C

Unit 1 Lesson 1: Revenue Cycle & Regulatory Compliance

Revenue Cycle

  • The Revenue Cycle is the process that helps a healthcare office get paid for the services they provide.

  • It starts when a patient schedules an appointment and ends when the office receives the final payment.

  • Both office staff and medical workers are involved in this process.

  • It’s important for healthcare offices to check their steps often to make sure everything runs smoothly.

  • If something goes wrong, it can slow down payments and cause problems with the money the office is expecting.

  • Accounts Receivable = money owed to the healthcare office by patients or insurance companies.

Six Steps in the Revenue Cycle

1) Patient Registration

  • Pre-Visit Procedures (Before the Patient is Seen)

    • Getting the patient’s basic demographic and health information.

    • Checking if the patient’s health insurance is active and what services are covered before providing any care.

    • Receiving copayment from patient.

  • Sign Required Forms (Before Treatment)

    • Patient Consent for Treatment form: Gives legal permission to evaluate and treat the patient.

    • Notice of Privacy Practices (NPP) form: Explains how PHI may be used/shar"ed and patient rights regarding PHI.

    • Financial policy form: Explains how payment and billing will work for insured and uninsured patients; clarifies responsibility for payment.

    • Assignment of Benefits (AOB): Permission for the provider to bill the patient’s insurance directly and receive payment.

    • Medical Record Release forms: Written permission to share medical records with others.

    • Patient Information form: Collects personal details and documents (copy of ID/driver’s license, insurance card); collects:

      • Name

      • Date of birth

      • Address

      • Health insurance plan information

      • Medical history, medications, allergies

      • Emergency contact information

  • Insurance Verification

    • Purpose: Verify that the patient’s coverage is active and confirm what services are covered for the visit.

    • Required information from beneficiary and policyholder:

      • Name

      • Date of birth

      • Insurance Member ID number

    • Out-of-pocket costs to determine:

      • Copay

      • Deductibles

      • Coinsurance

    • These costs are important because the patient is responsible for paying them.

  • Registration Timing (Quiz Highlights)

    • Question: When does registration take place?

    • Correct answer: Before the patient is seen for their appointment (before the appointment).

2) Charge Capture

  • Charge Capture (Coding & Billing Entry)

    • Documenting (coding) the medical services or treatments given to the patient.

    • Sending those charges to the patient’s health insurance company for payment.

    • Asking the provider questions when there are any questions about the provider's notes.

  • Charge Capture Steps

    • Choose the right medical codes (e.g., CPT®, HCPCS, ICD-10-CM) based on what was done for the patient.

    • Codes are added into the clinic’s Electronic Health Record (EHR) for billing.

    • Codes usually come from a preset form (encounter form) or via a code search in the EHR.

    • Coding validity: Codes must be correct and properly linked to prove the treatment was needed.

    • Additional details may include:

      • Modifiers

      • Number of units

    • Sometimes, special claim scrubbing software is used to check codes for mistakes before claims are sent to insurance.

  • Chargemaster

    • A chargemaster is like a menu price list used by hospitals/medical offices.

    • Includes:

      • A list of all services, tests, procedures, and supplies a patient might receive

      • Each item has a code, description, and price

    • Purpose: Helps the billing team know what to charge and how to code it for insurance.

  • What is a Chargemaster? (Quiz)

    • Question: What is a chargemaster?

    • Correct answer: C. A list of all billable supplies, procedures, and services a healthcare facility provided.

3) Claims Submission

  • Clearinghouses assist with claim scrubbing and identifying errors before submission.

  • Common error types include:

    • Diagnosis code errors

    • Insurance ID issues

    • Patient spelling errors

  • Submission methods:

    • 1) Electronic Claim Submission (preferred)

      • Use the EHR to create and send the claim in 837P format.

      • Use the Electronic Data Interchange (EDI) system to submit electronically.

    • 2) Paper Claim Submission

      • Use data from encounter form, verify, and complete CMS-1500 form; mail to payer.

  • Electronic Claim Submission System (Quiz)

    • Question: What is the name of the system used to submit claims electronically?

    • Correct answer: A. Electronic data interchange (EDI).

