How do medical billing and coding regulations affect reimbursement in a healthcare organization? After reviewing the steps in the revenue cycle, what are the various tasks that the different healthcare departments do to drive the reimbursement process?
Review the short paper prompt within your learning environment discussing reimbursing concepts, then complete the following:
HCM 345
Module One:
Healthcare Finance and
the Revenue Cycle
Course Description
• This course will explore some of the major issues facing the healthcare
industry and the effect that public policy and business environment have
on a healthcare organization.
• The emphasis is on the supply and demand theory, reimbursement
systems, managed care, charge-master management, case-mix
management, diagnosis-related group (DRG) prospective payment,
insurance, Medicare, Medicaid, governmental regulations, accessibility,
eligibility, budgeting, and planning.
What Is Reimbursement?
• To reimburse is to repay someone (Reimburse, 2021). The “someone” in
this case is the healthcare organization.
• The “repayment” for healthcare organizations comes from third-party
payers such as insurance companies or the patient.
• If departments do not follow the guidelines put into place or do not
capture the necessary information, it can be detrimental to the
reimbursement system.
Patient Financial Services
• There are many variations of the name of the group that focuses on the
revenue cycle within a healthcare organization.
• For this course, the department will be referred to as patient financial
services (PFS).
Role of PFS
• Important roles for PFS personnel include the following:
– Monitoring the reimbursement process
– Analyzing the reimbursement process
– Suggesting changes to help maximize the reimbursement
• One way to make this process more efficient is by ensuring that the
various departments and personnel are exposed to the necessary
knowledge.
Departmental Expectations
• Much of what happens in healthcare is about understanding the
expectations of the many departments and personnel within the
organization.
• Reimbursement drives the financial operations of healthcare
organizations.
• Each department affects the reimbursement process regarding timelines
and the amount of money put into and taken out of the system.
Healthcare Regulations and Health Reform
• There are numerous regulations found in healthcare.
• Regulations are there to ensure the privacy and integrity of patient
records, provide incentives to providers, and to reduce or eliminate the
incidents of fraud and abuse.
• Regulations will be covered to facilitate the understanding of why and
how they are used.
• They also create rules and guidelines to support health reform with
the goals of increasing quality and decreasing cost.
Regulatory Bodies and Entities
• Financial regulatory bodies such as the Healthcare Financial
Management Association (HFMA), the Association of Credit and
Collection Professionals (ACA International), and the Consumer
Financial Protection Bureau (CFPB) provide guidance for
strengthening of financial protections for patients, equitably
resolving the patient portion of medical bills, and improving the
economic well-being and health of Americans.
The “Language” of Healthcare
• Healthcare has its own language, as it is full of clinical and billing
acronyms, terminologies, and classification systems.
• Upon completing this course, students will understand the reimbursement
side of healthcare and the language that is frequently used.
• In addition, students will learn to use informational and research tools to
make effective management decisions.
What Is Healthcare Finance?
• The mission of healthcare organizations is to provide quality care to
patients.
• The mission of healthcare finance is to make sure that capital is
available to continue providing that quality care.
• Finances in healthcare pay for salaries of caregivers, diagnostic
equipment, and other items required to provide care.
What Makes Healthcare Finance Unique?
• A patient is a healthcare consumer. In other businesses, consumers assess who
to purchase products or services from, what products or services to choose, and
which products or services are within their desired budget to spend.
• In healthcare, services are often provided before money is collected and there is
little opportunity to estimate costs.
• There is also no option to “shop” for better prices, access is not equitable for all,
and patient consumers are not able to return the products or services—one
cannot put an appendix back in the patient!
• Healthcare is evolving to become more consumer-focused through such actions
as enabling remote care/ telehealth, utilizing analytics to estimate patient
contribution to costs, and developing coordinated care networks.
How Is Financial Data Used?
• Financial data is used to formulate strategies, monitor performance,
and make decisions.
• Financial data is tracked throughout the entire revenue management
cycle.
• Financial data is governed by accounting and revenue integrity
authorities.
Revenue Cycle
• The revenue cycle is one of the most important financial processes in
healthcare organizations. It encompasses all phases of the patient service life
cycle from the time a patient account is registered to the time the account is
paid in full.
• Information gathered from clinical and administrative functions throughout the
patient’s encounter are used to determine reimbursement.
• Charges for services and procedures are captured and added to the patient’s
bill. These charges are processed for payment and are referred to as “claims”
processing.
• A medical claim is an official request for payment that a patient or their
healthcare provider submits to a health insurer (Claim, 2021).
Revenue Cycle (continued)
• When the patient accumulates charges for his or her services, the
claims are filed to get payment, or reimbursement, for these services.
• Before the claims can be submitted, codes need to be applied to the
patient encounter.
• Claims need to be filed promptly in order for payments to be received in
a timely manner.
• The codes are determined according to guidelines and are applied by
the health information management (HIM) personnel who are trained in
coding.
• This course will discuss coding from the perspective of non-HIM professionals.
Revenue Cycle (continued)
• Claims can be denied or paid. There is software to help ensure that the
claims are error-free and will be paid promptly.
