Medical Billing Services vs. Revenue Cycle Management: What's the Difference in 2025

The healthcare financial landscape in 2025 has improved since 2022, in part thanks to the major transformative efforts undertaken in response to acute labor shortages, landmark inflation, and of course, in response to the overwhelming and instigating COVID-19 health crisis. That said, healthcare profits continue to lag behind their relative pre-pandemic levels as labor costs continue to rise, and increased regulations and consumer demands continue to burden back-office administrators, grinding some ill-prepared organizations to a halt.

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This is why it’s important for healthcare providers who wish to succeed to fully understand how the use of more strategic Medical Billing and Revenue Cycle Management Services can positively impact the growth of their organization.

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What are the key differences between Medical Billing Services and Revenue Cycle Management (RCM)?

• Revenue Cycle Management (RCM) encompasses the entire financial life cycle of a patient in relation to a healthcare organization.
• Medical Billing Services are one part of RCM, and their sole focus is on claims submission and payment processing.

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To attain the most efficient financial operations in healthcare, we must consider Medical Billing and RCM holistically: accurate medical billing is crucial to achieving a healthy revenue cycle; and strategic Revenue Cycle Management ensures that medical billing aligns with the comprehensive financial processes.

What is Medical Billing?

The scope of Medical Billing has never been as comprehensive or complex as it presently stands in 2025. 

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In large part, in America, this is due to the “No Surprises Act.” As of January 1, 2022, under this new law, patients only have to pay what they were quoted by their healthcare provider, or the equivalent of what they would have paid for an in-network service. 

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In order to ensure compliance with the law and ensure protection from the highest volumes of consumer freedom of information act (FOIA) requests and independent dispute resolutions (IDRs) over billing discrepancies, providers are making extensive changes to their reimbursement, billing, notification, and disclosure practices.

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To this end, technological advancements have become not only beneficial, but necessary. Automated billing solutions accomplish tasks that would require human beings to spend more time (than they objectively have) to maintain compliance. 

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That said, automation cannot take on the even larger challenge of finding a sustainable way to manage these new billing disputes, nor can automation fully avert the consequences these changes have made to Revenue Cycle Management (RCM), particularly when they delay debts from being sent or sold to collections. All of this means: less money coming in, less frequently, while more money and time is being spent by medical billing teams in order to remain compliant.

What is Revenue Cycle Management (RCM)?

Revenue Cycle Management (RCM) begins when a patient books an appointment, and ends when the patient’s payment is claimed. RCM is the means by which healthcare organizations collect profits, keep up with expenses, and stay in operation to treat more patients.It encompasses all administrative functions necessary to accomplish this.

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And, as healthcare organizations face rising costs and greater pressure from patients, RCM takes an even brighter spotlight in many 2025 healthcare strategies. 

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RCM responsibilities in healthcare finance in 2025 include:

• Advancing technological integrations
• Adapting to regulatory changes (including the “No Surprises Act”)
• Improving coding practices and analytics
• Strengthening payer relationships
• And more than ever: caring about the patient experience

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The impact of RCM on the healthcare ecosystem in 2025 cannot be underestimated. 

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Patients today are demanding transparency and convenience in billing, mirroring retail consumer trends.

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Successful RCM strategists are responding by implementing patient-centric technologies that offer accurate cost estimates, straightforward billing and flexible payment options. 

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When you shift your RCM strategy similarly, you not only enhance patient satisfaction but also accelerate your revenue cycle by simplifying their payment process.

The Evolution of Medical Billing and RCM

For decades, medical billing was handled almost entirely with pen and paper. Starting in the early 1990s, technology ushered in the rise of electronic health systems (EHS), of practice management systems (PMS), and eventually, technology became HIPAA-required for medical billing departments.

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Somewhat similar to today’s challenge of scaling the mountain of consumer FOIA requests and new IDR processes, the shift to electronic billing records from paper and pencil seemed almost insurmountable (talk about a backlog, a life’s work!), and yet it was necessary for more universal, error-free, timely and incontestable medical record-keeping.

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Tellingly, the integration of the EMR and PMS software still is considered one of the most challenging aspects of implementing medical practice management software today. Which means, if the parallel holds, that we may still be struggling with today’s new medical billing challenges in 30 years’ time. 

