Efficient revenue cycle management (RCM) is a persistent challenge for healthcare organizations. It encompasses patient registration, coding, billing, claims submission, and collections. These processes are complex, labor-intensive, and prone to error. In fact, administrative costs account for over 40% of U.S. hospital expenses, amounting to roughly US$ 160 billion each year on RCM activities. Amid this scale of spending, even a few percentage points of errors or denials translate to billions of dollars in lost revenue.
For example, recent government figures show that Medicare Fee-for-Service had an estimated 7.66% improper payment rate in FY2024, reflecting widespread billing and coding errors. Moreover, CMS notes that the ‘vast majority’ of these improper payments occur because claims lack sufficient documentation. This finding suggests that many payment errors are avoidable with better data capture and review.
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