The Medical Billing Process

The Importance of Medical Billing

Medical Billing is the process of getting a provider paid for their services. This is payment from the insurance carrier and payments from the patient for uncovered or deductible charges. A good medical billing specialist knows how to get their provider paid promptly for the services they perform and minimizes rejected or denied claims.

What the billing specialist does is not easily automated. Much of their task is interpreting physician notes and records, verifying and correcting patient and insurance information, verifying correct coding, etc.

It’s pulling all this critical information together, making sure it’s accurate, and assembling it into a claim. That’s just getting the claim filed! It still has to go through the insurance payer adjudication process. Adjudication is the process the insurance payer uses to determine their payments to the provider. This is the process where claims are paid, reduced, or denied based on claim information and any supporting documents attached to the claim.

Once a claim is processed and paid, applying payments has several other challenges that are not easily automated. The billing specialist frequently has to interpret insurance payer coding error messages and correct them. They may also need to submit additional documentation to get a claim successfully processed.

A Medical Billing Specialist could also be referred to as an Insurance Billing Specialist. That’s because the majority of what a billing specialist does revolves around health insurance. Health insurance can be very complex and sometimes frustrating – and it’s always changing! In some smaller single physician offices, the billing specialist many times is responsible for everything associated with getting the provider paid, which can include insuring the correct codes are used.

The medical billing and coding process

Below is a simplified diagram of the medical billing reimbursement process.

Medical Billing Tasks

Below are the fundamental tasks of a medical billing specialist:

• Create and maintain patient account ledgers.
• Determine patient responsibility based on their particular health insurance plan.
• Look-up medical diagnosis and treatment codes.
• Enter information from patient registration forms and superbills into the practice management software.
• Understand managed care authorization and coverage limits. Communicate with insurance payers to resolve rejected or denied claims.
• Transmit claims to clearinghouse or insurance payer.
• Send patient statements and occasionally answer questions about their bill.
• Run reports on outstanding claims and patient accounts.
• Coordinate delinquent patient accounts with a collection agency.
• Enter insurance and patient payments into the practice management patient ledger

The Medical Billing Process

1. Patient sees Physician who evaluates the patient and writes down the observed conditions and treatment. This information is then assigned the appropriate ICD-10 diagnosis and CPT treatment codes (and code modifiers if necessary.
2. Diagnosis & Treatment codes are documented on the Superbill. Some physicians will check or circle the diagnosis and treatment codes directly on the superbill. The majority of patient visits involve using a lot of the same codes.
3. The medical billing specialist gets involved here. They take the superbill and insurance information and input into the practice management (or medical billing) software. A claim is created from this information. Electronic claims are transmitted or uploaded to either the insurance company or a clearinghouse.
4. If there are problems with the claim the medical billing specialist follows up to find out why, correct the claim, and resubmit. An appeal may also need to be written and submitted with supporting information to the insurance company.
5. Once payment is received from the insurance carrier, it is accompanied by a Remittance Advice statement. This information is entered into the software. If there is any patient responsibility such as co-pays and co-insurance, a patient statement is printed and mailed.
6. Unpaid claims require investigation and follow-up to keep accounts receivables low for the practice. Delinquent patient accounts may require additional statements or letters to collect unpaid balances. If still unpaid these may be turned over to a collections agency.

The reimbursement cycle, step by step

Every claim follows the same path. The stages below are colour-coded by who is responsible for each step, and the dashed arrow marks where a rejected claim loops back for correction.

• Front office
• Provider
• Billing office
• Payer

1. Front office

   Patient arrives

   The patient checks in for their appointment.

2. Front office

   Collect information and co-pay

   Front office captures demographics and insurance details and takes the co-payment. Errors introduced here are the most common cause of a claim being rejected later.

3. Provider

   Provider documents the encounter

   The provider examines the patient and records the conditions observed and the treatment given.

4. Provider

   Assign diagnosis and treatment codes

   The documentation is translated into ICD-10 diagnosis codes and CPT treatment codes, with modifiers where the circumstances require them.

5. Billing office

   Enter the claim into practice management software

   Demographics, insurance and the coded encounter are entered into the software that will produce the claim.

6. Billing office

   Electronic or paper claim?

   • ElectronicSubmit the claim to a clearinghouse, which scrubs it and forwards it to the payer.
   • PaperPrint the CMS-1500 form and mail it directly to the payer.
7. Payer

   Claim reaches the insurance company

   The payer begins adjudication - deciding what it will pay, reduce or refuse.

8. Payer

   Does the claim pass adjudication?

   • YesThe payer issues payment to the provider.
   • NoThe claim is rejected or denied and must be corrected.

   Correct and resubmit the claim — back to step 5

9. Billing office

   Post payment and adjustments

   Payment is applied from the electronic remittance advice (ERA) or explanation of benefits (EOB), along with any contractual adjustments.

10. Billing office

    Bill the patient for the remainder

    Any coinsurance, unmet deductible or outstanding co-pay is billed to the patient.

11. Billing office

    Provider is paid in full

    The claim closes once the payer and patient portions have both been received.