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But the predictions are somewhat more hopeful than that: 

• Automation and Artificial Intelligence (AI) promises to further reduce errors and optimize the revenue cycle.
• Telehealth Billing promises to be more standardized in its billing, and more popular as a form of treatment and long term care.
• Value-Based Care, as opposed to fee-for-service, means medical billing records will need to include careful and timely attention to detail from patients and medical professionals over the course of treatment, not just over the lifecycle of the bill.
• Regulations Evolve, continuously, meaning it is vital for medical billing teams to stay up-to-date to avoid legal and financial pitfalls.
• Data Security and Privacy will remain a top priority as sensitive health records are digitized and shared between payers, providers and other relevant 3rd-parties.
• Outsourcing RCM, for all these reasons, becomes increasingly logical and necessary.

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Healthcare businesses who place the highest priority on the overall health of their organization and of their patients find it increasingly hard to keep up with the pace of changing regulations and technologies.

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Perhaps this is the chief reason to work with an RCM partner: they devote their days and nights to keeping pace with technological and regulatory changes as they relate back to the health of your organization’s billing and revenue. 

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Trends suggest that as healthcare organizations continue to enjoy competitive advantages from working with outsourced RCM partners, this strategy will only continue to grow in popularity.

Key Differences Between Medical Billing and RCM 

Medical billing involves: 

• Submitting claims for services provided
• Following up on those claims (reviewing claims, gathering data, resubmitting rejected claims)

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Because medical billing’s job is never done until the bill has been paid, the process can be intolerably slow. This is why many healthcare organizations will devote an entire department to focus itself on medical billing, or will outsource their medical billing to a Healthcare BPO. 

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However, while medical billing is absolutely necessary, inherently complicated, and time consuming, it doesn’t provide the big, strategic picture of your revenue and overall financial operations. 

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This is the focus of revenue cycle management (RCM) which involves: 

• All the ways a healthcare organization generates revenue 
• All the ways revenue is obtained through patient payments
• All the ways revenue is obtained through insurance collections 
• Constantly studying changes in regulations, technology, consumer mindsets, and competitive healthcare practices, in order to improve the revenue of the organization

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In terms of how a practice is managed, both medical billing and RCM play integral roles. Both work to ensure the financial health of healthcare organizations. The key difference is that where medical billing plays an “acting” role, responding to what has happened and is happening, RCM takes a “directing” role, and must consider everything, from increasing cash flow and decreasing denials, to the shift toward value-based care, to how patients make payments, to the security of personal identifiable information (PII), to which partners and technologies are best suited to meet their practice’s needs.

The Integration of Medical Billing within RCM

In a sense, medical billing is an applied RCM process; it originates in revenue cycle management, and serves revenue cycle management. It is the hands-on (and/or technologically maintained) act of keeping a complete record of a medical bill until it has been paid. 

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The basic steps of medical billing are: 

• Charge capture
• Claim submission to insurance companies
• Properly coding diagnoses and procedures.
• Determining patient balances and collecting payments.
• Collecting pre-registration information, such as insurance coverage.
• Collecting subsequent patient information during registration to establish a medical record number (and meet regulatory, financial and clinical requirements).
• Applying or rejecting payments through remittance processing.
• Collecting payments from third-party insurers.
• Examining the necessity of medical services in review.

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The synergy between the functions of medical billing and revenue cycle management (RCM) is undeniable. Without medical billing, there would be no revenue cycle, as such, to manage. And without revenue cycle management, there would be no formal or correct processes/goals for medical billing to serve. 

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The need for this synergy can be seen in the real-world’s push for greater integration. Prominent vendors that are working to bring RCM (and through RCM, medical billing) more integrally and holistically into the healthcare system as a whole include McKesson, GE, Epic, Dell, and Greenway Health to name a few.

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With these vendors, we see not just the further integration of medical billing and RCM, but the integration of RCM, medical billing, and electronic health records (EHR), and remote patient monitoring programs… both of these examples give RCM and medical billing greater visibility into the patient experience, and both suggest the role RCM and medical billing will play in Value-Based Care. 

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And we can also see integrations between RCM, medical billing and global networks of accountants, which strengthens the role RCM plays in healthcare financial operations more holistically, rather than as a siloed, “billing only” functionary. 

Financial Implications for Healthcare Providers

Medical billing and revenue cycle management involve some of the most complex and evergreen challenges at any practice. Thousands of codes for procedures and diagnoses. Multiple payers. Regulations changing on federal and state levels.

