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Medical Billing

Written by   Updated June 25, 2024

In simple terms, medical billing involves creating healthcare claims or patient bills for insurance companies. These claims allow insurance companies to compensate healthcare providers for the services they offer. Once the service is documented, the medical biller meticulously tracks the process to ensure reimbursement for the provider’s work. An experienced biller can significantly improve the revenue performance of the practitioner or medical organization.

Medical Billing vs Medical Coding:

Medical Billing and Medical Coding are two separate but interrelated processes essential to the medical industry. They play vital roles in transmitting diagnoses, supplies, and procedures to federal or commercial payers like Medicare and Aetna.

Medical Billers and Coders work closely with clinical staff so, they should have knowledge of pathophysiology, medical terminologies, and anatomy to interpret medical reports and notes accurately. If we talk about small organizations, it is not uncommon for medical coders to work as both billers and coders. While these services are indeed different than each other, they have one thing in common which is being indispensable components of the revenue cycle of healthcare.

Medical Billers:

Within the healthcare ecosystem, medical billers facilitate communication among patients, healthcare providers, and insurance companies (payers) to ensure that the healthcare services are properly reimbursed. They start by gathering essential information such as patient demographics, medical history, insurance details, and records of services or procedures provided to the patient. This information can help billers analyze patients’ insurance plans and medical charts to confirm healthcare service coverage.

After gathering the necessary information, medical billers compile it to create medical claims, ensuring accuracy and completeness. These claims are then submitted to insurance companies for review and approval. Once approved, the insurance companies provide payment for the agreed-upon services, and the finalized claims are returned to the billers.

Medical billers are also responsible for creating patient’s bills before they consult their doctor or sometimes even before their appointments. This process begins by calculating how much the patient’s insurance is covering and subtracting it from the total cost of service or procedure, incorporating deductibles and copays, and accounting for any outstanding balance owed by the patient. If it is necessary medical billers also dispatch invoices to the patients and payments are recorded and balanced. However, there’s much more that fills the medical biller’s day, both before and after these essential tasks.

Medical Coders:

Just like Medical Billers, Medical Coders also play an important role in the medical billing process. Each time a patient visits a healthcare provider, their corresponding medical chart is created. Medical Coders then meticulously study these charts to extract chargeable information and translate it into standardized codes.

These codes are used to provide a universal language for communicating with payers, such as CPT®, HCPCS Level II, ICD-10-PCS are used for procedures to indicate what services have been provided by healthcare professionals, and codes like ICD-10-CM are used for diagnosis that explains why these services have been provided.

Medical coding and billing interrelate through standardized codes. These codes are used by medical billers to create insurance claims and patient bills, which ensures accuracy and compliance throughout the billing procedure.

However, The medical billing cycle starts before medical coding and continues until the healthcare provider receives full reimbursement for the medical service provided to the patient.

Process of Medical Billing:

Indeed the medical billing process involves many steps but, getting it right the first time and staying on top of things is very important. In many countries, insurance companies have to settle claims within 30 or 45 days. Missing these claim deadlines means losing out on coverage without any chance to appeal, which means losing out on reimbursement for the organization.

Even small mistakes anywhere in the billing process can cost a lot of time and money. That is why having medical billers on the team who are skilled and experienced is very crucial. The financial health of healthcare providers like doctors’ offices, hospitals, and surgery centers also depends on having a solid front and back-end billing team.

How is Front-end billing different than Back-end billing:

The medical billing process can be divided into two main stages: front-end and back-end. Front-end billing deals with steps taken before the patient sees the doctor. It involves front-office staff handling patient-facing activities crucial for accurate billing.

On the other hand, back-end billing tasks are not patient-facing and take place after the patient’s visit. During this stage, the billing staff handle various tasks related to reimbursement and claims management.

Back-end billing holds equal importance in managing the revenue cycle compared to front-end billing, although it tends to be more intricate. Errors in back-end billing can lead to serious consequences. That’s why having certified and skilled billers is crucial at every stage of this process, especially during tasks like claim preparation and post-adjudication activities, which underscore the level of expertise required in this profession.

Front-end Medical Billing:

If an organization hires a Front-end medical biller they expect the billler to have a good grasp of the different insurance providers their organization deals with. Knowing about these insurance providers and their health plans can help billers confirm insurance eligibility, stay updated on submission deadlines, and identify which insurance providers require service preauthorization to ensure smooth claim processing.

Registering an Insurance Claim:

The process of registering an insurance claim begins when a patient contacts the provider’s office to schedule an appointment or registers upon arrival at the hospital. During this stage, front-end staff collect essential patient information such as insurance details and demographics, either through direct interaction or completion of a registration form.

Keeping procedures consistent during patient registration helps billing staff minimize errors in data entry, ensuring precise patient information. This precision is important for verifying patient eligibility, evaluating benefits, and obtaining necessary authorizations in advance.

Checking Insurance Eligibility:

Before any medical service is billed, it is necessary for front-office staff members to verify if the patient’s health plan covers these services or not. This typically involves confirming eligibility dates, patient copayments, deductibles, coinsurance, and specific benefits related to the type and location of service.

Front-end Medical billers should also secure preauthorization as it is a requirement for some insurance companies before they pay for the patient’s medical services, especially for treatments conducted in specialized care facilities or non-routine healthcare settings.

Collecting Point of Service:

When benefit details are confirmed during eligibility checks, staff are informed about the patient’s financial obligations. This enables the biller to collect copays, deductibles, coinsurance, or any outstanding balance while the patient is checking in or checking out.

