Techniques and Tools for Improving Healthcare Revenue Cycle Management
Healthcare revenue cycle management (RCM) is undergoing a complicated transition, with insurance verification, prior authorization, coding, claim submission, denials, payments, patient balances, and accounts receivable all impacting the speed and efficiency of revenue realization. For many providers, it is becoming evident that improving practice revenue cycle management is about preventing errors, streamlining operations, and analyzing trends.
According to CAQH® healthcare administrative transactions still contain opportunities for automation, and MGMA® continues to report denials, eligibility, authorizations, credentialing, and A/R as areas of revenue leakage.
This guide will focus on the tools, techniques, and strategies healthcare providers can employ to improve revenue cycle management.
What Is Healthcare Revenue Cycle Management?
Revenue cycle management is the financial and administrative process, which begins with scheduling, ends when a provider receives payment and pursues delinquent balances.
An example of a revenue cycle:
Scheduling → Registration→ Eligibility→ Authorization→ Visit→ Documentation→ Coding→ Claim Submission→ Payment→ Denial→ A/R
As can be seen, errors anywhere in the process can lead to a number of delays or losses of revenue, adversely impacting collections.
8 Techniques to Improve Healthcare RCM
Improve Patient Registration
A wealth of patient information must be accurate and complete during registration for the revenue cycle to accelerate. Any of the following will add days or weeks to a claim cycle due to corrections needed to names, dates of birth, insurance numbers, subscribers, or payers.
The American Medical Association recommends verifying demographics and insurance information as part of an improved revenue-cycle process.
Create a standard process for verifying the following:
Demographics
Insurance
Subscriber
Coordination of benefits
Referral (as applicable)
Authorization (as applicable)
The more accurate information is at registration, the less time and money it takes to fix errors.
Automate Eligibility Verification
Eligibility verification should occur before rendering services. Eligibility verification is critical for obtaining coverage and benefit information for patients.
CMS has adopted the HIPAA 270/271 standard transaction set for eligibility.
Why It Matters
Without verifying eligibility before seeing the patient, the practice may not realize that the coverage they thought they had turned out to be false, inactive, incorrect, had the wrong carrier, the wrong deductible, coinsurance, etc. If these errors occur, it can require multiple staff hours to research and correct the claims.
Electronic eligibility tools can help uncover:
Inactive coverage + Incorrect payer + Deductible Information + Copay/Coin insurance + Coverage Limitations
CAQH® stated 2024 electronic medical-plan eligibility verification has a 96% adoption rate, demonstrating the widespread use of the automation in this area.
Improve Prior Authorization
Prior authorization continues to be an important administrative and revenue-cycle management process in the healthcare industry. Claims may take days to get approval, leaving patients waiting and revenue on the line. Even more concerning is the claim rejections associated with prior authorization.
CMS is rolling out interoperability and electronic prior authorization rules in full force in 2027 for impacted payers.
Better Approach
Use a centralized workflow and system to help ensure authorizations are obtained, submitted with claims, and follow up on any issues.
Service Ordered → Authorization Required? → Submission → Documentation Attached → Approved?
Authorization software, payer portals, and EHR integration can simplify the prior authorization process and tracking.
Improve Coding and Claim Accurate
Claims that fail due to coding errors take, on average, 24 days to resolve versus 19 days for rejected or denied claims. This creates an adverse impact on collections.
CMS has created the National Correct Coding Initiative (NCCI) to detect inappropriate code combinations, among other issues.
Best Practice
Review the following information before submitting claims:
Documentation → Diagnosis → CPT/HCPCS→ Modifier → Units →Payer Rules
Coding tools, encoder software, and professional review help identify and resolve errors before submission.
Review the All-State RCM Medical Coding Services.
Use Claim Scrubbing
Claim scrubbing refers to reviewing claims for errors before submission. A claim scrubber may vary depending on the system or software used; however, most offer the following types of edits:
Missing Information → Invalid Codes → Modifier Issues→ Duplicate Claims →Payer Edits–Claims Eligibility → Authorization Information
The Rule of Thumb
Fix the problem before the payer rejects or denies the claim.
