Revenue Cycle

Management
 Objectives
By the end of this training you would be able to understand:

1) 3-Ps of HealthCare

2) Revenue Cycle Management

3) Generic Healthcare Terminologies

4) Insurance Flow Charts

5) EOB Calculations

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 3-Ps of HealthCare

Patient, Provider and Payer relationship

 The three entities in healthcare industry can be denoted as the three “P”s of the healthcare industry.

 Patient - AKA Client; Subscriber; Members; Policy Holders; Beneficiaries; Enrollees; Employees;
Dependents.

 Provider - Doctors; Hospitals; SNF; hospice; DME Suppliers; Home health Agencies; Rehab Centers;
Pharmacy.

 Payer - Insurance; Carriers.

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 RCM- Definition

 Revenue Cycle Management is a comprehensive

approach that evaluates, improves and manages
all components in obtaining patient encounter
information ensuring patient safety while
creating a simplified, integrated work flow
designed to optimized and expedite
reimbursement.

 Hence, while the term Medical billing may be

restricted to some of the major components of the
industry RCM is a sum composite of all the
process that are involved in managing the
provider’s revenue to ensure that he gets
reimbursed appropriately and in a timely manner.

 The steps in the next slide would describe each

step in RCM and some components may not be
necessary in certain settings while in other some
additional .

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 Steps of RCM

Benefit and Pre-

Patient Scheduling Eligibility registration/Pre- Patient Encounter
Verification admission

Registration/
Medical Patient
Charge Capture Medical Coding
Transcription Demographic
Entry

Cash
Accounts Denial
Posting/Payment
Receivable Management
Posting

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 Generic Healthcare Terminology
• Patient – AKA Subscriber; Members; Policy Holders; Beneficiaries; Enrollees; Employees; Dependents.

• Provider (Someone who provides the health care services or treatments to a patient in the US is called
‘Healthcare Service Provider’ or only ‘Provider’ E.g. Doctor, Pathology lab, etc.

• Payer - Insurance; Carriers.

• Carrier - Health insurance companies in the US are called ‘Carriers’ or ‘Administrative Agents’ or
‘Underwriters’ or ‘Insurers’ as they carry the risk of healthcare cost reimbursement to policy holders.

• Subscribers - An individual who buys an insurance policy (either through employer or other means) is
called a ‘Subscriber’ or ‘Enrollee’ or ‘Certificate Holder’. The insured is the term used to designate the
person who represents the family unit in relation to the insurance program. This may be the employee,
whose employment makes this coverage possible. This person may also be known as enrollee, certificate
holder or subscriber, policyholder or subscriber i.e. an insured is the person who takes an insurance policy
to cover the risks that the person might incur.

• Dependent: The spouse and children of the subscriber who are eligible for medical care under the
insurance contract.

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 Generic Healthcare Terminology
• Service - Treatment rendered to a patients called as ‘Service’ or ‘Healthcare Delivery’.

• Encounter - When a patient meets with a doctor in a clinic/converses in regards to his health status; it is
called a ‘Patient-Provider Encounter’.

• Guarantor - is a person who takes any responsibility on behalf of the patient. Guarantor promises
payment due to provider, in case insurance or patient does not make payments either partially or fully. If
there is no other person to guarantee, then the patient becomes his/her own guarantor.

• Inpatient Service: An Inpatient visit is one where the patient is admitted in the facility for treatment for
more than 24 hrs.

• Outpatient Service: An outpatient visit is one where the patient is taking the treatment in the facility
within 24 hrs.

• Premium - The periodic payment to an insurance company or a health care plan for health care coverage
is a premium.

• Effective & termed date: Effective date is the date on which an insurance binder or policy goes into effect
and from which time protection is provided. Termed date is the period of time that an insurance policy
provides coverage. Most policies have a one year term (365 days) but many other policies also have a 6
month term. Policy terms can be for any length of time and can be for a short period when the period of
risk is also short.