– If denied, follow-up must happen to refi le promptly.
– If paid, the patient is billed for the remaining balance or the balance is written
off according to negotiated terms.
• Reimbursements contribute to cash flow for the healthcare organization.
Cash is essential for financial operations and sustainability.
• The revenue cycle continues throughout the patient care, through the
discharge, and continues on until the patient billing is brought to a zero
balance.
Payers
• There are various types of payers, including private insurance, managed
care organizations, the government, and the patient.
• They all have different claim-filing guidelines.
• PFS personnel can become experts at filing timely claims with each
payer.
Customer Service Excellence
• As previously mentioned, a patient does not usually choose to be a patient.
• A patient comes into the healthcare system with much anxiety.
• The PFS personnel have an opportunity to provide exceptional customer service, which
can relieve some of the anxiety and “make or break” the patient experience.
• A friendly face, courtesy, and respect go a long way toward putting a
• patient at ease.
• Patients know that their charges may result in a large amount of money owed, and the
expense is usually not part of their personal budget.
• PFS personnel can help them find ways to pay for their services, reducing their stress.
Conclusion
• Module One highlights the following:
– Healthcare finance and what makes it unique from other businesses
– Revenue cycle
– Customer service
• Module Two will continue the discussion of reimbursement by introducing
financial management and coding (from a non-coding professional
viewpoint)
References
Claim. (2021). In HealthCare.Gov’s online dictionary. Retrieved from http://
https://www.healthcare.gov/glossary/claim/
Reimburse. (2021). In Merriam-Webster’ s online dictionary. Retrieved from http://
www.merriam-webster.com/dictionary/reimburse
HCM 345
Module Two:
Financial Management
and Coding
What Is Financial Management?
• As discussed in Module One, the mission of healthcare
organizations is to provide quality care to patients, and the
mission of healthcare finance is to make sure the finances
are available to continue providing that quality care.
• Financial management is the coordination of the monetary
resources within a healthcare organization.
How Are Monetary Resources
Coordinated?
• Financial transactions occur at many places within a
healthcare organization.
• The coordination usually occurs within the management or
leadership level of the organization.
• The coordination efforts require using the management
process, including planning, organizing, staffing,
coordinating, and controlling.
• To learn more about the management process, review this
article.
Financial Accounting
• Decision makers use financial information to guide the
future of the healthcare organization.
• Financial data is reported on financial statements to provide
information on certain aspects of the financial viability of the
organization.
• Financial accounting focuses on providing information to
external stakeholders; managerial accounting focuses on
internal stakeholders.
Financial Accounting (continued)
• There are many aspects of financial accounting, and many
terms that will be further defined. Two of these are as
follows:
– Revenues: transactions that create money coming into the
organization (i.e., income). For healthcare, this would be patients
receiving procedures or services that generate charges.
– Expenses: transactions that create money going out of the
organization (e.g., payroll or the purchase of equipment and
supplies).
Financial Accounting (continued)
• Managers submit budget requests on an annual, or other,
basis to estimate the spending in their departments.
• Capital expenses (those that expand the scope of the
business or have a useful life of over a year) are part of the
long-term strategic plan.
• Budgets are reviewed regularly for variances (differences
between the amounts budgeted and the actual
expenditures).
Financial Accounting (continued)
• Accounting has many regulations that are independent
of the healthcare regulations.
• There are common rules or standards used for financial
reporting.
• Financial reports should be audited by external,
independent personnel.
• Internal controls should be implemented for financial
transactions to keep people honest.
Health Record
• When a patient is admitted or visits a healthcare facility, a
health record is created or updated.
• This health record, or “chart,” contains comprehensive
patient information such as demographics, charges, health
information, procedures, and diagnoses.
• Codes for procedures and diagnoses are needed for the
health record and reimbursement.
Health Record (continued)
• Health information management (HIM) personnel will
determine the correct codes.
• As is common in healthcare, coding has a set of standards
and regulations.
• Most healthcare provider offices (72.3%) (Centers for
Disease Control and Prevention, 2021) and non-federal
acute care hospitals (96%) (Office of the National
Coordinator for Health Information Technology, 2017) have
possession of an EHR certified by HHS. Incentives, such
as Promoting Interoperability Programs, have been put in
place to continue expanding the usage.
Conclusion
• Module Two introduces financial management and coding.
• Module Three will continue the discussion on
reimbursement:
– Claims Processing
• Brief history
• Appeals process
• Form completion
– Governmental payers
Reference
Centers for Disease Control and Prevention. “Electronic Medical Records/Electronic
Health Records (EMRs/EHRs)” https://www.cdc.gov/nchs/fastats/electronicmedical-records.htm. October 2021.
Leonard, K. (2019). Five functions of management and leading. Houston Chronicle.
Retrieved from http://smallbusiness.chron.com/five-functions-managementleading-56418.html
Office of the National Coordinator for Health Information Technology. ‘Non-federal
Acute Care Hospital Electronic Health Record Adoption,’ Health IT Quick-Stat
#47. https://www.healthit.gov/data/quickstats/non-federal-acute-care-hospitalelectronic-health-record-adoption. September 2017.
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