Timely reimbursement is essential to the smooth operation of medical practices. However, when claims are pending, denied, paid incorrectly or unpaid balances continue to accrue, providers can easily lose significant time and money.
These issues arise in part due to a lack of understanding around the difference between medical billing and RCM. While medical billing is a crucial component of the healthcare revenue process, revenue cycle management (RCM) encompasses far more than that.
The distinction can assist physicians, practice owners, and medical office managers in identifying areas where they may need more support and financial assistance, as well as opportunities to improve their financial processes. We will cover the meaning and working of medical billing and RCM, the key differences between them, and how Noventra RCM can assist healthcare practices in handling medical billing and RCM more effectively.
What is Medical Billing?
Medical billing is the process of handling, preparing and following up healthcare claims to enable health care providers to be reimbursed for services rendered to patients.
Services provided to a patient have to be translated into the proper billing information after healthcare is provided, which is recorded in the medical record. This could include medical codes like CPT, ICD-10-CM, HCPCS, etc. based on services provided and what is needed by the payers.
The typical medical billing process may entail:
Reviewing patient and insurance information
Allocation and/or auditing of relevant medical codes
Preparing claims
Claiming benefits to insurance companies
Monitoring claim status
Correcting claim errors
Handling claim denials and/or rejection
Posting payments
The follow-up of unpaid loans
Medical billing is mostly about the economical aspect of particular healthcare services and claims. It helps to ensure that providers are submitting accurate information and getting reimbursed correctly by Medicare, Medicaid, commercial insurance companies and other payers.
Billing, however, is just part of the financial voyage of a healthcare encounter.
In the most simplistic terms, what is revenue cycle management?
Revenue cycle management is a more comprehensive approach to the financial lifecycle of a patient’s healthcare visit, extending from booking the appointment and verifying insurance to finalizing payment collection.
In healthcare, RCM is not just about claims submission and payment, but the whole revenue cycle.
The activities in the revenue cycle may include:
Patient registration
Insurance eligibility verification
Insurance verification
Prior authorization support
Medical coding
Charge capture
Medical billing
Claim submission
Claim tracking
Denial management
Payment posting
Accounts receivable management
AR follow-up
Patient responsibility management
Reimbursement analysis
RCM aims to support practices in handling the entire financial journey of patient care.
For instance, checking eligibility for coverage prior to appointment can help identify coverage issues before providing services. Faster coding can help to streamline claims. Submitting claims in a timely fashion may help eliminate delays. Unpaid claims which remain unpaid can be covered by AR or denial management.
The whole concept is what differentiates revenue cycle management from medical billing.
Medical Billing vs RCM: What’s The Difference?
One of the easiest ways to comprehend medical billing vs RCM is to consider medical billing as one of the pieces to the revenue cycle.
Medical billing involves primarily claims and reimbursement. RCM oversees the entire process of the money, from activities that occur prior to the submission of a claim to those that take place after a claim has been submitted to a payer.
Medical Billing
Revenue Cycle Management
Concerned mainly about billing and claims
Includes the entire revenue recognition process
Includes claim preparation and submission
Contains pre-service, billing and post-service activities
Accepts rejection and denial and discusses it with the hand in the best way possible
Tackles financial problems all along the patient journey
Includes payment posting
Comprehensive AR Management with payment posting
Usually targets particular issues
Observes the revenue performance and workflows
May start following services are delivered
Can start prior to patient care
Their distinction is significant because issues in one stage of the revenue cycle will impact the rest of the cycle.
If, for instance, a patient does not present with an eligibility issue, but develops one later in the visit, it could eventually lead to a claim issue. Likewise, a medical code that isn’t correct can cause a denial, and poor AR follow-up can result in an otherwise correct claim being denied for an extended time.
The role of Medical Billing in the Revenue Cycle.
While medical billing is a crucial component of RCM, it is not the only one.
Let’s start with a typical patient interaction.
Verify that patients are scheduled and registered.Check patients are scheduled and registered.
The process can start even before the patient arrives. Patient information is gathered and entered into the practice’s computer system.
2. Insurance Eligibility Verification
This practice checks if patient is covered by insurance and retrieves the related information.
3. Prior Authorization
If applicable, the practice may require prior authorization prior to the receipt of some services.
4. Medical Coding
The patient’s services are coded as CPT, ICD-10-CM or HCPCS codes as appropriate per the documentation and applicable requirements.
5. Claim creation and submission
The billing process gathers the claim and returns it to the payer of the insurance.
6. Claim Processing
The claim is looked at by the payer. It can be accepted, refused, refused or need more information or correction.
7. Payment Posting
The payments and adjustments are noted in the practice’s billing system.
8. Denial and AR Follow-Up
Claims unpaid or denied may need to be investigated and corrected, resubmitted, appealed, and/or followed up.
This is just one reason that RCM isn’t simply about billing. Each stage has the potential to impact the timely and accurate healthcare provider reimbursement.
So, why is RCM essential for medical practices?
A robust RCM system for healthcare processes enables practices to oversee their financial activities throughout the patient revenue lifecycle.
Reduces Gaps in the Revenue Cycle
Even if claim submission is accurate, a practice can still encounter issues related to AR follow-up, payment posting, coding, or eligibility verification, which can impact its finances.
RCM has a more holistic perspective and can assist practices in identifying these gaps.
Supports Cleaner Claims
Claim Avoidance by ensuring accurate patient information, eligibility, coding and claim preparation will help prevent unnecessary claims issues.
Helps Manage Denials
Claim denials can take up staff time and are a delay to reimbursement. Denial management involves the process of understanding the reasons for claims being denied and what should be done next.