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 Generic Healthcare Terminology
• Effective & termed date: Effective date is the date on which an insurance binder or policy goes into effect
and from which time protection is provided. Termed date is the period of time that an insurance policy
provides coverage. Most policies have a one year term (365 days) but many other policies also have a 6
month term. Policy terms can be for any length of time and can be for a short period when the period of
risk is also short.

• EOB : It is a statement/document sent by the insurance company to a participant in a health plan, listing
services, amount paid by the plan and details of balance billing if any.

• EOMB (Explanation of Medical Benefits): Same as EOB but received from Medicare.

• Types of Transport:
ALS”: Advanced Life Support (“Flight for Life” Helicopter rides).
BLS”: Basic Life Support (“Normal” rides i.e. Lights, sirens and horns).
SCT : Special Care Transport (Rides requiring a doctor and/or a nurse aboard).

• CMS 1500 (Center for Medicare and Medicaid): A form used for requesting payment from an
insurance company, government organization, or business: Contact your social security office for a claim
form. An expense/medical insurance/travel claim form.

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 Generic Healthcare Terminology
• Primary Insurance: When an insurance company has "primary insurance status," it means that that insurer
will pay on the beneficiary's health-care claims first, while Medicare pays second.

• Secondary Insurance: Protection against a risk or group of risks that is taken out to supplement a primary
policy already held by the insured party. For example, a person might take out a secondary insurance policy to
cover a significant gap or uninsured risk not covered by their existing insurance policy.

• Tertiary insurance: The word "tertiary" literally means "third," so a tertiary insurance policy provides
coverage beyond an insured party's primary and secondary policies. The tertiary insurance company works
with the other two insurers on "coordination of benefits," an agreement on which company will pay which
part of a claim.

• Coordination of Benefits: A system to eliminate duplication of benefits when you are covered under more
than one group plan. Benefits under the two plans usually are limited to no more than 100 percent of the
claim.

• Timely Filing Limit: Timely filing is when an insurance company puts a time limit on claims submission. For
example, if a payer has a 90-day timely filing requirement, that means you need to submit the claim within 90
days of the date of service.

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 Generic Healthcare Terminology
• Out-of-Pocket Expenses: The most money you will be required pay a year for deductibles and coinsurance. It
is a stated dollar amount set by the health insurance company, in addition to regular premiums.

• Co-payment: Another way of sharing medical costs. You pay a flat fee every time you receive a medical service
(for example, $5 for every visit to the doctor). The health insurance company pays the rest.

• Coinsurance: The amount you are required to pay for medical care in a fee-for-service plan after you have
met your deductible. The coinsurance rate is usually expressed as a percentage. For example, if the health
insurance company pays 80 percent of the claim, you pay 20 percent.

• Deductible: The amount of money you must pay each year to cover your medical care expenses before your
health insurance policy starts paying.

• Billed Amount: The amount charged for each service performed by the provider.

• Allowed Amount: Most insurance companies have a fixed payable amount for each of the different services
performed by the physician. This amount is taken from the fee schedule that the carrier is using which may
have been based on the Usual, Customary and Reasonable (UCR) Charges or the Resource-Based Relative
Value Scale (RBRVS) system. The carrier will pay the allowed amount to the physician regardless of how much
the physician has billed.

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 Generic Healthcare Terminology
• Reasonable and customary fees: The average fee charged by a particular type of health care practitioner
within a geographic area. The term is often used by medical plans as the amount of money they will approve
for a specific test or procedure.

• Balance Bill: When a non-participating provider bills the corresponding insurance, the insurance company
only pays the allowed amount. The difference between the allowed amount and the billed amount can then be
billed to the patient. This is called balance billing. The balance bill would therefore be the difference between
the non-participating physician’s billed amount and the corresponding carrier’s allowed amount for a service.

• Veterans Administration: (VA) Veteran Administration “VA” is a government owned hospital for non-active
veterans. The “SSN” of the debtor is required to bill it to the “VA.”

• NPI (National Provider Identifier): It is a number issued by the CMS to all providers in US. This is a unique
number which can be used with any insurance company. This is replacement for PIN.