This will reduce rework and improve first-pass claim submission.
Make Denial Management Proactive with Advanced Reporting
Denial management should not be about tossing rejected claims back to the front end. A proactive approach is to research why they occurred in the first place. Common reasons for denials include eligibility, authorization, coding, documentation, medical necessity, credentialing, and timely filing. MGMA® continues to report these as areas of revenue leakage.
Proactive Denial Process
The best way to approach denial management is to categorize them by payer, reason, provider, service, location, and ask the following questions.
What was the reason for the denial? Who is responsible for the denial? Can the denial prevention process be improved?
This is the essence of denial prevention.
Review the All-State RCM Denial Management Services.
Prioritize Accounts Receivable
Like denials, accounts receivable (A/R) should also have specific procedures, rules, and staff responsible for following up on delinquent and aging receivables. The most effective way to organize A/R is by priority. You will want to sort A/R by:
Age of the balance –Dollar Value–Payer–Denial Status–Filing Deadline–Recovery Opportunity
For example, a $20,000 claim with a filing deadline in two days should be given higher priority than a $2,000 claim with a 30-day filing deadline.
A/R dashboards and work queues help to prioritize aging balances and focus collections efforts on the most impactful balances.
All State RCM A/R Services.
Automate Payments and Claim Status
A growing number of healthcare payers are moving toward electronic transactions, with CMS promoting and developing electronic claims status transactions 276/277 and electronic payment/remittance through EFT/ERA. This can reduce manual processing and simplify reimbursement by eliminating manual claims status inquiries and remittance advice.
An automated payment workflow could look like the following:
Claim → Electronic Status→ Adjudicated Claim→ ERA→ Posted Payment → Reconciliation
In a nutshell, electronic status and payment/ERA reduce manual steps and allow staff to focus on high-priority items.
Tools That Can Improve Healthcare RCM
The ideal healthcare RCM tools will support and enhance existing processes rather than replacing or overriding them.
The tools useful for improving revenue cycle management will mainly consist of:
EHR and Practice Management Solutions
These primary systems manage most clinical and practice data, including scheduling, registration, charge capture, and billing.
Eligibility Verification
Before seeing patients, verify insurance coverage and benefits.
Prior Authorization Tools
Payer-specific electronic tools to track, request, document, and report.
Claim Scrubber
Look for errors in claims before submission to payers.
Coding Tools
These tools help ensure accurate code selection and application per documentation and payer rules.
Denial Management
Categorizing rejection reasons and analyzing opportunities for improvement
A/R Tools
Helpful in managing aging balances and analyzing the root causes of slow-paying or unpaid claims.
ERA/EFT
Automate remittance and payment processing. ERA allows for receiving remittance electronically, and EFT uses electronic funds transfers to pay providers.
Analytics and Dashboards
Convert raw data into reportable formats and meaningful insights for revenue cycle performance.
Artificial Intelligence (AI) and Automation
AI can assist with document review, denial categorization, claim risk assessment, and work queues. However, coding, clinical documentation, medical necessity, and appeals should involve human review and judgment.
RCM KPIs Healthcare Providers Should Track
No healthcare organization can improve what it does not measure. As such, a strong revenue cycle management dashboard will consist of the following key performance indicators (KPIs):
Clean Claim Rate – Indicates a percentage of clean claims produced without avoidable errors.
Denial Rate – Provides the percentage of denied claims received from payers.
Days in A/R – Reflects the average number of days the practice retains TR from the date of submission to the payer.
A/R Aging – Displays the dollar amount of accounts receivable by invoice age.
Collection Rate – Helps to understand how much cash the practice actually collects.
Payment Turnaround – This shows how long it takes to receive payment after claim submission.
Rejection Rate – This determines how many submitted claims get rejected before adjudication by payers.
The key point here is to start examining the KPIs from various angles, such as:
Payer – Provider – Specialty–Location–Denial Type
It is not unusual for a practice to have excellent clean claim rates and high revenue cycle days, implying it may not be collecting as much cash as other similar practices.
How to Build a Better RCM Process
A healthcare organization does not have to overhaul its RCM process. The following five-step process can help the practice improve cash flow by accelerating reimbursements and reducing denials, and aging.
