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Revenue cycle management (RCM) is the process of managing the financial aspects of patient care. It starts when your practice schedules the patient appointment and continues until you receive and post the final payment. Goals of RCM include optimizing revenue and ensuring compliance with healthcare regulations. Below are some important components of RCM.

Components of an effective revenue cycle

Appointment scheduling and patient registration

This initial step in RCM takes place at the front desk and encompasses collecting necessary patient information and scheduling appropriate services.

Insurance verification

Each patient's insurance coverage must be verified to confirm their eligibility for insurance coverage for the services they seek. This helps prevent delays in care due to inaccurate or outdated insurance information and revenue loss caused by claim denials.

Pre-authorization and pre-certification

For certain medical services, your practice must obtain pre-authorization or pre-certification from the insurance company. If not done, it may be difficult or impossible to obtain reimbursement.


Documenting care accurately in the EHR is vital for proper coding and billing.


The medical care you provide must be translated into standardized codes for billing purposes. Examples include CPT, ICD-10, and HCPCS. For billing to be efficient and effective, coding must be accurate.

Claim submission

Timely claim submission to private insurance companies or government payers such as Medicare and Medicaid is essential to receive prompt reimbursement and maintain an effective revenue cycle.

Monitoring claim status

After claim submission, RCM involves monitoring progress of claims through adjudication and payment. This includes reviewing claim rejections and denials and resubmitting denied claims. Timely resolution of claim issues can increase reimbursement.

Payment posting and reconciliation

The next step in RCM is posting payments received from third-party payers and patients into your medical practice's financial records. This step involves matching payments to the appropriate claims and identifying any discrepancies.

Denial management and appeals

If a claim is denied, medical practice staff can work to identify the reason why and address it. Your practice may submit appeals, provide additional documentation, and correct any claim errors to maximize chances of reimbursement.

Patient billing and collections

To achieve optimal revenue, your practice must generate accurate and comprehensible patient statements. You may need to educate patients about their financial responsibilities and take steps to facilitate timely payments, such as setting up payment plans if needed.

Financial reporting and analysis

Your practice can gain valuable financial insights through reports and analyses. These reports help you understand revenue trends, identify areas for improvement, and make informed business decisions.

Benefits of an effective revenue cycle:

  • Prevent denials: An efficient RCM system helps prevent claim denials by ensuring that all necessary documentation is accurately completed and submitted. This involves verifying patient information, insurance eligibility, and coding procedures correctly. By reducing denials, healthcare providers can avoid costly rework and delays in receiving payments, ultimately preserving their revenue stream.
  • Increase net collections: Effective revenue cycle management optimizes the entire billing process, from claim submission to payment posting. This results in a higher percentage of claims being paid in full and a quicker turnaround time for reimbursements. As a result, healthcare organizations can increase their net collections, which directly contributes to their financial stability and sustainability.
  • Improve velocity of collections: An efficient RCM process accelerates the pace at which payments are received. This means healthcare providers can convert services rendered into cash more rapidly. This improved velocity of collections enhances the organization's cash flow, allowing them to invest in technology, facilities, and staff, and remain financially agile.
  • Reduce days in accounts receivable (A/R): Days in A/R is a critical financial metric that indicates how long it takes for an organization to collect payment after providing services. An effective revenue cycle management system reduces this metric, leading to shorter payment cycles. By reducing the number of outstanding accounts, healthcare organizations can free up working capital and minimize the risks associated with delayed or unpaid bills.
  • Enhance the patient experience: A well-structured RCM process can indirectly improve the patient experience. When billing and insurance claims are handled efficiently, patients receive accurate and timely bills, and any issues or questions are resolved promptly. This transparency and professionalism enhance patient satisfaction and trust in the healthcare provider, ultimately leading to positive word-of-mouth referrals and patient retention.

How to choose an RCM services provider

Partnering with an RCM services provider can help your practice optimize the revenue cycle and increase collections by providing access to greater expertise and superior technology for managing finances. Consider contracting with an RCM services provider especially if talent recruitment and retention is an issue for your medical practice.