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The big question before you is which model you want to set your sights on. Do the financial benefits and risk-sharing of outsourcing outweigh the full control you maintain by keeping all of your medical billing team and RCM expertise in-house? 

Patient Experience and RCM

According to Change Healthcare (Part of Optum) “79% of healthcare organizations manage clinical and financial patient communications via different technologies without a unified system. And on average, it takes 20 healthcare workers to schedule, register, and financially clear each patient for their appointment. Patient-focused revenue cycle management is key to successfully improving patient experience and business outcomes.” 

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While RCM has traditionally been solely focused on numbers, and measured in terms of operational efficiency– the healthcare market has evolved toward patient-centric practices, and with it, today’s most successful RCM strategies are “humanized.”

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“Please, tell me what you read about your symptoms on WebMD…” “Absolutely, tell me how you broke up your payments for a big purchase on Amazon…”

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The idea of healthcare taking patient opinions into account has been, until very recently, a moot point. Everyone knows how complex the world of healthcare is to navigate. 

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But this very complexity is why simplifying billing procedures and operations so that patients (laypeople) can understand them makes a profound impact on incoming revenue– and patient satisfaction. 

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Key patient engagement strategies to consider in RCM:

• Payment processes: have traditionally been high-touch and redundant, requiring as many as 20 different healthcare workers to manage the full RCM lifecycle from scheduling to complete payment. By consolidating touch points, and eliminating redundant input from patients, RCM stands to receive more bill payments, more promptly, while giving the patient a feeling of confidence, ownership, and delight.
• Communications: have traditionally been siloed on the clinical and financial sidelines. For many healthcare organizations, this information is still completely separate, which leads to frustration for patients, clinicians, and financiers. While this is an “Epic” task, successful RCM strategies are already looking ahead to how technology and coordination can help them unite communications from across the medical and billing divide. 
• Technological solutions: that have traditionally been built for the exclusive use of medical billing and RCM experts, are innovating daily around how patient-users are interfacing. To mimic the low-touch, more-option nature of retail consumer purchases, technology will ultimately be necessary for RCM to fully incorporate the patient into their own billing lifecycle. 

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Naturally, we must balance our objectives between patient care and financial management. But trends already suggest that the higher we elevate patient engagement and satisfaction with billing, the higher our revenue and reputations climb.

Compliance and Regulatory Challenges

New compliance and regulatory challenges have been hard-hitting the world of healthcare ever since the first major changes made during the pandemic. 

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Some of the most dramatic and sweeping changes in recent months/years are due to the “No Surprises Act,” or NSA. In this monumentally complex piece of administration, patients are not obligated to pay any medical bill that is a predetermined amount higher than what they were quoted by their physician, or is more than what they would have paid for an in-network service.

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If the bill amounts to a different amount (typically higher), an independent dispute resolution (IDR) process must be established wherein the provider and patient can continue to negotiate the bill. During this process, providers:

• May not move the bill into collections or threaten to do so.
• Must pause collections if the bill is already in collections.
• Can’t collect late fees on unpaid amounts.
• Can’t threaten to take any retaliatory action against the patient for initiating the patient‑provider dispute resolution process.
• If the provider and patient agree on a payment amount before the dispute resolution entity makes a determination, the provider must notify the dispute resolution entity as soon as possible, but no later than 3 days after the settlement. 

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All of this amounts to staggering new challenges for patient billing management in healthcare organizations of all sizes and in all niches of treatment. Medical billing has never before had to contend with this level of payer-specific reporting, situational reporting (etc.), or resolution reporting with timelines as aggressive as 3 days after the settlement.

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Strategies for staying compliant:

• Communication: From the premise of the No Surprises Act alone (patients not being responsible for paying a bill larger than what was quoted by their physician), we see a prime example of why RCM must take an immediate and active role in bridging the communication gap between medical information and billing information.

• Technology: Aggressive timelines and unpredictable volumes of patient FOIA requests and IDR disputes make technology an indispensable help in remaining compliant. The decision of which technology to choose is a big one, often associated with a big “lift.” Be sure to do your homework, or consult with your outsourced RCM partner to make sure you’re making the choice that’s best for your organization’s needs.

