers will classify them according to the International Classification of Diseases (ICD-10) codes. The healthcare facility will then send the healthcare summary and the ICD and Current Procedural Terminology (CPT) codes to the insurance companies.

From there, the insurance company will then determine which ones are covered by the patients’ insurance. The patients themselves will then pay the remaining balance. 

Revenue cycle management
Revenue cycle management: the backbone of the healthcare industry

Key elements of the revenue cycle management

Healthcare providers do not have that much control over the patients’ claim review and denial process payments. Thus, two elements drive the revenue cycle: 

External factors

In some cases, claims and billings that take relatively long to process often result in rejection. It may be due to issues in insurance eligibility, fraud, healthcare regulations, or other reimbursement schemes. 

Internal factors

Internal factors are composed of healthcare providers’ costs for particular procedures, services, or treatments. These revenue elements also include the skills of the healthcare staff and front and back-office workflow. 

The revenue cycle management process

An efficient revenue cycle management process consists of the following typical workflow: 

Patient scheduling/pre-certification

The revenue cycle begins when a patient comes into a healthcare facility and undergoes pre-authorization. Insurance details, including demographic information, will be collected from the patient during this stage. 


Eligibility and verification of insurance

Eligibility and verification take place before performing any services or procedures. A verification checklist tool is implemented into the RCM software to ensure all patients’ required information is collected and inspected.

Patients will also be made aware of the Explanations Of Benefits (EOB) statement. It is a detailed description of what their insurance company will cover on their behalf. 

Charge and code

A set of codes is on record whenever a patient visits a healthcare facility. Professional medical coders are the people responsible for this task. Further, all codes must follow the CPT guidelines and the updated ICD-10 coding system. 

Deductibles and copayments

A deductible is a fixed amount in a health plan that patients must pay before the insurance company starts paying for the healthcare services or procedures. Patients pay up the copay at the healthcare facility after every appointment. 

Submission of claims

During this stage, all claims will be filed to the insurance company through a clearinghouse. If the records are incorrect, it will lead to reduced payments or increased denials. 

RCM begins as the healthcare facility’s management software, connecting internal processes with a medical billing software. The billing company will then follow up with the insurance company for claims. 

Payment posting/reimbursement

Payment posting is when the insurance company pays up. Once all bills are accurate, the reimbursement process will be smooth and hassle-free. Denials usually happen when filed claims have incomplete information, erroneous claims, and more.  

Manage denials

Rejected claims will be submitted again once they are cleared from coding errors. Resubmitted claims will be strictly screened under the latest coding guidelines. 

If there are reimbursement cutbacks from the payers, the health plan will not cover all payments. It is now the role of the billers to send all outstanding payments to patients, follow up now and then until they pay up. 

Importance of revenue cycle management

A good revenue cycle management helps healthcare providers maintain solid financial wellbeing. However, internal and external factors bring about such impacts to healthcare entities’ revenue and survival.

Importance of revenue cycle management

As a business entity, healthcare providers should continuously optimize their RCM to help them with their transformational growth. And more than anything, provide total patient care to people in need. 

Related outsourcing resources

    Transform your business