Selecting the right revenue cycle management (RCM) services vendor is critical for healthcare organizations to ensure a smooth and efficient billing and reimbursement process.

Here are key factors that make a good RCM services vendor:

  • Industry expertise: A good RCM vendor should have a deep understanding of the healthcare industry, including knowledge of coding regulations, payer policies, and the complexities of medical billing. They should stay up to date with industry changes and be able to adapt their services accordingly.
  • Technology and infrastructure: The vendor should have modern, robust, and secure RCM software and infrastructure. This includes Electronic Health Records (EHR) integration capabilities, data security measures to protect patient information, and the ability to handle high volumes of claims efficiently.
  • Experience and reputation: Look for a vendor with a proven track record in revenue cycle management. They should have a portfolio of satisfied clients and positive references that can attest to their effectiveness, accuracy, and reliability.
  • Compliance and regulatory knowledge: Healthcare regulations and compliance requirements are constantly changing. A good RCM vendor must be well-versed in these regulations, such as HIPAA, ICD-10, and CPT coding guidelines, to ensure that billing and coding practices are compliant.
  • Revenue maximization: The primary goal of RCM is to maximize revenue for the healthcare organization. The vendor should have strategies and technologies in place to optimize claims processing, reduce denials, and accelerate reimbursement cycles.
  • Transparency and communication: Effective communication is essential. The vendor should provide clear and transparent reporting on key performance indicators (KPIs), financial metrics, and the status of claims. They should be accessible for questions and updates as needed.
  • Customization and flexibility: Each healthcare organization has unique needs and workflows. A good RCM vendor should be able to tailor their services to meet the specific requirements of the client, whether it's a small clinic or a large system.
  • Credentialing services: Credentialing is an integral part of the revenue cycle process, especially for providers joining a new network or insurance plan. A good RCM vendor may offer credentialing services to ensure providers are properly enrolled with payers.
  • Cost and ROI: The cost of RCM services should be reasonable and justifiable based on the ROI it provides. Consider the fees, contract terms, and potential savings in terms of reduced denials and improved collections.
  • Training and education: The vendor should offer training and educational resources to the healthcare organization's staff to ensure that everyone understands billing and coding procedures, which can help prevent errors and denials.
  • Scalability: A good RCM vendor should have the ability to scale their services to accommodate the growth of the healthcare organization or changes in patient volume.
  • Disaster recovery and business continuity: Ensure the vendor has robust disaster recovery and business continuity plans in place to protect data and ensure uninterrupted service, even in the event of unforeseen disruptions.
  • Customer support: Responsive and knowledgeable customer support is crucial. Healthcare organizations should have access to support teams to address any issues or concerns promptly.
  • Data analytics and reporting: The vendor should offer advanced analytics and reporting capabilities that provide insights into revenue performance, helping the healthcare organization make informed decisions.

Selecting the right RCM services vendor is a critical decision that can impact the financial health and overall efficiency of a healthcare organization. By thoroughly evaluating vendors based on these criteria, healthcare organizations can make an informed choice that aligns with their specific needs and goals.

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Roy Gill Headshot

Roy Gill, MD, FAMIA

VP, Clinical Affairs and Patient Safety at NextGen Healthcare

I joined NextGen in 2009, working first as a Physician Consultant, Director of Clinical Content under the Chief Medical Officer, and now as Vice President of Clinical Affairs and Patient Safety. A Family Physician by training with nearly 20 year of practice experience, I became interested in Clinical Informatics (CI) in the late 1990's as my institution was adopting an EHR. I became a Physician Champion and began to dive even deeper into Informatics. I eventually earned a Graduate Certificate in CI from Oregon Health and Science University and became Board Certified in CI in 2015 (as well as earning a Six Sigma Black Belt somewhere along the way). It's an exciting time to be working at NextGen, as we vastly improve attention to improving outcomes, patient safety, client needs, quality, and the evolving needs of our clinicians and the industry.