Though the top priority in your hospital or practice is delivering quality care to your patients, generating revenue is just as vital to maintaining your operations. Healthcare revenue cycle management (RCM) is a frequently used acronym for monitoring finances. RCM refers to how all healthcare facilities track, analyze, manage and collect revenue for their services. 

Improved patient revenue can help you create better patient journeys and offer more services to meet their needs. A solution that creates a more unified and integrated backend for your facility to collect more patient revenue can efficiently simplify your RCM process. First, it’s essential to familiarize yourself with the key terms, definitions and acronyms associated with RCM.

12 Common Healthcare RCM Terms to Know

We’ve compiled some of the top medical billing and RCM terms in this guide for easy review. 

1. Claims Denials

Patient claims denials occur when an insurance company or carrier refuses to pay for healthcare services rendered. After a claim is processed and reviewed, receiving a denial means the healthcare provider or facility will not be reimbursed.

2. Claim Rejections

A rejected medical claim occurs when insurance carriers find missing or incorrect information before they process the claim for payment. The claim will not be denied if errors can be easily resolved. For example, a provider can resubmit their rejected claim by entering the correct information or filling out required fields as needed. Rejected claims won’t be considered received until the provider resubmits the correct, completed claim.

3. Coordination of Benefits (COB)

Coordination of benefits (COB) refers to a set of rules that insurance companies use to determine the order and the extent to which multiple health plans will cover a patient’s medical bills. If an individual is covered by more than one health plan, insurance companies rely on COB rules to decide which plan is primary and will pay first for covered medical services or prescription drugs. 

They will also decide what the second health plan will pay after the first has paid. COB is important to avoid duplicate payments for the same service.

4. Explanation of Benefits (EOB)

An explanation of benefits (EOB) is a statement provided by a patient’s health insurance plan that describes the charges for their healthcare visit and details their coverage. An EOB is not a bill but an explanation that helps patients understand what medical services or treatments are covered. An EOB will also provide information on expected copays, coinsurance and contract agreements. 

An EOB may also be referred to as an electronic remittance advice (ERA), which is a digital version of a paper EOB statement. 

5. Good Faith Estimate

A good faith estimate refers to a statement that lists specific details and expected charges for healthcare services. Providers must give these estimates to patients who have no insurance or are not using insurance. The estimate must include an itemized list of related care services, such as facility fees, hospital fees or the cost of a surgery. 

6. HIPAA-Compliant Payments

The United States Health Insurance Portability and Accountability Act (HIPAA) of 1996 is a federal law that outlines patient privacy and healthcare data security standards. All healthcare organizations and facilities are required to comply with HIPAA regulations and implement physical, network and process security measures. This includes using HIPAA-compliant payment methods to protect personal patient information.

7. Insurance Adjudication

Insurance adjudication refers to the review stage in RCM, during which the insurance company reviews the claim and determines whether they will pay for the services or deny the claim. Once a healthcare provider submits a claim, they will be notified that it’s pending review by the payer’s adjudication team for accuracy, compliance with the insurance policy and medical necessity. 

Any remaining balance after insurance reimbursement is sometimes referred to as a post-adjudication balance or post-adjudication patient responsibility. Post-adjudication is the final phase in the claims processing cycle.

8. Insurance Eligibility Verification

Patient eligibility and benefits verification is a procedure that healthcare practices use to confirm a patient’s coverage, deductible, copayments and coinsurance with their insurance company. Insurance verification is a key component of healthcare RCM as it helps healthcare facilities determine a patient’s coverage status before their appointment. 

It also helps ensure that providers submit clean, correct claims and reduce eligibility-related rejections and denials. 

9. Patient Responsibility

In a healthcare RCM process, patient responsibility highlights a patient’s obligation to pay for the healthcare services, treatment and medication they receive. These details are outlined in a patient financial responsibility agreement, which describes the insurance coverage and payment information. Patients must accept responsibility for noncovered or denied charges, copays, deductibles and coinsurance not covered by their health plan. 

10. Patient Collections 

Patient collections refer to a vital metric in the healthcare RCM process that measures the balances a healthcare organization collects. Efficient patient collection is important for an efficient RCM, as unpaid or delayed payments can diminish cash flow. A patient collection rate can be determined by dividing the total amount of patient payments by the amount of outstanding patient balances. A high patient collection rate indicates an efficiently managed healthcare RCM.

11. Prior Authorization (PA)

Prior authorization (PA) refers to the approval that health plans require for patients to receive coverage for certain medications or services. This term may also be called prior approval, pre-authorization or precertification. PA helps insurance companies determine whether a healthcare service is medically necessary and should be covered. 

However, while obtaining PA confirms that the proposed service is eligible for coverage based on the patient’s health plan, it does not guarantee that the treatment will be covered. PA is generally required before a patient receives the service, unless in case of emergency.

12. Value-Based Reimbursement

Also referred to as value-based purchasing (VBP), value-based reimbursement is a method that connects insurance payments to the quality — instead of quantity — of the healthcare services provided. This reimbursement model aims to incentivize cost efficiency and payment for care as exhibited by patient health outcomes. Value-based programs reward providers for providing effective treatments and maintaining long-term patient satisfaction.

Maximize Your RCM With Millennia’s Patient Payment Solutions

Now that you’re more familiar with common healthcare RCM terms, it’s time to simplify patient revenue even further. With Millennia Patient Payment Solution, you can streamline patient financial processes and engage patients to generate more revenue. From pre-visit patient intake and insurance eligibility determination to post-visit solutions like a patient payment portal and mobile pay, Millennia’s solution streamlines the patient financial journey from intake to final payment. 

At Millennia, our company goals reflect the cycle of building digital engagement, increasing revenue for providers and developing better patient journeys. Our user-friendly technology reduces the amount of time you and your staff spend on manual, repetitive tasks and more time engaging with your patients. Schedule a consultation today to learn how Millennia can help you increase patient self-pay revenue.