• Expertise: Particularly when an increasing number of medical practices and facilities are privately owned by investors, for whom this is not their chief area of expertise, it is absolutely necessary to have people who know exactly what they are doing to remain compliant with new legislation, or risk facing financial and legal consequences. 

Outsourcing Medical Billing vs. RCM

Healthcare providers are recognizing the benefits of outsourcing their medical billing and RCM needs. 

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Typically, the benefits include greater cost-efficiency, reduced administrative burden, and improved revenue collection. An outsourced service provider will also be expected to leverage technology and data analytics to offer more comprehensive and competitive solutions. 

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There’s no “one size fits all” answer for whether or not you should keep your medical billing in-house, or outsourced. That said, the various pros and cons are fairly uniform. 

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So let’s look at the big picture.

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In-house Medical Billing Pros:

• Control: you control all the billing functions, and receive all the profits.
• Access: if issues ever arise, your systems and staff are always 100% yours, meaning you should have 100% access to them in order to solve the issues.
• Confidentiality: by keeping all your systems and staff in-house, you minimize the “surface” that can potentially be compromised by “bad actors.”

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In-house Cons:

• Costs: you own all the upfront costs for staff, technology (hardware and software), training, and the ongoing expense of maintaining your billing system. Each of these choices, and the maintenance of these choices, tend to be complicated and costly.
• Capacity: your capacity for medical billing (and improvements to your medical billing system) are limited by your staff and expertise. 
• Training: coding, billing, technology changes, and regulatory changes all necessitate ongoing training for medical teams to remain accurate, efficient, and compliant.
• Overdependence: when your billing department consists of only a few people, or a few “star players,” you risk disrupting your operations and cash flow should they need to be out of the office, sick, on vacation, or resigned.

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Outsourced Pros:

• Costs: outsourced billing is often less expensive, by a margin of difference.
• Timely: outsourced billing teams are “pre-ramped” on their own systems, meaning little time is needed to get them up and running; and, outsourced teams can be held accountable for meeting the deadlines you’ve agreed upon.
• Less expertise needed: no need to be an SME in medical billing when you have hired outsourced experts to be your partner.
• More expertise gained: outsourced billing can be a crowded space; your potential outsourced partners will always be looking out for the best practices and best technologies to get the job done to maximum effect. Relatively few (if any organizations) have someone on staff with this level of focus and expertise.
• Many options/choices: some outsourced billing companies will offer tiers of support, or various programs for you to choose from. 
• Less IT required: an outsourced billing company will maintain their own tech stack and IT department. 
• Compliance: not to be underestimated, in contracting an outsourced medical billing partner, you shift some of the burden of risk and compliance away from your organization and onto your dedicated experts.

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Outsourced Cons:

• Contractual obligations: you can never fully outsource the decisions you need to make regarding contractual obligations. This will always need to be handled by the healthcare organization, and when relevant, communicated to the outsourced billing company.
• Too few claims: you will need to meet a predetermined minimum volume of claims for most outsourced billing companies to decide you have a genuine need for their services. Or, as with the concept of “wholesaling,” the price of outsourced billing services can go up (rather than down) to handle a very small number of claims. The more claims you handle, the most cost-effective outsourcing your billing becomes.
• Less control: outsourced billing companies will follow the directions given to them; meaning it’s important to be clear in your agreement before actual billing work is being done.

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Ultimately, if you want a scalable RCM infrastructure that makes it much easier to handle increasing patient volumes + new regulatory challenges, all while lowering overhead costs, you most likely want to outsource; the challenges of scaling RCM (hires, training, etc.) are made much more difficult when keeping everyone “in-house.”

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For example, here’s a quote from the outsourced success story of one company after working with Pharmbills, “We had a problem sourcing and retaining professional, skilled remote talent. Then we started working with Pharmbills and were extremely pleased that they delivered what they promised: smart, motivated people. As a result of having dedicated Pharmbills teams that mesh well with our culture, we’ve been able to markedly improve our collection rates. In just a couple of years, we’ve added a significant number of new team members. When we need to grow, Pharmbills gets the job done quickly and successfully.”

In-House Management of Medical Billing and RCM

Medical billing and RCM has traditionally been owned “in-house” for the same reason many companies used to directly employ all the various experts they needed to maintain and differentiate their business. Even in the wake of “global” and “remote” work trends, some healthcare organizations still keep every individual attached to their finances in-house. 

