By Optimus Billing Solutions Editorial Team · Published · Last reviewed
Key takeaways
- RCM runs from scheduling to the last patient payment. Billing is only the middle.
- Most denials start at the front end, in eligibility and registration, not at claim submission.
- Four numbers tell you how it is going: clean claim rate, denial rate, A/R days and net collections.
- Outsourcing makes sense when billing is stretched. It does not when your own team already performs well.
What does revenue cycle management cover?
Revenue cycle management covers the whole path money takes from a patient's appointment to your bank account. It has a front end (before the visit), a middle (the visit and the claim) and a back end (payment and follow-up).
A practice that treats billing as one task usually loses money between the steps. A practice that manages the cycle sees where.
The steps of the revenue cycle
- Scheduling and registration. Collect accurate patient and insurance details. A wrong member ID here becomes a denial three weeks later.
- Eligibility verification. Confirm the patient's coverage and benefits before the visit, including copays and whether a prior authorization is needed.
- Charge capture and coding. Turn what happened in the visit into standard codes: CPT for procedures, ICD-10-CM for diagnoses and HCPCS for supplies and some services.
- Claim scrubbing and submission. Check the claim for errors, then send it to the payer electronically.
- Payment posting. Record what the payer paid and what the patient owes. Electronic remittance advice (ERA) is the payer's electronic explanation of payment, and it can be posted automatically.
- Denial management. Find out why a claim was refused, fix it and resubmit or appeal.
- Patient billing and collections. Send clear statements and make paying easy.
- Reporting. Track results so the next month is better than the last.
The code sets have different owners. The American Medical Association maintains CPT, and the Centers for Medicare & Medicaid Services (CMS) maintains HCPCS and publishes Medicare payment rules.
Revenue cycle management vs medical billing
Medical billing is the claim-and-payment portion of the cycle: creating the claim, sending it and collecting payment. Revenue cycle management includes billing and everything around it, such as eligibility checks, credentialing, denial prevention and reporting. A practice can outsource billing and still have gaps at the front end, which is where most denials begin.
The four numbers that show how your cycle is performing
- Clean claim rate. The share of claims a payer accepts and pays on the first submission. Optimus reports a 98% clean claim rate.
- Denial rate. The share of claims a payer refuses. Ours is 1.8%.
- A/R days. Accounts receivable days is the average number of days money is owed to you before it is collected. Lower is better, and it is the figure we watch most closely.
- Net collections. What you actually collect compared with what you were owed after contractual adjustments.
If you do not know these four numbers for your practice, that is the first fix. A free billing audit will produce them.
Where revenue cycles leak
Most losses are small and repeated rather than dramatic:
- Insurance not verified before the visit
- Prior authorizations missed
- Codes that do not match the documentation
- Claims submitted late, past a payer's filing deadline
- Denials never appealed
- Patient balances sent late or unclear
Fixing these at the front end is cheaper than appealing them later.
When to outsource revenue cycle management
Outsourcing usually helps when billing depends on one or two people, when A/R is aging, when denials keep repeating or when you are adding providers or locations. At Optimus, billing starts at 2.9%* of collections, so the cost rises and falls with your revenue.
When outsourcing is not the right fit
If your team already runs at or better than a 98% clean claim rate and 21 A/R days, you do not need us. If you only want billing software and plan to keep the work in-house, a software vendor is the right call. If your volume is very low, a percentage of collections may not cover the work, and we will tell you so.
How Optimus handles the revenue cycle
We work inside your existing EHR or practice management system, so there is nothing to migrate. Certified billers handle eligibility, scrubbing, submission, posting and denials, and you see the numbers on a live dashboard. Learn more about our medical billing services or see pricing.
This article is general information, not legal or compliance advice. Payer rules and regulations change, so confirm current requirements with the payer or the governing agency.