Sample Health Care Research Paper on Healthcare Reimbursement and the Revenue Cycle

Reimbursement and Revenue Cycle

            Healthcare organizations are unique in the way they are compensated for the services that they render. According to Harrington (2016), there is no other industry with as sophisticated reimbursement function as healthcare organizations. Surprisingly, the level of complexity has gone up substantially over the last two decades. There are four major reasons why healthcare organizations’ reimbursement process is completely different from other industries. To begin with, most payments are not made by the patients themselves, but by third parties on behalf of the patients. Secondly, payment for similar services may change depending on the type of the third party making the payment on behalf of the patient. Thirdly, the determination of the amount to be paid to the third party is a complicated process, dependent on some pre-established rules. Lastly, the government, which is often the largest payer sets the rules for payment of the services rendered to its beneficiaries without negotiation. Effective billing, coverage, and coding are the three critical components of a robust reimbursement plan. Harrington (2016) observed that healthcare organizations could lose significant sums of revenue because of failing to code the patient’s claims accurately. For instance, is the physician forgets to code an additional diagnosis, this will result in the assignment of a lower cost, and ultimately lost revenues. The billing department professionals have to teach the administrators and physicians in every department the importance of coding as much of the organization’s revenue is related to coding. All the healthcare administrators have to understand that they contribute to the overall financial health of the organization in which they work.

            The revenue cycle is a combination of revenue generation, processing claims, and payment. It involves all the clinical and administrative works that lead to management, capture, and collection of revenue from the patients. In simplest terms, the revenue cycle is the whole life of a patient’s account from creation to payment. The use of technology and other management tools helps in tracking the claims, as well as identifying any issues quickly, leading to a seamless flow of revenue (Harrington, 2016). Healthcare organizations follow eight steps in ensuring there is a frictionless flow of revenue. The steps include scheduling, POS (point of service) registration, case management, and utilization review, charge capturing and coding, submission of claims, third-party follow-up, processing remittance, and posting payment. The revenue cycle extends beyond ensuring that the client’s account is zero. Essentially, the cycle starts the moment the patient calls to seek an appointment and comes to an end when every outstanding payment has been collected. Harrington (2016) noted that the objective of the revenue cycle is to ensure that no uncollected revenues remain after the patient has been discharged from the healthcare facility. It also ensures that claims are done in an effective way to ensure that the relationship between the client and the healthcare facility is not ruined. Additionally, the revenue cycle ensures that the third-party reimbursements are done accurately and promptly to avoid affecting the operations of the healthcare facility.

Departmental Impact on Reimbursement

            The management of the revenue cycle largely affects the profitability of the healthcare organization. According to Herbert (2012), if it is not properly managed in the departments, the billing costs increases while the collection rates drop dramatically. As a result, the accounts receivables increase making the value of acquisition unsustainable. Effective reimbursement management at the departmental level helps the healthcare organization to achieve self-control as well as establishing close ties between the physicians and the patients.

The reimbursement billing is based on an accurate and a timely use of codes that generate the ambulatory classification of payment groups. Regular audits at the departmental level are crucial to ensure that an effective coding system is in place. Furthermore, periodic audit follow-ups are critical to the success of the reimbursement process for the entire healthcare facility (Herbert, 2012). Among other things, the audits help the organization in identifying, reviewing, and rectifying improper reimbursement practices that have impacts on the profits healthcare facility’s profits. Moreover, the audit checks help in highlighting possible compliance concerns as well as ensuring that the reimbursement procedures are up to date to handle accuracy and quality issues of the coding and reimbursement processes.

Billing and Reimbursement

            As the number of patients responsible for out-of-pocket cost increases, the facility must ensure that no uncollected revenues remain. However, the facility must be careful not to squeeze the patients as hard as they may seek healthcare in a rival facility the next time they require medical attention. Mastering the art of collecting the maximum amount of patient’s data and revenue at the point of service is crucial as it eases the process of coding (Harrington, 2016). Patient’s data including the cell phone number, gender, age, location, email, physical address, guardians, among others helps the facility to maintain the conversation with the patient before and after the service. Good customer service is key in maintaining contact to understand the patient’s responsibility. It helps the healthcare facility to devise streamlined means of payment collection from the patients. Having a well-trained, and efficient billing team that appreciates the importance of integrity and quality of patient’s data that they deal with on a daily basis is crucial for the facility in maintaining financial stability in the long-run.

            Due to the structural changes, both in the private and public sector, putting in place, effective third-party policies are crucial in ensuring the survival of healthcare facility. Billing the third-party payers for the services rendered to the client needs proper and accurate documentation. The CPT codes refer to the services that the patient receives in healthcare. The codes are predominantly crucial in the third-party billing as they are used in the determination of reimbursement amount to be paid by the third-party payer. To maximize reimbursement from third-party payers, the healthcare administrators and physicians must understand the coding process (Harrington, 2016). Moreover, the facility should develop, execute, and maintain third-party billing procedures with the support of external billing experts through ongoing guidance and training. The third-party follow-up procedure includes assigning a dedicated staff who is conversant with insurance regulations to maintaining immediate contact with the third-party payer as well as to check on the status of every claim. The dedicated staff works with the audit team to produce monthly reports for tracking collection trends. The assigned staff and the audit team periodically reviews the third-party payer procedure to maximize the third-party reimbursement.

Marketing and Reimbursement

            There are four fundamental managed care negotiation strategies for healthcare facilities to execute. According to Casto, Forrestal & American Health Information Management Association (2015), these strategies include conducting trend analysis to understand the market dynamics, analyzing the current situation, opening the communication lines for both sides, and exercising caution of a myopic view of the market. There are three essential ways of handling negotiation differences including domination, compromise, and integration. The hardest part is to find the integration between the third-party payer and the healthcare facility. As a result, the healthcare provider needs to be proactive to escape flawed negotiation outcome. All the healthcare providers involved in providing nursing care, primary healthcare and specialty care including physician assistants, medical doctors, and nursing practitioners have an important role to play with regards to managed care contracts (Herbert, 2012). Since each of these practitioners have the necessary training and experience in the healthcare setting, their negotiation skills are crucial in the signing of the medical care contracts. The managed care contracts not only affect the delivery of healthcare services, but also the reimbursement and billing process. The managed care contracts result in decreased expenditures to patients. To the healthcare provider, the managed care contracts result in reduced revenue collection cost.

            Since the coding and billing department deals with sensitive data on a daily basis, it needs to be equipped with the necessary resources including qualified and personnel and information systems for capturing patients’ and third-party payer’s information on a regular basis. The information systems enable the billing staff to facilitate secure physical and electronic transfer of sensitive medical data between the interested parties (Herbert, 2012). Failing to comply with the ethical standards and regulations attracts investigation from federal agencies ad could result in heavy fines. The standards are set by health insurance and Accountability Act, Inspector general’s office, and Healthcare Reforms Act. In a nutshell, the regulations set by these entities are some of the critical security, filing-related, and privacy rules that every billing expert needs to be conversant with.


Casto, A. B., Forrestal, E., & American Health Information Management Association. (2015). Principles of healthcare reimbursement. Chicago, Illinois : AHIMA Press

Harrington, M. K. (2016). Health care finance and the mechanics of insurance and reimbursement. Burlington, MA: Jones & Bartlett Learning.

Herbert, K. (2012). Hospital reimbursement: Concepts and principles. Boca Raton, FL: CRC Press.