Staff Series – R1 M1: How the Revenue Cycle Works
RCM Foundation Series  ·  Continuity Practice Partners Round 1  ·  Module 1 of 5

How the Revenue Cycle Works

Round 1 — Module 1  ·  The big picture before the detail

Your name will appear on your certificate when you complete this round.
Round 1 Progress
1
How It Works
2
Financial Clearance & Check-In
3
Charge Capture & Coding
4
Claims & Submission
5
Payment, Follow-Up & Collections
Overview

Everything connects to something else

The revenue cycle is the full sequence of steps a practice takes to get paid for the care it provides. It starts before the patient walks in the door and it ends when the balance on the account is zero. Every person on the team touches some part of it.

That is not an exaggeration. When a patient calls to schedule, the revenue cycle starts. When you verify insurance, collect a copay, or send a statement, you are in the revenue cycle. When a claim gets denied because a piece of information was missing at check-in, the revenue cycle broke — and it broke at the front, not in the billing office.

Understanding how the cycle works — all the way through — makes your part of the job easier. When you know what happens downstream from your task, you understand why accuracy matters right now.

The Cycle

Ten stages, two teams

The revenue cycle runs in ten stages. The first five happen at the front of the practice — before and during the patient visit. The last five happen in the billing office after the visit is complete.

1
Financial Clearance
Registration, insurance verification, and authorization before the first visit. This is where the billing foundation is set.
2
Check-In
Confirming patient information, updating insurance, and collecting the patient’s portion at the time of service.
3
Patient Care
The clinician delivers treatment, documents the visit, and the next appointment is scheduled.
4
Coding
Procedure codes (CPT) and diagnosis codes (ICD-10) are assigned to accurately represent what was done and why.
5
Charge Capture
Charges are submitted from the clinical side to billing, received, and reconciled to make sure nothing is missing.
6
Claims
Claims are scrubbed for errors, released to the payer, and any rejections from the clearinghouse are corrected.
7
Payment Posting
Insurance payments arrive and are posted to each account. Electronic remittance advices (ERAs) are applied; manual posting handles the rest.
8
Follow-Up
Unpaid or underpaid claims are worked. Denials are appealed or corrected. Payers are challenged when they pay less than they should.
9
Patient A/R
Patient balances are billed via statements, questions are answered, and remaining balances are collected or sent to collections.
10
Reporting
Key performance indicators (KPIs) measure how well the cycle is running. Trends are tracked and problems are caught early.
Your Role

Front office and billing: different tasks, same goal

The ten stages split naturally between two teams. Both are responsible for the practice getting paid. The difference is where in the cycle each team works.

Front Office
  • Verify insurance before the visit
  • Secure authorizations
  • Collect copays and balances at check-in
  • Keep patient information current
  • Schedule follow-up appointments
Billing Office
  • Scrub and submit clean claims
  • Post insurance payments
  • Work unpaid and denied claims
  • Send patient statements
  • Track and report on AR performance

Errors made at the front of the cycle show up as denied claims at the back. A missing authorization, an incorrect insurance ID, or a copay not collected at check-in can each delay payment by weeks — or prevent it entirely. The two teams are more connected than they may appear.

Key Terms

Words you will see in every module

Claim

A formal request for payment submitted to an insurance company after a patient receives care. It includes the patient’s information, the services provided, the codes, and the amount billed.

Payer

The insurance company or government program responsible for paying the claim. Medicare, Medicaid, and commercial insurance carriers are all payers.

Clearinghouse

A third-party company that sits between the practice and the payer. Claims are sent to the clearinghouse first, where they are checked for basic errors before being forwarded to the payer. If a claim has a problem, the clearinghouse sends it back as a rejection.

ERA — Electronic Remittance Advice

The electronic file a payer sends to explain how they processed a claim — how much they paid, what adjustments they made, and why. The ERA is what gets posted to the account in the billing system.

AR — Accounts Receivable

All of the money owed to the practice that has not yet been collected. AR includes both what insurance owes and what patients owe. Managing AR is one of the most important ongoing functions in the billing office.

Authorization

Approval from a payer before treatment can begin. Not every payer or service requires one, but when it is required and missing, the claim will be denied. Securing authorizations is a front-office function with direct billing consequences.

You do not need to memorize definitions right now. As you move through the modules, these terms will come up repeatedly in context. By the end of Round 1, they will feel familiar.

Check Your Understanding
Answer all three questions correctly to unlock Module 2. Select an answer to see immediate feedback.
1. A patient’s claim is denied because the authorization was never obtained before treatment. Which stage of the revenue cycle did this error occur in?
2. What is the purpose of a clearinghouse?
3. A front-office staff member forgets to update a patient’s new insurance information at check-in. The claim is submitted with the old insurance. What is the most likely outcome?

Module 1 complete — Module 2 is unlocked.

Continue to Module 2: Financial Clearance & Check-In →
Continuity Practice Partners  ·  Bend, Oregon
www.continuityrcm.com  ·  info@continuityrcm.com