Revenue cycle management (RCM) software is the system on which a hospital, a clinic or its billing firm tracks every bill, from the check of the patient's insurance to the last payment. It is also called a medical billing system. The revenue cycle is the whole path of one bill: check the cover, code the visit, send the claim, follow up any denial, and collect what the patient owes. RCM software is sold mainly in the United States, where insurers pay most medical bills.
Take, for example, a family doctor's clinic in Columbus, Ohio, in the United States. A patient with diabetes is booked for a check-up. Two days before the visit, the RCM system asks the patient's insurer whether her policy is active. After the visit, the doctor's note in the ambulatory EHR is turned into medical codes: E11.9 for type 2 diabetes, and 99214 for a visit of moderate complexity. The clinic's price list says $210 for this visit. The RCM system creates the claim and sends it through a healthcare clearinghouse.
Three weeks later, the insurer pays. Its contract with the clinic allows only $142 for this visit. Of that, the insurer pays $112. The patient owes a fixed amount of $30, called a copay. The clinic cannot collect the other $68 on its price list, because the contract does not allow it, so the system records it as an adjustment. The RCM system matches each of these amounts against the claim. Matching every payment against the claim it pays is a form of reconciliation. Then the system sends the patient a bill for $30.
Not every claim is paid. Say the insurer denies a claim because the patient changed her policy in January. The RCM system puts the claim in a work queue, with the reason for the denial. An employee in the billing team, or an AI billing agent, corrects the insurance details and sends the claim again. Most insurers accept claims only within a fixed time after the visit, often between 90 days and a year. So the queue must be cleared quickly. The system also reports the share of claims denied each month. A rising denial rate tells the clinic that something in its coding or its eligibility checks has gone wrong.
Much of this work is done from India. Many American billing firms run coding and billing teams in Chennai, Hyderabad, Bengaluru and Delhi, and several RCM makers build their software in Indian engineering centres. Indian hospitals have a revenue cycle too, built around cashless insurance claims. Some Indian companies sell RCM software to these hospitals. They also lend hospitals money against claims that insurers have not yet paid, a kind of MSME loan.