The term ‘reimburse’ refers to a payment made to either a person or institution. Within the healthcare organization, reimbursement is the payment made to the institution for services rendered to patients. Often, the said payment comes from third-party payers, but in certain cases, the patients make the payment directly (Casto & Forrestal, 2013). However, in health care, the approach to reimbursement has moved from the simple fee-for-service model to a Revenue Cycle Management model which requires the coordinated interaction of departments and their members to establish a facility revenue management team (Harrington, 2015).
If hospital services were offered to patients and no payment was made for the same, the health care institutions would have no means of generating revenue. Revenue generation is essential in the said institutions because it facilitates their continued operation. Thus, the need for healthcare institutions to generate revenue necessitates the establishment and proper functioning of revenue cycle management to ensure that the facility can remain operational and continue rendering the necessary treatment services (Singh & Wheeler, 2012).
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The determination of essential changes in the reimbursement area would depend on an analysis of reimbursement data records, documented through the revenue cycle. The records would be analysed to establish whether they incorporate an effective triage strategy that is accessible to patients and can facilitate the reduction of non-payment risks. The reimbursement records would be reviewed against the policies for maximization of reimbursements like reduction of denials with accurate information, employment of eligibility tools and increased visibility to patient responsibility. The comparison of the records against the maximization measures would facilitate the determination of the gaps between the two variables hence, providing information upon which the decision for making changes would be made (Riley, 2015).
Revenue Cycle
The revenue cycle is divided into three main phases, the front end, middle process and the back end. The front end marks the beginning of the revenue cycle. First, the service provider negotiates the contract with the payer, and after agreeing on both the requirements and pricing necessary for patient treatment, the price is loaded into the charge description master (CDM) and the billing system. Secondly, the patient is scheduled for service reception on either in or outpatient basis, as deemed fit. Next, patient registration follows, accompanied by insurance verification. The collection of the said information allows the health care institution to verify the payer information as well as patient demographics and facilitates the security of payment and the identification of the requirements of the patient’s insurance company, before offering any patient services. The conclusion of the front-end process is characterized by patient financial counselling, which is expected to enlighten the patient on their responsibility for their encounter with the healthcare provider (Harrington, 2015).
The middle process characterizes the intersection between clinical practices and billing. This section of the revenue cycle aims at eliciting a balance between the guidelines of clinical practices and service documentation, to ensure that the documented services are coded accurately for reimbursement purposes. Case management done in the middle process entails assessing, planning, facilitating, coordinating and evaluating care services to meet the comprehensive health needs of patients and their families. The charge capture process follows, where all charges associated with patient treatment are consistently recorded, posted and reconciled. Finally, the middle process is terminated by the hard and soft coding phases which entail the assignment of appropriate codes to reflect the recorded patient care level (Harrington, 2015).
Finally, the last process in the revenue cycle (back end) begins. At this stage, the patient’s bill is processed by totalling the charges of all services received. Consequently, the insurance company settles the claim that is submitted and on reception of payment, the healthcare facility posts it in open accounts receivable. In case the insurance denies the payment request because of simple errors like incorrect patient identification, the error is corrected by asking for patient clarification on the matter. The claim is then forwarded to the payer for settlement. Moreover, if the claim is denied the healthcare institution can appeal to the payer and supply additional documentation to support their appeal. Finally, the CDM is updated accordingly, if necessary (Harrington, 2015).
Departmental Prioritization in order of Importance to Revenue Cycle
The prioritization of departments in the healthcare field depends on the three main components that characterize financial transactions in the said institutions including, services and goods provided, transactions recorded and the reimbursement that is received. Clinical services are of primary importance because they facilitate clinical documentation. The documentation of clinical services is critical to the revenue cycle because documented services allow patient service validation and decision-making concerning patients within the facility (Harrington, 2015).
The second most important department in the revenue cycle is the patient accounts department. The said department gathers all transactions recorded in patient accounts through the CDM and produce the bill the payer is expected to settle. The departmental success is dependent on the accuracy of the CDM and that of the staff members that record transactions in the patient’s account (Harrington, 2015).
Thirdly, the Health Information Management department is critical to the revenue cycle because it deals with soft coding of the medical records of inpatients. The staff members in this department assign codes for diagnosis and procedures and ask for physician clarification on patient illness and treatment. Then, they compile the bill and send it to the patient accounts department for payment processing (Harrington, 2015).
Finally, the administration is the last department that is involved in the revenue cycle. The department analyses the financial transactions conducted throughout the facility including employee compensation and equipment purchases. The healthcare institution management teams review all transactions that impact the finances of the facility and its support areas (Harrington, 2015).
References
Casto, A. B., & Forrestal, E. (2013). Principles of healthcare reimbursement . American Health Information Management Association.
Harrington, M. K. (2015). Health Care Finance and the Mechanics of Insurance and Reimbursement . Jones & Bartlett Publishers.
Riley, J. (2019). Maximizing Reimbursement Starts with Patient Access | HFMA. Retrieved from https://www.hfma.org/Content.aspx?id=27386
Singh, S. R., & Wheeler, J. (2012). Hospital financial management: what is the link between revenue cycle management, profitability, and not-for-profit hospitals' ability to grow equity? Journal of Healthcare Management , 57 (5), 325-341.