• TIN (Tax Identification number): It is allotted by IRS (Internal Revenue Services) for the purpose of filling
taxes. TIN is either allotted top an individual or to a group of physician (or business practices). TIN is
mandatory for claim submission and consideration of claim for payment.

• CHAMPVA: CHAMPVA stands for Civilian Health and Medical Program of the department of Veterans Affair.
The program was established in 01/08/73. Veteran is any person who served in the US army during the war;
is no longer in service; has had an horrible discharge from service. The plan is service benefit plan.

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 Generic Healthcare Terminology

• CHAMPUS / TRICARE: CHAMPUS / TRICARE refers to Civilian Health and Medical Program for Uniformed
Services. This refers to the medical benefit program instituted for the Uninformed Services personnel.
Beneficiaries are active / retired personnel and their dependents. The claims are processed by Fiscal
Intermediaries. The beneficiaries can use only an Army Naval Hospital. Service obtained from a civilian
hospital would come under the Head Cooperative Care. This is a health benefit program for all seven
uniformed services
E.g. U.S. Army, U.S. Air Force, U.S. Navy, U.S. Marine Corps, U.S. Coast Guard, U.S. Public Health Service
and the Commissioned Corps of the National Oceanic.

• Medicaid: Medicaid is a Federal Insurance that is run by the states. The Medicaid guidelines hence differ from
one state to another. Medicaid is basically a ‘poor man’s policy’ that came into existence in the year 1965
along with Medicare. Medicaid can never be a primary insurance when the patient has other insurance with
him.

• Medicare: A federal health insurance program established by congress for the elderly, the disabled, and
individuals afflicted with End Stage Renal Disease (ESRD).

• Medi-Cal: Medi-Cal Offers free or low-cost health coverage for California residents who meet eligibility
requirements i.e. household size & your income. Most individuals who apply through Covered California and
enroll in Medi-Cal will receive services through health plans, similar to the majority of the health coverage
options available through Covered California. On January 1, 2014, California expanded Medi-Cal eligibility for
some low-income adults.

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 Flow Chart- Insurance Billed

Copy of EOB will be sent

to Patient

Provider will send a claim

Patient takes the services from our (CMS 1500) to Insurance
client, PCR will be filled. Company for Reimbursement

Patient Provider INS Company

An EOB will be
sent to the
Provider

Client will try to reach out to the

consumer to collect the Patients
Responsibility. If not Successful,
accounts will be forwarded to
collection agency.

CRM

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Flow Chart- No Insurance

Patient takes the services from

our client, PCR will be filled.

Patient Provider

Client will try to reach out to the

consumer to collect the insurance
information. If no insurance is
available, patient will be billed
for the services..

If the patient is unable to pay the

Amt, account will be forwarded
CRM
to collection agency.

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 Flow Chart- Insurance Info Given To CRM

CRM will send correspondence and

Collectors will try calling the
consumers
Account is assigned to CRM
CRM (Collections Patient
Client
Department)
Clients will inform CRM whether
the claim is paid or denied Patient Provides insurance
information to CRM

Account will be
If not eligible,
EOB will be sent to sent to our
collection activities
client (Paid or Denied) Insurance Team
will resume.
for Eligibility check

Consumer`s
CRM`s Insurance
Insurance
Department
Department If eligible CRM will send a claim to
the Consumer`s Insurance company.

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 EOB Calculations
 Participating Providers

Billed Amount - Allowed Amount = Contractual Adjustment

Billed Amount - Contractual Adjustment = Allowed Amount

Allowed Amount + Contractual Adjustment = Billed Amount

Insurance Company Payment + Patient Responsibility = Allowed Amount

Insurance Company Payment + Contractual Adjustment + Patient Responsibility = Billed Amount

Co-payment + Deductible + Co-insurance = Patient’s Total Responsibility

 Calculation for Non-participating Provider’s EOB calculations

Patient Responsibility = Co-payment + Deductible + Co-insurance + Balanced Bill

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