4) Payer Adjudication

  • ERA and EOB (Post-Submission Adjudication)

    • After claim review, insurer sends:

      • Explanation of Benefits (EOB) to the patient:

        • What services were billed

        • What the insurance paid

        • What the patient still owes (copays/deductibles)

      • Electronic Remittance Advice (ERA) to the provider:

        • Patient name

        • Date of service

        • Amount charged

        • What was paid

        • What was denied and denial codes

        • Any adjustments to the claim

        • Patient responsibility

  • Example: EOB (Illustrative)

    • Member: John Doe; Claim Date: 02/25/2023; Date of Service: 03/10/2023

    • Description: Office Visit; Charges: 150.00; Discount: 40.00; Amount Covered: 90.00; Patient Responsibility: 20.00

    • Diagnosis: M54.5

    • Note: EOB is not a bill; it explains what you might be billed for.

  • ERA Example (Illustrative)

    • ERA includes provider information, patient name, service date, procedure, allowed amount, adjustments, and patient responsibility.

    • Example elements:

      • Charge amount

      • Allowed amount

      • Adjustments

      • Patient responsibility

      • Check/EFT details

5) Payment Posting

  • Posting Payments

    • Timelines:

      • Typical posting occurs within 10\text{-}30\text{ days} after submission

      • Some payments may take up to 30\text{-}45\text{ days}

    • Process:

      • Record payment in the system (insurance and patient portions)

      • Bill any remaining balance to the patient

    • If a claim is rejected/denied:

      • Identify the reason, fix the issue, and resubmit

      • Follow up on unpaid claims

  • Payment Timelines (Quiz Review)

    • Question: How long after a claim has been submitted does it generally take to receive payment from a health insurance plan?

    • Correct answer: B. 30\text{-}45\text{ days}

6) Collections

  • Denial Management & Reconciliation

    • When a claim is denied or underpaid, steps include:

      • Correction of identified errors (e.g., incorrect date of birth)

      • Filing an appeal with additional medical information to support charges

  • Collections (Continued)

    • If balances remain unpaid, actions include:

      • Send patient bills for their portion

      • Reach out to patients to collect unpaid balances

      • Offer payment plans if needed

      • If very late, refer to a collection agency

      • Bad debt occurs when the balance is written off as a loss for the office.

Unit 1 Lesson 1: Revenue Cycle (Detailed Breakdown)

  • The Revenue Cycle involves multiple roles and steps to ensure proper billing and reimbursement.

  • Each step has checks to prevent errors that could delay payments.

  • Effective revenue cycle management reduces delays and maximizes cash flow for the practice.

Key Formulas and Numbers to Remember

  • Time to payment (typical): 10\text{-}30\text{ days}; sometimes up to 30\text{-}45\text{ days} depending on claim type (electronic vs paper).

  • Six steps in Revenue Cycle: listed in order from patient registration to collections.

  • Out-of-pocket costs categories: copay, deductible, coinsurance.

Real-World Relevance and Implications

  • Proper Revenue Cycle management affects cash flow, physician compensation, and ability to deliver care.

  • Errors at any stage can cause delays, denied payments, or underpayment.

  • Understanding patient financial responsibility improves transparency and reduces disputes.

  • Compliance with regulatory requirements (privacy, consent, PHI handling) protects patients and the organization.

Ethical and Practical Considerations

  • Accurate documentation and coding are essential for fairness and avoidance of fraud/abuse.

  • Clear financial policies help manage expectations and reduce disputes.

  • Timely verification of eligibility protects patients from unexpected charges and helps budgeting for the practice.

Summary of Key Terms

  • Revenue Cycle

  • Accounts Receivable (A/R)

  • CPT/HCPCS/ICD-10-CM codes

  • Encounter form

  • Chargemaster

  • 837P format

  • CMS-1500 form

  • Clearinghouse

  • EHR (Electronic Health Record)

  • Eligibility verification

  • Copay, Deductible, Coinsurance

  • AOB (Assignment of Benefits)

  • NPP (Notice of Privacy Practices)

  • ERA (Electronic Remittance Advice)

  • EOB (Explanation of Benefits)

  • Preauthorization

  • Denial Management

  • Collections

Practice Prompts (From Slides)

  • When does registration take place? Before the patient is seen for their appointment.

  • What is a chargemaster? A list of all billable supplies, procedures, and services a healthcare facility provided.

  • What is the system used to submit claims electronically? Electronic Data Interchange (EDI).

  • What does an ERA provide? A breakdown of how a claim was processed and remittance