HealthRole of Healthcare Revenue Cycle Management in Denial Management

Role of Healthcare Revenue Cycle Management in Denial Management


Over the years, the healthcare industry has seen a considerable increase in claim denial rates. According to reports, healthcare facilities have witnessed a 21–23 percent increase in claim denials from 2015 to 2020, arguably a lot. Medical claims can be denied for multiple reasons, such as non-covered services, inconsistent data, claims not filled on time, etc. Also, claims can be denied based on clinical and technical terms, such as missing a patient’s signature or inconsistent medical coding.

This claim denial rate is concerning as it means that hospitals and healthcare facilities have poor or average financial health. So, healthcare facilities need to manage claim denials to prevent revenue loss and help the patient resolve the claim reimbursement issues quickly. Therefore, healthcare facilities such as hospitals and clinics seek revenue cycle management (RCM) services to reduce claim denials. The role of RCM in denial management is crucial, and one needs to understand this.

Let’s learn this discreetly by understanding what RCM is, what its benefits are, and how it works for reducing claim denials.

What is RCM?

RCM is mainly a financial process in which medical billing software is used for precise results. With RCM, healthcare facilities can efficiently perform several activities, such as tracking their patient care profile, from registration and doctors’ appointments to the final payment of hospital bills. 

In simple words, it can easily manage the administrative and clinical functions associated with payment, claims to process, and revenue generation. In healthcare, RCM involves three steps: identifying, managing, and collecting patient service revenue. Today, most healthcare facilities use RCM to collect profits and keep up with expenses. The benefits of a sound RCM system are:

  • RCM works well by simplifying the business and clinical sides of healthcare facilities. This is done by integrating all the administrative data about the patient with the treatment the patient has received. 
  • With RCM, healthcare providers ensure that they can quickly reimburse medical services. As it benefits both the patient and healthcare provider, RCM service is implemented by all healthcare facilities.

Understanding Denial Management

We have already seen how a claim denial can be troubling for healthcare organizations and patients. However, the good thing is that healthcare facilities can increase their claim acceptance rate to a better range simply by implementing a precise denial management strategy.

Denial Management means systematically checking each rejection to discover its root cause and redesigning the process to prevent any denial in the future. To improve denial management, there is always a need to implement RCM.

It is a fact that if a team of professionals manages the claim denials, there will be a reduction in the occurrence of claim denials. Outsourcing denial management and healthcare revenue cycle management services might be the most beneficial option for any healthcare facility. 

Role and Benefits of Healthcare RCM 

When a healthcare organization implements effective RCM, they get help in avoiding lost or delayed revenue. Along with increasing revenue for healthcare facilities, RCM also benefits patients and gives more excellent value to denial management.

  • Finding the root cause of denial and resolving errors

RCM is an excellent way of identifying the source of errors within the revenue cycle. Once you know where the issue is, it becomes easy to address it. The technical mistakes of missing code or patient data can be prevented using RCM. Ultimately, this will decrease the claim denial rate to a great extent.

  • Avoids healthcare fraud 

Over the years, healthcare fraud has been causing a loss of billions of dollars to healthcare organizations every year. There is a chance of healthcare fraud investigations when there’s inaccurate medical coding. So, one of the crucial benefits of RCM implementation is that it can prevent such fraud to a great extent.

  • Better claims, fewer denials

There’s no doubt most of the denials of claims happen because of payment claim errors. So, it would be better to focus on getting the medical coding right for which optimized healthcare BPO services will be needed. 

As the claim denial rates are escalating, it has become crucial to implement an effective strategy and response for handling denied claims in RCM. This helps in the denial management process and is also considered suitable for collecting more revenue for healthcare organizations. As a patient, you get to reduce the medical insurance claim denials and receive reimbursements with ease.

The Conclusion

Healthcare RCM is bringing rapid changes to the healthcare system by reducing claim denials, finding the denial’s root cause, and so on. Healthcare organizations need to be aware of the crucial role that RCM plays in denial management and effective implementation for the betterment of healthcare facilities and patients.

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