Mapping the Revenue Cycle in Hospitals from Start to Finish

A hospital’s financial health depends on a seamless revenue cycle that spans every step of the patient journey. Every step, from scheduling an appointment to posting the final payment, offers a chance to boost efficiency and balance clinical excellence with financial sustainability.

Mapping this cycle in detail is beneficial for administrators, clinicians, and revenue cycle teams. It helps them understand where inefficiencies or errors may occur and where revenue leakage can be prevented. It looks something like this:

1. Patient Registration: Pre-Claim Phase

The revenue cycle begins before care is delivered. Registration and intake establish the foundation for clean claims. Errors here can cascade into claim denials and payment delays later. 

Patient Registration & Intake

In non-emergency situations, registration should occur before a patient sets foot in the practice. It involves collecting: 

• Patient demographics
• Insurance information
• Consent forms
• Medical history
• Current medications
• Emergency contacts
• Purpose of visit

All of this information should be put into the patient’s medical record.

Insurance Discovery & Verification of Eligibility & Benefits

Use this newfound information to ensure insurance coverage is active. Verify that both the provider and the patient understand the terms of the insurance agreement. Identify co-pays, deductibles and coverage limitations. Confirm the plan is active on the date of service and expected services are within the scope of coverage.

Additionally, now is a good time to conduct insurance discovery to find unknown or hidden sources of secondary coverage.

2. Patient Check-In & Documentation

This step validates that the patient provided accurate information in step one. If a patient comes in for treatment and reports something different about their information, staff can address the discrepancy sooner, before it snowballs into a larger issue.

Admission, Check-In, & Encounter Documentation

At admission or check-in, verify the patient's identification and insurance cards and clarify payment terms. Collect any co-pays or deposits before service. Start proper encounter documentation in the patient’s record for easier downstream coding.

Review Utilization & Management of Case

Hospitals must confirm that treatments align with payer requirements for medical necessity. Utilization review helps optimize care delivery while ensuring compliance with payer contracts. Effective case management prevents denials related to overutilization or insufficient documentation.

3. Charge Capture & Medical Coding

This stage converts the care delivered into billable data for claims submission. Every department must accurately document services and ensure those records are available for coding. Hospitals use this information to assign appropriate billing codes and generate charges for payer review.

While medical coding itself is handled within a hospital’s internal system or through certified coding staff, the accuracy of this step directly affects claim acceptance and reimbursement timelines. Consistent documentation and timely charge capture help reduce missing charges and prevent downstream denials.

4. Claims Submission & Hospital Contract Oversight

Now that all information has been documented, it’s time to submit the claim. The faster a claim is submitted, the quicker the provider will receive payment from the insurer. But the claim must be accurate above all else. Claims submitted with errors will be denied, rendering the quick submission moot.

Validate & Submit Claims to Payers

Put all services, codes and charges into an official submission format as designated by the payer. Ensure claims have accurate information and necessary documentation (aka “clean” claims) before submission. Automated claim scrubbers can be a massive help by flagging incomplete or inconsistent information.

Manage Hospital Payer Contract

Revenue cycle teams must understand each payer’s reimbursement policies and fee schedules. Strong contract management ensures hospitals receive accurate payments and can negotiate favorable terms to support sustainability.

5. Post-Submission: Handling Reimbursements & Exceptions

Once a claim is submitted, it can take 30-180 days to receive a response from the payer. Processing times are impacted by factors like the severity of the patient’s condition and the current number of claims the payer is receiving from hospitals. 

Once the payer receives a claim, the insurer evaluates the provided information and decides whether to pay in full, pay partially or deny the claim altogether.

Remittance Process & Posting Payment

Once the decision has been made, the provider receives a response noting what has been paid or adjusted (known as remittance advice (RA) or electronic remittance advice (ERA)) and an explanation of benefits.

If the payment is denied or the hospital is not satisfied with the provided reimbursement, the process moves to denial management. If the hospital is satisfied, the remaining portion of the bill (if any exists) is considered the patient’s responsibility and can be posted to their account.

Denial Management & Appeal Workflows

Denials can occur due to coding errors, missing documentation, lack of medical necessity or other billing issues. Some denials are inevitable, but effective workflows minimize their impact.

Hospitals should track denial trends, investigate why claims are denied and appeal when justified. Appealing involves resubmitting correct claims to receive reimbursement. Appeals are often slow-going and should be tracked to ensure they aren’t lost in the revenue cycle. The faster claims are corrected and submitted for appeal, the more efficient the revenue cycle becomes.

6. Patient Financial Services & Payment Collections

Now that insurance has covered its portion of the account, providers can generate patient invoices for the remaining balances.

Follow Patient Billing Best Practices 

Best practices include, but are not limited to:

• Providing clear and upfront billing estimates ahead of service.
• Offering flexible payment methods, both online and in-person.
• Offer payment plans to make it easier to settle accounts over time.
• Maintaining patient-friendly billing statements, encouraging prompt payments that clearly show what was charged, what was covered and what the patient owes.

Collections & Compliance with Medical Debt

Hospitals must comply with state and federal guidelines for fair collections. Send collections reminders via the patient’s preferred communication method, whether it be phone, email, patient portal or physical mail. If the patient does not respond after a specified period of time, consider involving a third-party collection agency.

7. Enterprise A/R Management & Revenue Recovery

Not all accounts will be paid quickly. It’s essential to keep track of which accounts carry a balance, and how long they remain in accounts receivable (A/R) status. The longer an account sits in A/R, the less likely it is to ever be paid. 

Follow Up on Hospital A/R

Unpaid accounts require consistent follow-up. Regularly review A/R aging reports. If the issue is with the payer, don’t be afraid to reach out and follow up. If the issue is with the patient, contact them via their preferred method and offer to clarify billing questions or set up a payment plan.

8. Analyze Your Metrics & Data for Improvement Insights

Generating performance reports is essential for compliance and external audit documentation, but it’s also key to conducting internal audits for improvement. 

Understand & Leverage Important Hospital Revenue Cycle Metrics

Key metrics include:

• Days in A/R: Measures collection speed
• Denial Rate: Indicates claim quality and documentation effectiveness
• Clean Claim Rate: Reflects the accuracy of submitted claims
• Net Collection Rate: Shows revenue captured versus revenue expected

Use insights from these metrics to make decisions and pinpoint inefficiencies to enhance performance. Always focus on continuous improvements throughout all steps of the revenue cycle.

Improving the Revenue Cycle

A hospital’s revenue cycle is not a single event. Rather, it’s a sequence of interconnected steps where each phase carries financial opportunities and implications. By mapping the cycle from start to finish, hospitals can better understand the patient journey and begin to identify areas for improvement.

Office Ally offers a suite of solutions designed to streamline every phase of the hospital revenue cycle. From eligibility verification to claims submission and insurance discovery, our tools give hospitals the visibility and automation they need to recover more revenue while keeping patients at the center of the practice.

‍Map a revenue cycle that drives both clinical excellence and financial strength. Learn more about Office Ally’s revenue recovery tools and clearinghouse solutions.