Revenue Cycle of a Healthcare Practice

Healthcare Practice

Revenue cycle management is a system through which a healthcare facility in the US is reimbursed for the services it delivers. The revenue cycle is especially complicated in the US because of the introduction of multiple entities due to insurance carriers and hospital policies.

In this guide, we are going to do a breakdown the revenue cycle into seven steps, which will also give you an insight into what’s involved with this process:

Seven Steps of Revenue Cycle in Healthcare Practice

Listed below are the seven steps of the revenue cycle in healthcare:

Step 1 – Pre-Registration

The first step of the process is pre-registration. It is a step that allows the healthcare facility to get informed about the demographics. Other details that pre-registration delivers are insurance information and eligibility.

This step doesn’t require meeting the patient since it is done on the phone. The same information is then delivered to the patient’s insurance carrier, and from there, it goes to the healthcare provider’s revenue cycle management system.

The revenue management system then provides healthcare providers with the following details:

  1. Patient’s coverage
  2. Deductible
  3. Co-insurance co-payment

There are certain instances where a referral might be needed, but it is subjective.

Since it is an information-gathering step, the medical practitioner may talk about their financial expectations to the patient and tell the patient when they want to be paid. Other details that are cleared out during the pre-registration process include no-show and cancellation policies.

The financial tone of the medical practice is set at this stage, and it becomes clear to the patient what they are going to pay. Getting all the finance-related questions in order during the first step ensures that none of these details cause any confusion when patient care is taking place.

Step 2 – Registration

While pre-registration is only based on inquiry, registration is the process where the patient’s details are made completely clear to the healthcare provider.

The registration process includes providing the following details:

  1. Name of the patient
  2. Patient’s address
  3. Date of birth
  4. Guarantors
  5. Insurance information

This is the step where a joint, verbal agreement is made between the healthcare provider and the patient that the information is correct.

Registration is also the step in which the healthcare provider collects the co-payments. If the healthcare provider is a specialist, they will also ask for referral details. If referral details aren’t given during the registration process, the specialist may not get paid in the end.

Registration also lays the foundation for paying for healthcare provider’s services. Forms are filled and signed. Insurance documents are thoroughly analyzed before assigning the benefits to the patients.

Step 3 – Charge Capture

Charge capture refers to the process in which the healthcare provider claims the insurance-related codes given by the patient and converts them into charges to earn money.

There are two ways for charge capture: automatic and manual.

The manual way involves the front desk staff entering every detail and sending it to billing. The other method, however, is automatic. Billing information automatically reaches the healthcare facility based on the details that the healthcare provider has given.

Most modern medical facilities are turning to automated systems for this because of the ease of process. However, it is recommended that healthcare facilities find robust revenue cycle management systems for this purpose. Otherwise, ancillary services, such as post-surgery treatment services, won’t be included in the billing.

Step 4- Claiming the Submission

After charge capture comes claiming a submission. A particularly nuanced process, this step involves the revenue cycle team sending the codes. Here, the goal is to properly send these codes after a thorough categorization. The team will see the charges, CPT codes, and the diagnosis code.

Here, questions are asked, such as whether the diagnosis supports the procedure performed. If these services are different, different codes and different charges are sent to the insurance carrier.

The revenue cycle team will also perform claim scrubbing

Claim scrubbing is the process of verifying whether the claim is clean, i.e., whether the insurance benefits are sought for the right kind of services. If the claim is clean, the insurance carrier pays the bills quickly.

Therefore, claims are sent to a clearinghouse to be cleaned before sending them to the insurance carrier. The medical facility will then get a transmission report informing them of the claims that were sent, claims that were accepted, and claims that were dropped. Dropped claims also come with a rejection report. It is recommended that healthcare facilities fix the issues quickly for rapid payment.

Step 5 – Remittance Processing

During step 5, remittance is processed. During this step, remittance goes back to the healthcare providers. Three things are determined during this step:

  1. Allowables: Allowables refer to the eligible expense, the payment allowance that the insurance carrier is supposed to pay to the healthcare provider. During this step, a contract is negotiated between the insurance carrier and the healthcare provider, and the insurance carrier will decide how much it will pay for healthcare.
  2. Free schedules: Free schedules are another element of remittance processing. These are the amounts providers charge for each service they provide. Providers should also review their free schedules and align them with the contracts, allowable, and adjusted rates.
  3. Write-offs: The third element of the remittance process includes write-offs. They can be both contractual and non-contractual. While there is no way to bypass contractual write-offs, non-contractual write-offs, however, can be. This is because they are often the result of the breakdown in the remittance process.

Step 6 – Insurance Follow Up

Insurance follow-up is the second-last step of the revenue cycle. Here, hospitals analyze what has been paid for and what has not been paid for.

An account receivable report is created, which shows whether there is something wrong with the insurance follow-up.

Here, the following questions are answered:

  1. Do people have certain carriers?
  2. Has the billing team received cross-training?
  3. Is there more than one person billing?
  4. Is the insurance being worked on by the practice management team?
  5. Are there any noticeable changes in aging?
  6. Are the claims being appealed, or are people re-submitting them?

Step 7 -Patient Collection

The final–and the most difficult—step is patient collection. It is here that a healthcare facility collects fees from its patients. Healthcare facilities must have trained someone sitting at the front desk who gets the money from the patient.

Also, during this process, routine statements must go out to the patient. The best practice is to give them a statement every 30 days, highlighting the financial details.


The revenue cycle of a healthcare practice is a long and drawn-out matter. Every step has to be taken carefully, and every detail should be analyzed properly. If a medical practitioner finds themselves stymied during a process, they can talk to consultants.

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