While medical billing is the core of healthcare in most countries, healthcare providers often struggle with complex medical billing procedures. Understanding the medical billing process in detail can help such providers improve their collections.
A general flow chart for the medical billing process starts at patient registration and moves all the way down to payment posting and patient billing. The basic steps include eligibility verification, coding, claim submission, payment posting, denial management, and patient billing.
This guide will provide you with a step-by-step breakdown of the medical billing process along with other crucial information that you should know as a healthcare provider. Let’s get started right away.
Medical billing is the process of getting reimbursements from patients or insurers for the services provided by the healthcare practitioner. The billing guidelines and procedures are different for each specialty, and the difficulty varies accordingly.
People often mix medical billing with medical coding, which is part of the whole medical billing process. Medical coding converts the services provided into specific codes to make them comprehensible for insurance companies, while billing is the whole cycle of getting reimbursements from both patients and insurers.
While the billing regulations are different for some specialties, here is a general breakdown of the billing process.
The receptionist often does patient registration, which is considered one of the most crucial steps in the medical billing process. This step involves collecting essential patient information, including:
A receptionist should ensure 100% accuracy in patient registration, as incorrect patient information or insurance details can cause delayed reimbursements. Errors in this step may also lead to financial loss in the form of claim denials.
Verifying patients’ insurance coverage before providing them with medical services can avoid complications in the billing process. A receptionist or, in some cases, a dedicated medical biller can also do this.
Eligibility verification can help the provider know if the insurance covers the specific medical service that the patient needs. It also highlights any deductibles, copays, or out-of-pocket expenses that avoid misunderstanding between the patient and the provider.
A pre-authorization step is involved when the patient’s insurance does not cover the specific medical service they need. In such a case, the medical biller contacts the patient’s insurance provider to get a pre-authorization.
Simply put, the healthcare provider gets a confirmation from the insurer for reimbursement of the specific service that is not covered by the patient’s insurance plan. This step is crucial to avoid denials and delays in the billing process.
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The process of documenting or recording the services the healthcare practitioner provides in a billable form is known as charge entry. A biller or a virtual assistant records every billable medical procedure, treatment, service, or prescription provided by the practitioner.
Maintaining accuracy in the charge entry procedure is very crucial to accurate coding. Errors in charge entry can lead to wrong billing, ultimately leading to delayed or denied reimbursements.
Insurance companies use specific codes to understand and track the services provided by a healthcare provider. Medical coding is the process of translating the information or document created during the charge entry process into understandable codes for the insurer. The most commonly used coding systems include:
It is crucial to ensure that the codes are accurate and that the process is compliant with insurance and regulatory standards. Errors here may lead to delays in the reimbursements, which may also cause denials.
Once the codes are ready, a medical biller creates a bill, which is sent to the relevant insurance company. This process of sending bills to the insurers is known as claim submission.
Claim submission is now of two types: manual and electronic. Electronic submission is done through a clearing house, which sends the bills to their relevant payors with a single click. It is beneficial as the clearing house checks the claims for billing errors before submitting them to the insurer. Manual submission is prone to errors and is not common these days.
Claim processing is done on the insurer’s end where they check the claim, verify the provider’s credentialing, and then pay for the service. However, this process isn’t that simple and may take somewhere between 30-45 days on average.
The claim may result in one of three outcomes:
Also, Partial payment is possible when the insurer agrees to pay a specific percentage of the claim instead of the complete claim.
If the claim is approved, the insurer sends an Explanation of Benefits or Remittance advice to the provider. These documents include all the details of the claim, such as the billed amount, covered amount, patient responsibility, and any adjustments made to the claim.
If, for some reason, the claim is denied, the provider will receive a denial notice that highlights the specific reason for the denial. The provider can then file for an appeal and send an updated claim after removing the error.
For transparency, the provider posts the payment to the patient’s account. Also, if there is any patient responsibility, the provider has to send a bill to the patient for any copays and deductibles.
Claim denial may occur due to several reasons, such as:
When a claim is denied, the billing team or the denial management team investigates the reason and takes suitable action by submitting an appeal. The appeal process may take somewhere between weeks to months. Here’s how the denial management team carries out the appeal process:
Efficient denial management is very crucial as it increases reimbursements and reduces financial losses for healthcare providers.
Patient billing is often the last part of the medical billing process where the provider bills a patient for any remaining balance. Once the insurance payments are processed, the provider then makes a bill for any deductibles or copays.
Accounts receivable, also known as uncollected revenue, is healthcare providers’ biggest challenge. This might include unpaid claims, rejected/denied claims, pending deductibles, and copays.
Most healthcare providers face staffing challenges when managing their medical billing processes. One of the most common problems is a shortage of qualified staff. Billing staff need regular training to stay up-to-date with the latest billing trends and HIPAA regulations. Besides, they often face difficulty managing billing teams.
Outdated billing software is also the reason why healthcare providers struggle with their medical billing processes. Billing companies that don’t have proper EHR integration also raise problems for healthcare providers. Billing software that lacks automation may also cause billing errors and complications.
Healthcare providers who don’t have a professional billing team often struggle with compliance issues. Going against HIPAA and state-specific billing regulations results in recurring audits and may result in possible penalties for non-compliance.
Coding complexities are also a major challenge for healthcare providers who don’t hire professional coders. The intricacies of ICD-10, CPT, and HCPCS often cause errors in claims that result in denials and rejections. The regulatory authorities regularly update the codes, making it difficult for healthcare providers to keep up.
Healthcare providers lose a significant amount of their reimbursements due to claim denials. The major factors responsible for claim denials include coding errors, incomplete documentation, credentialing issues, missed deadlines in claim submission, etc. Dealing with all of these problems is a big challenge for a healthcare provider who lacks a professional billing team.
Medical billing processes are getting automated. Professional billing companies and large healthcare providers use advanced billing software and tools to streamline their billing processes and procedures. Investing in advanced billing software can help you save a lot of time and increase your reimbursements.
Conducting regular audits can help you improve your medical billing cycle. These audits might include pre-billing audits, coding audits, compliance audits, denial audits, etc. Such audits not only improve your medical billing cycle but also play a crucial role in protecting your practice from non-compliance penalties.
Regular staff training has proved to be beneficial for improving the medical billing process. Well-trained medical professionals improve revenue collections and reduce the risks of non-compliance as they stay up-to-date with the latest regulatory updates.
Outsourcing medical billing to a professional service provider can have several benefits for you and your practice.
There might be several reasons for a claim to be denied by the insurance company, such as:
Processing time varies by insurer and claim type. Clean claims (error-free) are processed within 7-30 days, while denied or rejected claims may take weeks or months to resolve, depending on corrections and appeals. Medicare and Medicaid claims are often processed within 14-45 days.
A clean claim is a properly completed claim with no errors or missing information. It meets insurance payer requirements and is processed without the need for additional corrections or resubmissions.
The patient is usually responsible for the full cost if an insurance plan does not cover a procedure. The provider should inform patients in advance about potential out-of-pocket expenses. If there is a valid reason for coverage, the provider may also appeal to the insurance company.
An Explanation of Benefits (EOB) is a document sent by insurance companies that explains the services provided and charges billed. It also includes the amount covered by insurance and patient responsibility. It clearly mentions the reasons for partial payment or denial.
At Medi Billing, we provide comprehensive medical billing services that cover everything from coding and claims to payment recovery. We take the stress out of your revenue cycle across all specialties so you can dedicate your time to patient care.
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