Point-of-service collections are critical in medical billing because they simplify the task of gathering patient payments upfront and help prevent issues like unpaid bills and financial losses.

Generating Superbills:

A super bill is created for every patient visit which includes patient details and a list of common services with their medical codes, along with space for clinicians to note diagnoses.

These forms are generated to document the services provided to the patient. Once the visit is complete, the provider marks the services provided and signs the form to confirm their completion and eligibility for billing. In cases where the provider uses an Electronic Health Record (EHR) and practice management system, the superbill is often digital.

Checking-out:

During this phase of the billing process, the staff schedules any necessary follow-up appointments and confirms that the doctor has filled out the superbill. It also offers another chance to collect point of service.

Following check-out, medical coders review the medical records and translate the billable details into medical codes.

Back-end Medical Billing:

In back-end medical billing, billers have to frequently interact with doctors to gather information about patient’s visits and their diagnoses so, it is crucial for billers to have proficiency in interpreting medical records and to be knowledgeable about standardized medical codes.

Charge Entry Process:

The superbill provides essential information to the charge entry team regarding the services and procedures performed during a patient’s visit, as well as the reasons for their necessity. This team then updates these details, along with any patient payments received, on the practice management system.

If a diagnosis is missing from the superbill, a crucial requirement for payer justification of medical services, then the charge entry staff are tasked with seeking clarification from the provider.

Moreover, it is the responsibility of the charge entry team to ensure the recording of all charges and payments precisely when reconciling patient charges. This process usually includes conducting reviews of charge capture at the end of the day. The team compares the total charges and payments from superbill entries with a printed system report that summarizes the day’s charge entry activities.

Claim Generation Process:

Once the teams update the charges and payment details, the next step is to create the claim. This involves compiling various procedures, diagnoses, and revenue medical codes.

Medical billers prepare the claim by extracting data from the superbill, either manually or with the help of a computer. The superbill, as a reminder, contains comprehensive details about the patient, services rendered, and associated diagnoses.

This detailed form also includes the date of service and essential provider information, such as name, location, signature, and NPI (National Provider Identifier). This form also contains provider notes and comments to support the patient’s claim. Additionally, it might include admission dates and information for both the billing and referring providers.

Once all this data is collected, it is converted into a claim format and forwarded for reimbursement to third-party payers.

Claim Scrubbing Process:

During the process of preparing claims, billers engage in claim scrubbing to verify the accuracy of procedure, diagnosis, and modifier codes, alongside ensuring the completeness of patient, provider, and visit details. This involves utilizing claim scrubbing software to detect and rectify errors.

Alternatively, some practices opt to send claims to clearinghouses, third-party entities tasked with reviewing, editing, and formatting claims before submission to insurance payers.

Types of Claim Forms:

Medical billers rely on two primary claim forms, the CMS-1500 and the UB-04. Centers for Medicare and  Medicaid Services are responsible for generating these forms to seek payments from insurers.

The CMS-1500 is utilized for detailing professional services rendered by healthcare providers and Surgical Centers, whereas UB-04, also known as the CMS-1450, is utilized for recording services and procedures carried out at inpatient facilities like hospitals.

Commercial insurers can have their own claim forms, but most of them now utilize CMS forms. Though understanding form fields is crucial for medical billers, most of the field completion is now automated within the modern management system.

Submitting Claims:

Provider organizations have two options for submitting claims: either directly to payers using HIPAA-compliant software or through clearinghouses. Clearinghouses review claims for compliance and return any needing corrections to billers.

After reaching payers, claims undergo processing and review by claims analyzers or adjudicators. The clearinghouse report details claim receipt by the payer and may include notes on various issues, like patient eligibility.

Tracking Claims:

After sending claims, medical billers keep track of their progress. Clearinghouses, if used, provide easy-to-access dashboards for updates on submitted claims. Once claims reach the payer, they undergo adjudication to determine reimbursement amounts based on the biller’s information.

After adjudication, payers issue two types of statements, Electronic Remittance Advice (ERA) to providers and Explanation of Benefits (EOB) to patients. ERA statement contains information about services paid, missing information, or reasons for claim denial.

Posting Payments:

Upon receiving Electronic Remittance Advice (ERAs) along with checks or direct deposits, physician practices or hospitals must post payments. This includes remittances, which frequently contain denial codes and other critical details.

The back-end billing team is tasked with matching payments to the patient accounts, reconciling them with their corresponding claims, and ensuring accurate information from the ERA (or EOB) against the received payments. At day’s end, medical billers must reconcile the direct deposits received and posted to maintain accuracy.

Dealing with Denials:

When insurers reject claims or face payment issues, acting swiftly is key. Upon denial, the remittance advice provides billing staff with codes and a brief explanation. They should review denied claims to see if more information is needed, if errors need fixing, or if an appeal is required.

In appealing denials, medical billers often collaborate with coders and after identifying the cause, the billing team drafts an appeal letter and resubmits the claims.

Patient Collections in A/R:

As the final step in medical billing, attention shifts to patient collections. Medical billers reach out to patients with overdue accounts, providing payment options like plans or online methods to expedite collections and minimize debt. After that, payments are transferred to accounts receivable (A/R) for meticulous tracking and recording.

Handling Credit Balances:

Managing Credit Balances:

Excess payments for medical services, known as credit balances, pose a risk to provider organizations. The billing staff needs to identify overpayments and issue refunds to the rightful parties promptly. Neglecting to address these overpayments could result in legal action and financial penalties.

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