Difference between Revenue Cycle Management and Third Party Administrator

Revenue Cycle Management vs Third Party Administrator

RCM is a process or software to perform end to end providers activities (Patient registration, claims processing etc), where as TPA is a person or organization who works on behalf of payers, providers or members. 

TPA can perform all steps in RCM cycle if they work for a provider.

RCM (Revenue Cycle Management):

It is a financial process/medical billing software that healthcare facilities (providers/hospitals) use to track patient care episodes from registration and appointment scheduling to the final payment of a balance.

Purpose of RCM Systems:

Healthcare providers use revenue cycle management systems to store and manage patients' billing records to interact with Payer Systems to receive the payment and other health IT systems -- such as electronic health record (EHR) and medical billing systems -- as patients move through the care process.

TPA (Third Party Administrator):

A Third Party Administrator (TPA) is a person or an organization that works on behalf of other healthcare parties like Provider, Payer or Member etc.

Types of TPA’s:

1.       Works on behalf of self-insured employers

2.       Works on behalf of Providers and members

o Performs all RCM functional operations

3.       Tasks traditionally handled by insurance companies 

o Policy maintenance

o Membership functions

o Premium Billing

o Claims processing

o Provider networks

o Utilization reviews

4.       Other areas

o Actuarial (Analyzing potential risks, profits and trends)

o Loss control (Part of Risk Management)

o Provider service

o COBRA

o Mental health administrations

o Plan Administration

Various TPA Pricing Models:

1.       Per Claim basis, Percent of Incurred, and Percent of Paid

2.       % of revenue

3.       Per employee per month (PEPM)

4.       Per member per month (PMPM)

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