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Some of the largest healthcare companies may be obliged to maintain direct control over all aspects of finance, and have the resources necessary to do so. 

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And some of the smallest healthcare practices may (always) find that the most financially responsible thing to do is to “wear many hats,” and rely on only the most minimal assistance from their in-house staff to run their practice’s finances smoothly. 

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In either case, control is the primary advantage in keeping all of your billing and RCM in-house. Whether the concern stems from security, process innovation, or agility, when you keep your full finance department in-house, you maintain autonomous control over all aspects. 

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The challenge, in most cases, will be high costs, high turnover, ongoing training, ongoing research, and fully-owned risks in all aspects of your revenue cycle. 

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Best practices for how your revenue cycle is managed will vary from one healthcare organization to the next, but it will always be a good idea to take an objective look at where you are currently struggling, and currently succeeding, in order to re-evaluate what’s best for your healthcare financial operations on a regular basis.

Global Perspectives on Medical Billing and RCM

The mandate for many countries to embrace digital record keeping is theorized to be a major contributing factor toward the rise of medical billing outsourcing.

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According to the Business Research Company’s Medical Billing Global Outsourcing Report: 

• “The medical billing outsourcing market… has grown rapidly in recent years. It will grow from $15.12 billion in 2023 to $16.91 billion in 2024 at a compound annual growth rate (CAGR) of 11.8%. The growth in the historic period can be attributed to increasing complexity of medical billing, shift to electronic health records (ehrs), increased patient volume, focus on patient care.”

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The is corroborated by a LinkedIn trends report, Medical Billing Outsourcing, The Future of Healthcare Providers:

• “The medical billing outsourcing market is massive and rapidly expanding. According to Grand View Research, it is predicted to reach 25.3 billion USD by 2028, with a CAGR of 12.3%.”

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According to both reports, the regions with the largest share of the medical billing outsourcing market are North America (as of 2023), followed by Western Europe with the second largest share. 

In total, the regions surveyed by the reports included Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, and Africa. 

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The specific countries included in the reports are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Italy, Spain, and Canada.

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Globally, trends show that in many countries, the pandemic prompted their governments to invest more heavily in healthcare infrastructure. This can be seen, not just in governmental requirements for greater transparency and reporting from healthcare entities, but also (conversely) in the ambiguity of much of the new legislation being enacted across different countries, including the “No Surprises Act” in the USA.

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These regulatory challenges happening simultaneously across various countries – many of which require immediate action from medical billing and finance departments (including the implementation of new codes and timelines) – directly contribute to the growth of the outsourced medical billing market, globally.

Conclusion

• The healthcare financial landscape in 2025 has improved since the pandemic. That said, healthcare profits continue to lag behind their relative pre-pandemic levels as labor costs continue to rise, and increased regulations and consumer demands continue to burden back-office administrators, grinding some ill-prepared organizations to a halt.
• The scope of Medical Billing has never been as comprehensive or complex as it presently stands in 2025; in large part, in America, this is due to the “No Surprises Act.” 
• RCM responsibilities in healthcare finance in 2025 include: advancing technological integrations; adapting to regulatory changes (including the “No Surprises Act”); improving coding practices and analytics; strengthening payer relationships; and more than ever: caring about the patient experience.
• We must balance our objectives between patient care and financial management, but trends already suggest that the higher we elevate patient engagement and satisfaction with billing, the higher our revenue and reputations climb.
• Healthcare providers are recognizing the benefits of outsourcing their medical billing and RCM needs. 
• According to the Business Research Company’s Medical Billing Global Outsourcing Report: “The medical billing outsourcing market… has grown rapidly in recent years. It will grow from $15.12 billion in 2023 to $16.91 billion in 2024 at a compound annual growth rate (CAGR) of 11.8%.”
• Ultimately, if you want a scalable RCM infrastructure that makes it much easier to handle increasing patient volumes + new regulatory challenges, all while lowering overhead costs, you most likely want to outsource

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Founded in 2018, Pharmbills started out in the healthcare industry, a core area of expertise. Pharmbills remote workforce solutions have revolutionized an industry challenged by English language barriers, lack of customized client training, poor customer service, high pricing and workforce turnover. 

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We believe that exceptional people make the difference, and that’s why we want to hear from you. One exceptional person to another, let’s get in touch. Tell us what your back-office has, and what it needs; we’ll tell you how we help. Get in touch