Enhances the visibility into Accounts Receivable
Follow up on AR is crucial in the revenue cycle. Keeping track of balances outstanding can help practices to recognize claims that are aged and understand what more needs to be done.
Enables improved administrative efficiency
An in-house management of all aspects of revenue cycle can be overwhelming for the medical practice’s administrative staff. These responsibilities can be organised via a structured RCM process which makes handling of workflow problems easier.
What are some common issues in the revenue cycle?
There are many points where revenue cycle issues can arise in medical practices.
Frequent issues are:
Inaccurate or incomplete information about patients
Insurance eligibility issues
Missing prior authorization
Coding errors
Claim rejections
Claim denials
Delayed claim submission
Incorrect payment posting
Unresolved accounts receivable
Inconsistent AR follow-up
It can be challenging to keep track of outstanding claims.
Payer-specific billing requirements
These issues are frequently interrelated. Any problem that occurs during the registration or eligibility process, may not be apparent until the claim is submitted to the payer.
That’s why you shouldn’t only consider the last billing point to be the solution.
What are the things Practices could do to enhance their Revenue Cycle?
There is no need to completely overhaul the entire operation to improve the revenue cycle. The first step in a good practice is to examine the key phases of an existing workflow.
Check Insurance Information in Advance
Eligibility and insurance verification should be done as early as possible. Addressing problems before they become billing issues will be helped by identifying coverage problems before services are provided.
Review Coding Accuracy
Medical coding has direct impact on claim submission and reimbursement. Practices should have mechanisms to verify the accuracy of the coding and documentation and support of information submitted.
Check for claims after they are submitted.
A claim should not be the last step in billing. Practices should keep track of claims and address any claims that are rejected, denied or unpaid.
Track Denials
Practices can check for denial patterns instead of an individual denial. If there are recurring issues, this could indicate a problem with workflow/procurement which requires attention.
Maintain Consistent AR Follow-Up
There should be no delay in taking action on outstanding accounts. Scheduled AR follow-up can assist practices in finding claims that haven’t been paid, and define the correct next actions.
Keep a close eye on the Entire Revenue Cycle.
Most importantly, Practices should consider the full process and not just the Bill. This can help determine if issues are arising before claims are submitted, during the claim processing phase with payers and after the claims are processed and payments are made.
When should a Practice consider professional RCM support?
There are different types of medical practices, both internal and external, that handle billing and RCM.
When a practice is having ongoing difficulties with: professional help may be warranted.
Medical billing
Claims management
Denial management
Insurance verification
Eligibility verification
Prior authorization
Payment posting
AR follow-up
Medical coding
Coordinating revenue cycle as a whole
The decision should be based on the size of the practice, staffing, type of practice, payer mix, workflow, and administrative requirements.
These processes can be very time-consuming and require constant monitoring if handled in-house. Noventra RCM is an expert medical billing and revenue cycle management solution for medical practices that require assistance in this area.
What Noventra RCM Can Do For Your Practice?
The distinction between medical billing and RCM becomes particularly significant for a practice when it has to choose where it would like its support to come from.
A practice which only requires support for claim submissions might have a different need than a practice which requires support for everything from eligibility verification to claim coding to claim denials to payment posting to AR follow-up.
Novenetra RCM can offer relevant services like:
Medical billing
Revenue cycle management
Medical coding
Claims management
Insurance verification
Eligibility verification
Prior authorization support
Denial management
AR follow-up
Payment posting
The solution varies with the source of the current revenue cycle issues of the practice.
If there is time that your administrative staff is spending on billing and claims that is not necessary, then there is something that you need help with.If you’re spending valuable time on your administrative staff’s billing and claims work and you still have some time to spare, then you need professional medical billing support.
Medical Billing vs RCM: Which Do You Need For Your Practice?
It depends upon the needs of your practice.
Medical billing support can address the fact that if your main issue is preparing and submitting claims, correcting billing glitches or following up on claim status, then it may be able to cover a critical segment of the problem.
If problems arise at several steps (from insurance verification, prior authorization, through coding, claims, denials, posting and AR), then more comprehensive RCM support might be a better fit.
The important thing to do is to be able to find out where the problem is.
The question to ask about a practice is:
Are insurance issues and eligibility issues being caught early?
Is there accurate claims submission and timely claims?
Is there a tracking and addressing of denials?
Is the posting of payments correct?
Are there consistent follow up responsibilities for outstanding accounts?
Are staff able to identify specific areas of issues in the revenue cycle?
The answers will help identify if and how practice-specific billing support or more general revenue cycle support is warranted.
If your team is spending time on billing and revenue cycle-related processes, there is a solution that can help them, such as Noventra RCM, which offers professional RCM solutions that fit the administrative needs of healthcare providers.
Final Takeaway
While it’s crucial to understand the difference between medical billing and RCM, it’s essential to recognize that these are two various degrees of the healthcare revenue stream.
Medical billing mainly deals with claims and reimbursement, payment posting and other billing activities. RCM is more comprehensive and encompasses the financial life cycle of a patient interaction, from eligibility verification to prior authorization, coding, billing, claims management, denial management, payment posting, AR follow-up and more.
What’s most vital for medical practices is to consider the entire revenue cycle instead of just individual claims. If anything goes wrong at any point, it could impact reimbursement and increase administrative tasks.
If your practice requires medical billing assistance or more comprehensive RCM support, it is crucial to first identify where your current process is lacking and then make informed decisions to improve. Noventra RCM can assist healthcare providers in delivering expert medical billing and revenue cycle management solutions tailored to their needs.