A hospital can deliver excellent care and still lose money on it. Between the moment a patient books an appointment and the moment the money lands in the bank, every step creates data the next step depends on. That chain is the revenue cycle, and most provider IT projects touch some part of it.
1. Scheduling and registration
The patient is booked and registered: demographics, a medical record number (MRN), consent and insurance details. Before the visit, the front desk checks coverage with an eligibility request (X12 270) and gets a response (271). A wrong member id or an expired plan captured here travels all the way to the claim.
2. Care and documentation
The clinician documents the encounter in the EHR: findings, diagnoses, orders and results. Documentation is not just clinical; it is the evidence for everything that will be billed.
3. Charge capture
Every billable service in the encounter must become a charge line. If a procedure, a drug or a supply isn't captured, it is never billed. Missed charges are one of the quietest ways a provider loses revenue, because nothing errors; the money simply never appears.
4. Coding
Coders (or coding software) assign ICD-10 codes for the diagnoses — why the patient was treated — and CPT/HCPCS codes for what was done. Hospital inpatient stays are grouped into a DRG, which sets one price for the stay. Coding errors lead straight to denials or underpayment.
5. Claim scrubbing and submission
Before the claim leaves, a scrubber checks it against payer rules: missing fields, invalid code pairs, missing authorisation numbers. Clean claims go out as an X12 837, usually through a clearinghouse.
6. Payment posting and denials
The payer answers with an 835 remittance and an EFT payment. Each line is posted against the patient account. Denied or underpaid lines go to the denials team to correct and resubmit or appeal. Whatever the insurer doesn't pay becomes the patient's balance.
The numbers a revenue cycle manager watches
- Clean claim rate — share of claims accepted first time without correction.
- Denial rate — share of claims the payer rejects or denies.
- Days in A/R — how long, on average, money stays uncollected.
- Net collection rate — how much of what could be collected actually was.
- Cost to collect — what it costs to get each rupee or dollar in.
Where QA should look
- Registration with inactive coverage, a subscriber who isn't the patient, and a mid-year plan change — followed through to the claim.
- Charge capture for every service type in an encounter, including late charges added after discharge.
- Scrubber rules: one test per rule, with a claim that should pass and one that should fail.
- 835 posting for full payments, partial payments, line-level denials and reversals.
- Masked or synthetic patient data in every lower environment.
Follow one encounter from booking to the 835 and you'll understand more about a provider than a month of reading screens.