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Healthcare Reimbursement in the US

Reimbursement and the Revenue Cycle

What Reimbursement Means to a Healthcare Organization

The U. S. healthcare system is rather complicated due to the existence of several approaches to paying for the provided care. Private payers (insurers and individuals) as well as the government (through Medicare or Medicaid) pay for the healthcare services to providers (Harrington, 2019). Healthcare reimbursement can be seen as the financial foundation of healthcare organizations as this is the money they receive for provided services and use to ensure their proper functioning. Another difficulty related to the payment system in the United States is the fact that patients receive services first, and after that, payers provide the corresponding amount of money. If the provided services are not paid on time, a healthcare organization will lack money to cover its expenses, including but not confined to employees’ salaries, equipment, and maintenance.

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The healthcare revenue cycle encompasses the provision of services and receiving funds for all the provided care. Healthcare organizations receive funds from the government, private insurers and patients, based on the plans patients have. If the insurer or the government does not cover this or that service, the patient has to pay for the received care. Sometimes hospitals find it difficult to collect money from patients, so they address collection agencies that help them. This is the last resort for healthcare organizations as they try to maintain effective communication and proper relationships with their patients.

Flow of the Patient Through the Cycle

As mentioned above, the revenue cycle can be referred to as the flow of money associated with the provision of healthcare services. The primary department that plays a key role in the reimbursement process is the financial unit. This department ensures that all services are paid and collects funds if some disruptions occur. The cycle starts at the front office, where a patient first addresses the hospital with their problem (Harrington, 2019). The front office employees collect the necessary data, which implies the completion of the electronic health record (EHR) (Pepper, 2019). At that stage, the employee arranges the meeting with the corresponding healthcare professional who provides care. The latter makes a diagnosis, develops a treatment plan, completing the EHR. Many healthcare organizations address third parties that encode the services they provide to patients, and the encoded services are sent to the corresponding insurer or governmental agency. Some hospitals do not address third parties, so their employees (mainly the medical staff) encode the service at once. Thus, at this point, the IT department, front-end employees (the medical personnel) are involved in revenue cycle management.

Once the insurer or governmental agency (or the patient) pays for the service, the financial department becomes central to the process. If some issues occur (some bills are rejected), the financial department communicates with the representatives of the partner to settle the issue and collect the necessary amount of money. In some cases, the legal department should also participate in funds collection as sometimes patients try to prove that they did not receive quality care or failed to receive the needed services at all (Harrington, 2019). When the issues are settled, financial data is processed in the financial department, and the associated data is added to the patient’s record. Importantly, modern technology makes the cycle more efficient as previously as a considerable part of operations are often automatized. The departments mentioned above (excluding the financial unit that is the key player in the process) have been ordered based on their place in the cycle rather than their importance. It is hard to identify the most important department in terms of the reimbursement cycle management as each of them is an indispensable part that completes specific functions that are equally relevant.

Departmental Impact on Reimbursement

The Impact of Departments

As mentioned above, every department involved in the reimbursement cycle plays an important role in the process, having a similar impact with certain specifics. For instance, if the front-end personnel complete the EHR with errors, the reimbursement process may be disrupted (Pepper, 2019). These are also people who communicate with the patient, which is a part of the provided services. Hence, the staff should be able to develop effective communication channels and appropriate relationships with patients. The audit of the record completion (with the focus on errors and processing time), as well as the technologies and strategies, should be implemented (Green, 2020). In order to measure the impact of the department, it is possible to estimate the number of returning and leaving patients, error rate, and patient satisfaction.

The medical staff provides care and identifies the exact health-related services that are needed. The audit of this department can involve the audit of medical errors and the use of clinical procedures (Green, 2020). The quality of provided services can be the primary measurement to identify the exact impact of this department on pay-for-performance incentives. The financial unit has the central impact as it ensures that all expenses are covered, and all bills are filed properly. As for auditing this department, the common accounting audit should be implemented. The impact of this unit can be measured by the detection of the unresolved issues and errors in financial records. Finally, the legal department plays a key role in settling legal cases if such take place. The way the department addresses these aspects can be a matter of audit. It is essential to identify whether the employees try to communicate effectively and settle issues without going to court. This can also display the impact of the department on the pay-for-performance incentives.

Departments’ Activities

As mentioned above, the front unit employees communicate with patients and guide them through the process of reimbursement. Such data as EHR-related errors and patient satisfaction should be collected to estimate whether changes are necessary for ensuring the effective flow of operations (Pepper, 2019). As for medical staff, they provide care, communicate with patients, and provide information regarding reimbursement and available resources (Green, 2020). The analysis of such data as EHR in terms of diagnosis, medical errors, the relevance of clinical procedures, proper encoding, treatment effectiveness, and patient satisfaction should be conducted.

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The financial department checks the billing, codes compliance, and collection of funds. In order to measure the performance of this department, it is important to implement regular accounting audits (Green, 2020). The exploration of patient satisfaction linked to the interactions with the financial unit can shed light on the quality of provided services and unveil the gaps that need to be addressed. Finally, the legal department ensures that all patients’ litigations are addressed properly. The unit employees also consult patients on various aspects associated with legal issues. The rate of resolves cases and client satisfaction can be the measurements of the effectiveness of the department.

Employees Responsible for Compliance

Health information management professionals are responsible for ensuring the organization’s compliance with codes and bills. These professionals are a part of the financial unit in most cases. These employees check the records completed by the staff and third parties (in case the organization uses such services). The team of these practitioners should be updated on all changes so that they could inform their peers about novelties. Clearly, if they make an error or fail to ensure proper compliance, the reimbursement cycle can be disrupted. Moreover, the organization may be sued by the patient or be fined by the governmental agencies.


Green, M. (2020). Understanding health insurance: A guide to billing and reimbursement – 2020 (15th ed.). Cengage Learning.

Harrington, M. K. (2019). Health care finance and the mechanics of insurance and reimbursement (2nd ed.). Jones & Bartlett Learning.

Pepper, J. (2019). The electronic health record for the physician’s office: For SimChart for the medical office (3rd ed.). Elsevier Health Sciences.

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