Step 1 | Measure 60-90 Days of Claims, Denials, A/R, Payments, Eligibility, and Authorization
This step will provide a baseline for the current RCM process.
Step 2 | Look for the Biggest Pain Points
At this point, the focus should be on the issues causing the largest delays or losses in revenue.
Step 3 | Focus on the Front End First
The registration, eligibility, and authorization processes drive the rest of the RCM, including coding, claims, and collections.
Step 4 | Use Technology to Automate Rules-Based Transactions
Technology is useful in automating rules-based processes, such as eligibility, claim status inquiries, ERA/EFT, work queues, and reporting. The focus should always be on speed, accuracy, and employee productivity.
Step 5 | Monitor and Measure Performance
Review trends by payer, physician, specialty, location, denial type, etc., and repeat as needed to continuously improve the revenue cycle
Outsourcing RCM Can Be an Option
Some practices have the resources to dedicate to revenue cycle management and may find success with a few key process improvements.
Other practices might find themselves in a position where RCM expertise, payer follow-up, denial management, credentialing, and aging A/R require more specialized skills and knowledge. Outsourcing allows the provider to leverage the expertise and capacity of a specialized third-party while still offering patients the convenience and comfort of an in-house front end.
Practices considering revenue cycle outsourcing options have several options, ranging from full back-office outsourcing (claims, denials, A/R) to billing and front desk only, or some combination of the two.
All State RCM offers core revenue cycle management services to support and supplement existing processes and staff, including:
Medical Billing | Medical Coding |Denial Management |A/R| Credentialing |Audit and Reporting
Review the All-State RCM Revenue Cycle Services.
How All State RCM Supports RCM Improvement
All State RCM can strengthen healthcare organizations’ operations by addressing the areas contributing to administrative and billing obstacles, including:
Medical Billing – Claims preparation, submission, payment posting, and billing support
Medical Coding – Documentation review and coding support designed to improve claim accuracy and reduce errors
Denial Management – Denial analysis to reduce future occurrences, payer follow-up, and appeals support
Accounts Receivable – Aging insurance balances receive appropriate follow-up to maximize collections
Credentialing – Provider enrollment, CAQH, and payer administrative support
Audit/Reporting – Insights and reporting to understand RCM performance, identify areas of opportunity, and assess risks
A strong, integrated healthcare revenue cycle improves an organization’s operations by catching and resolving the issues at their source, rather than simply treating the symptoms
Final Thoughts
Improving revenue cycle management is not a matter of one technique or tool. Rather, it involves ensuring data is accurate from registration through final payment. By implementing process improvement projects focused on high-impact areas like registration, eligibility, coding, and claim submission, in addition to using the right tools to prevent and resolve errors, analyze trends, and automate routine tasks, healthcare organizations can achieve significant improvements in their RCM.
For organizations that need additional support, All State RCM provides RCM services to help supplement staff resources and address the area’s most impacting cash flow.
Explore All State RCM Revenue Cycle Management Services
FAQs
How can healthcare providers improve revenue cycle management?
Healthcare providers improve their revenue cycle management by enhancing their registration and eligibility processes, strengthening authorization and coding, preventing avoidable claim errors, analyzing denial root causes, prioritizing A/R, and automating rules-based tasks.
What is the most important RCM KPI?
There is no single RCM KPI that demonstrates the health of a practice. Understanding the trends within clean claim rate, denial rate, days in A/R, aging, collection rate, and turnaround rate is vital to improving your revenue cycle.
Can automation reduce medical billing errors
Automation can reduce many manual tasks during the revenue cycle, but documentation, coding, and other clinical and medical judgment tasks require further human intervention even with AI-assisted tools.
When should a practice outsource RCM
Practices may consider revenue cycle outsourcing when billing and collections are negatively impacted, including denials, aging A/R, or the lack of internal resources.
Can All State RCM handle only part of the revenue cycle?
All State RCM can provide revenue cycle services on a per-function basis; therefore, it can support practice needs based on requirements, whether it is billing, denial management, A/R, coding, or credentialing.
