The healthcare billing process relies on a defined sequence of activities designed to ensure accurate reimbursement and compliance. To explain the steps of the healthcare billing revenue cycle, you must recognize how clinical, administrative, and financial operations converge. For labs and hospitals alike, each step must be optimized to reduce denials, shorten payment cycles, and protect margins.
The inpatient revenue cycle model and outpatient workflows follow the same core framework, though the complexity and documentation requirements may differ. For both, it’s essential to list the steps in the revenue cycle and give a brief description of each to understand where breakdowns most often occur.
The 7 standard steps are:
- Pre-registration
- Registration
- Charge capture
- Claim submission
- Remittance processing
- Insurance follow-up
- Patient collections
Each step must be tightly controlled. Missing data or coding errors early in the process lead to revenue loss and rework downstream. Laboratories that align their LIS and RCM platforms reduce these gaps by automating validation, applying payer-specific rules, and tracking claims in real time.
Steps 1–3
The first three steps of the revenue cycle set the foundation for accurate billing and successful reimbursement. Mistakes here create downstream denials, delayed payments, or unreimbursed services—making early-stage accuracy essential for revenue integrity.
Step 1: Pre-registration
This occurs before the patient encounter. The lab or provider collects basic information—patient demographics, insurance details, and service intent. For scheduled inpatient or outpatient testing, this step includes insurance eligibility verification and authorization checks. If incomplete, the claim may later be rejected for coverage issues or lack of prior approval.
Step 2: Registration
At the point of service, registration staff confirm and document patient identity, insurance coverage, service location, and order details. This step finalizes payer information, links it to the correct plan, and ensures all required consents are signed. Inaccurate registration details—wrong payer, invalid subscriber ID, or missing secondary insurance—lead to billing errors and unnecessary write-offs.
Step 3: Charge Capture
Charge capture links clinical services to billable procedures. In laboratory settings, this step must translate tests performed into the correct CPT and HCPCS codes. Ideally, this occurs within the LIS or directly through LIS-RCM integration. Automated charge capture ensures that every test with reimbursement value is properly coded and queued for claim submission. Manual charge capture introduces risk—underbilling, miscoding, or omission.
Getting these three steps right reduces claim rework, lowers denial rates, and enables real-time performance tracking across the revenue cycle. These are not clerical tasks—they’re revenue-critical controls.
Steps 4–7
The final four stages of the revenue cycle determine whether the claim converts into revenue or becomes a loss. Optimizing these steps protects the financial stability of the lab or health system.
Step 4: Claim Submission
Once charges are captured and coded, the claim is formatted and submitted to the appropriate payer. Clean claims meet payer-specific formatting rules, include required documentation, and reflect accurate coding. For labs, claim submission often routes through a clearinghouse, where errors can still be flagged. Automated edits, payer rule libraries, and real-time LIS integration reduce rejections at this stage.
Step 5: Remittance Processing
After the payer reviews the claim, remittance advice is returned with payment details or denial reasons. This step includes posting payments, adjustments, or denials into the billing system. Effective remittance processing allows for immediate reconciliation and identification of underpayments or contractual write-offs. Errors in this step delay collections and disrupt financial reporting.
Step 6: Insurance Follow-up
Unpaid or denied claims trigger follow-up processes. Staff must analyze denial codes, identify missing or incorrect information, and submit corrected claims or appeals. The faster this cycle turns, the higher the recovery rate. Poor follow-up procedures lead to aged receivables, decreased recovery percentages, and missed filing deadlines.
Step 7: Patient Collections
If any patient balance remains—after insurance or for self-pay cases—the lab must collect from the patient. This step requires accurate billing, transparent communication, and digital payment options. A streamlined collection process increases patient satisfaction and improves recovery rates without damaging provider-patient relationships.
Together, these final steps determine net collections and financial performance.
Choosing the Right RCM Partner
Effective laboratory revenue cycle management requires more than software—it demands a partner with operational fluency in laboratory workflows, payer behavior, and regulatory frameworks. The right RCM provider integrates seamlessly with your LIS, enforces pre-bill edits, and delivers audit-ready documentation with full traceability. Prioritize partners offering adaptive rule engines, denial prevention protocols, and analytics that drive revenue recovery, not just reporting.