Revenue Cycle Management 101: What is it and Why is it Important?

Revenue Cycle Management 101

Revenue cycle management is the process used by healthcare systems in the United States to track the revenue and collect the cash from treating patients, from their initial appointment or encounter with the healthcare system to their final payment of balance. This entire process encompasses the identification, management, and collection of patient service revenue, from insurers and patients.

Without a process such as this in place, healthcare organizations are unable to keep their doors open to care for patients. In short, it’s a financial strategy that healthcare organizations use to pay their expenses.

This process begins when a patient makes an appointment for medical services and ends when all the claims and payments from the patient and their insurer have been collected.

Below are the key components of revenue cycle management.

pre-cycle phase of revenue cycle management

Pre-Cycle/Patient Access 


During the pre-cycle phase of revenue cycle management, Patient Access involves scheduling, registration, financial clearance, and patient collection.

Patient scheduling aims to improve the match between healthcare resources (doctors, nurses, rooms, equipment, medicines) and patient needs. Scheduling Software reduces wait times for patients while also improving the utilization of critical resources.


A patient registration specialist will collect Patient Identification, while Address Verification confirms the patient identity, address, and demographic data against third-party sources to improve registration accuracy and the ability to communicate with patients.  If anything is omitted, given incorrectly by the patient or entered incorrectly by the front desk, additional rework is created through the rest of the revenue cycle process.

Insurance Verification

Insurance Verification is the process of checking a patient’s active coverages with the insurance companies and verifying the eligibility and benefits available to expedite payment of a patient’s insurance claims.


Prior and post-authorization is the process of getting an agreement from the payer to cover specific services before or after the service is performed. The Authorization process can be completed electronically or manually through a service offering.

Patient Financial Counseling

Financial Counseling

Patient Financial Counseling offers financial advice and assistance to patients regarding their medical bills. They are the liaison between patients and insurance companies, often coordinating payments and answering questions from both parties. Additionally, they collect payment from patients on behalf of the healthcare provider.


Charge Capture

Charge capture is a process used by doctors and other healthcare providers, so they get paid for their services. In its simplest form, charge capture is the process whereby health care workers record information on their services, which is then mapped to a charge and sent out to different payers and insurance companies for reimbursement.


Domestic or International Medical Coding Services transform healthcare diagnosis, procedures, medical services, and equipment into universal medical alphanumeric codes. The diagnoses and procedure codes are taken from medical record documentation, such as transcription of physician’s notes, laboratory and radiologic results, etc.

Clinical Documentation Improvement and Auditing

Clinical Documentation Improvement (CDI) is at the core of every patient encounter. To be meaningful, it must be accurate, timely, and reflect the scope of services provided. Successful CDI programs facilitate the accurate representation of a patient’s clinical care that translates into coded data.

Auditing services include internal or external audits that validate clinical coding, DRG codes, and documentation through software and personnel-specific or organization-wide approaches.

submitting claims with health insurance companies



The billing process involves a healthcare provider editing, submitting, following up on, and submitting claims with health insurance companies in order to receive payment for services rendered, such as testing, treatments, and procedures.


There are many different aspects of healthcare compliance, governed by a variety of federal and state agencies. Here are some of the governing bodies and federal regulations that govern healthcare compliance:

The Social Security Act governs funding and requirements for Medicare, Medicaid, CHIP, and more.

HIPAA and the HITECH Act protect patient privacy

    HIPAA and the HITECH Act protect patient privacy, requiring healthcare organizations to implement measures to keep patient records secure.

    The False Claims Act makes it illegal to file a false claim for funds from a federal program.

    The Patient Protection and Affordable Care Act implemented new requirements for insurance, Medicaid, and more.

DEA and FDA regulate the creation and distribution of medication 

    The Drug Enforcement Administration and the Food and Drug Administration regulate the creation and distribution of medication.

    The Department of Health and Human Services and the Office of the Inspector General help protect against fraud.

Healthcare organizations are also subject to the same workplace regulations that apply to organizations in every industry. The laws established by the Occupational Safety and Health Administration and the Equal Employment Opportunity Commission, for example.

The Health Insurance Portability and Accountability Act (HIPAA) sets the standard for sensitive patient data protection. Companies that deal with protected health information (PHI) must have a physical, network, and process security measures in place and follow them to ensure HIPAA Compliance.

Denial management is a critical element to a healthy cash flow

Denial Management

Denial management is a critical element to a healthy cash flow and successful revenue cycle management. Denial Management software is designed to drill into 835 remittance data to uncover the root causes leading to denials. It analyzes, tracks, trends, and reports on denial data, identifying unpublished rules and recommending fixes for individually denied claims while helping you identify and implement process improvements to eliminate recurring denials and optimize revenue. Denial Management software can also provide a system in which to resolve denials.


Collection is the process of securing past due receivables on a customer’s account. This usually involves working with insurers and taking appropriate actions in the absence of due payments after the due date.

Payment Posting

Payment Posting-Insurance Payment Posting: All payers either send an EOB (explanation of benefits) or ERA (electronic remittance advice) towards the payment of a claim. The revenue cycle staff or software programs post these payments immediately into the respective patient accounts, against that particular claim to reconcile them.

Patient Payments

Patient Pay

Patient Payments are the amount patients are responsible for paying. Balance/Amount owed to the healthcare provider is the process of collecting on self-pay or patient pay after insurance accounts have been received.

Medical Financial Assistance program

Financial Assistance

Medical Financial Assistance program (MFA) or Charity Care programs help low-income, uninsured, and underserved patients receive access to care. The program provides temporary financial assistance or free care to patients who receive health care services from providers, regardless of whether they have health coverage or are uninsured.

HIPP is a Federal/State program currently in 37 states, where the state Medicaid agency pays the premium, coinsurance, and deductibles of eligible Medicaid patients to allow them to access private group commercial insurance or COBRA that is available to their family but unaffordable.  This service assists patients in this process.

Collection Agency

If an unpaid medical bill goes into collections, the collection agency helps organizations receive additional payments from patients while maintaining relationships.

Healthcare benchmarking

Reporting and Benchmarking

Healthcare benchmarking is taking a given organization’s performance metrics and comparing those to a standard developed using data from other similar organizations. The practice has been around in healthcare since roughly 1985.


Healthcare organizations must be able to stay in the black and maintain profitability to be successful at Healthcare Revenue Cycle management. Revenue Cycle management is a process that continues to evolve and keep pace with rapid changes to the healthcare system. Healthcare organizations should always be mindful of how their Revenue Cycle is doing to provide appropriate care and receive appropriate reimbursement.

Additional questions?  Please visit

Healthcare Revenue Cycle management

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April Langford @ [email protected]

Jena Eggert @ [email protected]

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