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Differences in Revenue Cycle Management Essay

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Updated: Oct 4th, 2020


Revenue cycle management (RCM) is one of the key issues in health care billing system. To bill for services, it is important to collect data during a patient’s visit and properly treat insurance requirements and regulations. Taking into account that insurance system presents various options and tends to change rapidly, the billing process may sometimes be difficult to provide. RCM professionals are expected to assign correct codes to health issues and accompany the whole process of payment.

They are also responsible for reimbursement, eligibility, and other procedures involved in financial concerns. It should be noted that ambulatory (inpatient) and outpatient services have some differences in terms of revenue cycle management. In particular, ambulatory care setting requires paying great attention to financing comprehensive and coordinated care, while outpatient services focus more on out of the hospital treatment and may be reconsidered as per patients’ request if they disagree.

As reported by the official sources, the latter is characterized by the growth in recent years, since plenty of patients have transitioned to outpatient realm (Singh & Wheeler, 2012). In order to understand revenue cycle management in an in-depth manner, it is critical to identify differences between inpatient and outpatient care settings.

Literature Review

The thorough review of the recent literature indicates that the majority of scholarly sources explore RCM in a hospital setting. Abdelhak, Grostick, and Hanken (2016) state that the key internal revenue drivers include productivity that is also called provider capacity, patient volume, and fees. The mentioned drivers are quite easy to control, and they may be managed for every practice. In their turn, the key external revenue drivers involve patients’ payments, claims from commercial and government payers, and collections.

These drivers can hardly be controlled by a billing team, thereby significantly affecting ambulatory revenue cycle. Another distinctive feature of inpatient RCM is the very procedure of entering a patient’s demographics, health history, and other relevant data in the system, as stated by McDermott, Jones, and Stuckey (2012). By assigning proper codes and making claims, billing specialists ensure the reception of reimbursement. As for outpatient RCM, it begins after the discharge of a patient, when codes and claims are to be reconsidered and adjusted according to the diagnosis and further services. In case a claim was rejected by a payer, it is to be reviewed by billing team and resend.

Hospital Inpatient Prospective Payment (IPPS) is usually used by RCM in an inpatient care setting. It implies per case payment as well as the assignment of payment per diagnosis (Kahn et al., 2012). Hospital Outpatient Prospective Payment System (HOPPS or OPPS) is applied for outpatient care. It is also called Ambulatory Payment Classification (APC), since it helps professionals to classify certain costs and characteristics. It is possible to assign more than one classification for the same patient. When a patient is discharged after treatment in the hospital, he or she is reviewed in terms of the Uniform Hospital Discharge Data Set (UHDDS). The above set is used as the last billing procedure during inpatient stay to specify diagnosis and procedures.


To sum it up, ambulatory and inpatient revenue cycle management are quite similar, yet they have some distinctive features as well. Among the key differences, one may note procedures and payment options used by a billing team professional. The first difference refers to revenue codes and bills. If inpatient care settings imply that a patient’s data should be collected before the visit to a physician and then adjusted in accordance with the identified diagnosis and treatment options, then ambulatory care RCM begins with the discharge of a patient (Centers for Medicare & Medicaid Services (CMS) & HHS, 2013).

As for revenue codes reported to insuring companies and send to payers, RCM presents different coding systems. Namely, IPPS is used for inpatient services, and HOPPS or OPPS and APC are utilized to mark outpatient care provisions. When all the obligations and payments are provided, the revenue cycle is regarded as complete.

The literature review shows that ambulatory care settings require much more attention rather than inpatient services, since the former has a more complex nature and needs to be treated more comprehensively. According to the reviewed sources, namely, the one by the Centers for Medicare and Medicaid Services (CMS) and HHS (2013), patients tend to address outpatient care and physician offices to receive the required services. In this regard, it is possible to suggest that further research is necessary to establish proper understanding of the topic and implement relevant policies to improve the work of billing teams in the framework of revenue cycle management.


Abdelhak, M., Grostick, S., & Hanken, M. A. (2016). Health information: Management of a strategic resource (5th ed.). St. Louis, MO: Elsevier Health Sciences.

Centers for Medicare & Medicaid Services (CMS) & HHS. (2013). Medicare and Medicaid programs: Hospital outpatient prospective payment and ambulatory surgical center payment systems and quality reporting programs; Hospital Value-Based Purchasing Program; Organ procurement organizations; Quality improvement organizations; Electronic Health Records (EHR) Incentive Program; Provider reimbursement determinations and appeals. Final rule with comment period and final rules. Federal Register, 78(237), 4825-5200.

Kahn, C. N., Ault, T., Potetz, L., Walke, T., Chambers, J. H., & Burch, S. (2015). Assessing Medicare’s hospital pay-for-performance programs and whether they are achieving their goals. Health Affairs, 34(8), 1281-1288.

McDermott, P., Jones, J., & Stuckey, L. (2012). Maintaining revenue cycle health during IT change. Healthcare Financial Management, 66(9), 58-65.

Singh, S. R., & Wheeler, J. (2012). Hospital financial management: What is the link between revenue cycle management, profitability, and not‐for‐profit hospitals’ ability to grow equity? Journal of Healthcare Management, 57(5), 325-341.

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