Understanding the Revenue Cycle: Where Medical Billing Fits In
In the world of healthcare, there’s no shortage of paperwork, regulations, or moving parts—and at the center of it all is the revenue cycle. As someone who’s spent more than a decade immersed in medical billing and reimbursement systems, I can confidently say this: if you don’t fully understand your revenue cycle, you’re leaving money on the table.
My name is Rachel Donovan. I’m a University of Michigan graduate with a bachelor’s degree in Health Information Management. I’m the owner of a successful medical billing company based in Chicago and serve as a writer and editor for Price it Here. For over 11 years, I’ve helped private practices, specialty clinics, and outpatient facilities streamline their billing operations, reduce denials, and increase revenue collection.
Let me walk you through the revenue cycle and where exactly medical billing fits into the process—and why it’s more critical than ever to get it right.
What Is the Revenue Cycle in Healthcare?
The revenue cycle refers to the complete financial process that healthcare providers use to manage patient care—from the moment an appointment is scheduled to the final payment of the bill. It includes everything from verifying insurance eligibility to collecting copays and processing insurance reimbursements.
It’s a closed-loop system, and it only works smoothly when each step flows into the next without delays, gaps, or errors.
The Major Stages of the Revenue Cycle
To understand where medical billing comes in, it helps to look at the entire revenue cycle in stages:
Patient Registration and Insurance Verification
Before the patient ever sees a provider, your front office staff gathers personal and insurance information. Accurate data at this stage is crucial—if anything is wrong here, everything that follows could be denied or delayed.
Medical Encounter and Documentation
This is where care is delivered. The provider performs services and documents what was done using medical records—these notes later become the basis for coding and billing.
Medical Coding
Here’s where things start moving into the billing zone. Certified coders translate the provider’s notes into standardized codes (CPT, ICD-10, and HCPCS). These codes must match the services rendered and comply with payer rules.
Charge Entry and Claim Submission
At this stage, a medical billing professional (or team) enters charges and prepares the claim to send to the insurance company. Claims need to be accurate, timely, and compliant with payer-specific requirements.
Insurance Claim Processing
Once submitted, the claim goes through a series of checks by the insurance payer. This includes determining whether the patient was eligible, if the codes are covered, and whether any errors need correction.
Payment Posting and Patient Billing
When payments are received, they’re posted in the system, and any remaining patient responsibility is billed. This includes deductibles, coinsurance, or non-covered charges.
Accounts Receivable Follow-Up
This is the cleanup stage. If payments are delayed, denied, or underpaid, your billing team follows up with the payer or patient. Timely follow-up here can make a huge difference in your practice’s cash flow.
Where Medical Billing Fits In—and Why It Matters
Medical billing is the engine that drives revenue from the moment coding is complete to the day your practice is paid in full. It bridges the gap between clinical services and financial reimbursement.
Done well, it ensures that:
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Claims are submitted correctly the first time
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Payments are collected in full and on time
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Denials and rejections are minimized
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Compliance with payer and federal guidelines is maintained
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Revenue doesn’t leak through the cracks
As a billing professional, I often say that billing is equal parts technical skill, industry knowledge, and persistence. A great billing team knows how to work with payers, appeal denials, and protect your bottom line—all while staying on top of the ever-changing rules in healthcare finance.
What Happens When Billing Breaks Down?
If billing isn’t handled properly, the entire revenue cycle suffers. Here are just a few common issues that can arise:
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Delayed cash flow: Claims not submitted on time
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Denied reimbursements: Incorrect codes or missing information
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Compliance risks: Billing for services not documented or medically necessary
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Patient frustration: Inaccurate balances or confusing statements
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Loss of revenue: Claims written off unnecessarily
I’ve seen small practices lose tens of thousands of dollars each year because they didn’t have a strong handle on their billing process.
The Value of Professional Billing Support
Whether you’re managing billing in-house or outsourcing to a third-party service like mine, the goal should be the same: a clean, fast, and accurate flow from service to payment.
Here’s what I believe makes billing truly effective:
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Transparency: You should always know where your revenue stands
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Consistency: Claims should be submitted daily, not in batches
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Accountability: Denials should be worked and resolved—not ignored
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Expertise: Your billing team should understand your specialty and stay updated on changing payer rules
Outsourcing, when done right, allows your staff to focus on patients—not paperwork—while specialists handle the financial legwork behind the scenes.
Scaling Your Businesses Growth
Understanding the revenue cycle is the foundation of financial health for any medical practice. And at the core of that cycle is billing—making sure your hard work translates into accurate and timely reimbursement.
If your revenue feels unpredictable or if you’re constantly chasing payments, it’s time to take a closer look at how billing fits into your larger financial picture.
I’ve built my career on helping healthcare practices recover lost revenue, reduce errors, and build sustainable billing systems that scale with their growth. And I can tell you—getting billing right is one of the best investments you can make in your practice’s future.
About the Author
Rachel Donovan is a University of Michigan graduate with a bachelor’s degree in Health Information Management. She is a writer and editor for Price it Here and the owner of a successful medical billing company in Chicago. With over 11 years of experience, Rachel specializes in revenue cycle strategy, billing compliance, and helping practices thrive through better financial systems.
