Medical billing is a complex process and it comes with a lot of compliance challenges and meeting the unique sets of instructions and codes given by insurance companies and many other connected parties. But how does medical billing work? Medical billing is required to list the services rendered by the physicians, nurses, and medical staff. It can be at a separate medical facility, a hospital, or any clinic where the standards are met for providing the services to patients.
Medical billing can only be done for the providers who are allowed to provide their services for which they need to be credentialed. Their credentials will allow them to get paid or reimbursed for the services by the insurance companies the patients are listed under.
But that’s not all. There is a list of essential checkboxes that make a proper medical bill. To learn these essentials, understanding how does medical billing and coding work is important. Let’s dive deep into knowing the rooted information and guide you through the crucial aspects of medical billing from an expert’s point of view.
What is the medical billing process and how does medical billing work?
The process of medical billing includes registering the first clinical examination of a patient and recording every care, treatment, and administration given to all the services rendered. The process is connected with three main participants, including the patient, the provider, and the insurance company, and all the other communication between them through documentation. It is necessary for providers to register all the services, suggestions, and advice that patients require during the hospital visit. This is because the billing process requires codes for every service and provider involved in the treatment. Every code represents a specific service and information, which are later modified by the modifiers.
This process is also called the medical billing cycle. The overall effectiveness of your practice is highly depending on the average time this cycle takes to complete. For instance, if a facility is completing the cycle in 40-50 days, it is likely that it will receive the payments within 30 days or less. How can you maximize the possibility of receiving the payments and optimize your revenue cycle?
There are several steps that you should consider while speeding up your billing cycle. This may include accelerating your billing process, taking measures to increase the chances of medical bills and claims on the first attempt, and adapting the latest technology to minimize the time it takes and errors the billers can make. This can be done by introducing medical billing software, which will ultimately ease and speed up the process. To help you understand how you can optimize these tasks to receive complete and quick payments, let’s take a closer look in to the steps involved in the medical billing process.
Steps Included in the Medical Billing Cycle
Step 1: Registering the patient
The process begins when a patient requests to have your services. Once the request is generated, the patients will be registered. Patients are requested to provide their health histories, insurance information, and other important data required to record if the patient requires a new registry or a returning patient.
The returning patient will involve the reason they came last time, the treatment they had, and the provider details they visited. History also contains information about the prescribed treatment and follow-up details which help the provider to proceed further.
Step 2: Analyzing the financial responsibilities
Once the initial process of registration is completed, you need to analyze the treatments that are covered under their insurance plan. Insurance plans have very strict and specific plans for treatments and medical care. These plans keep changing time to time annually, this is why a practice needs to be updated by the guidelines shared and updates on the latest requirement.
Step 3: The Use of Correct Codes
Medical billing processes on two sets of codes, which record the interaction between the providers and patients’ interaction. One of them is called the International Classification of Diseases (ICD), governed by the World Health Organization. These codes represent the issue, and the issues are evaluated. These codes are updated regularly. Medical billers use the current version of code ICD-10 with the amendments of ICD-11, all set to become the code standards in 2025.
The other medical codes used in medical billing are Current Procedural Terminology (CPT) codes. They are developed and managed by AMA – American Medical Association. These codes are used for the treatments administered by the medical providers. These codes are essential to be used accurately for smooth reimbursement against the rendered services.
In short, ICD codes represent the symptoms for which a patient arrives and CPT are for the treatments that practitioners prescribe. As a healthcare provider, you need to record both codes for the services rendered and the issues that arise. It is near to impossible to remain vigilant while using these codes in your billing process. Because it has nearly 10,000 codes for ICD and around 70,000 CPT codes. This is why medical billing departments employ system software for the billing process to expedite the process and make sure that the software is up to date according to the updated list of codes issued annually.
Step 4: Compiling the codes to create a superbill
Once the patient checks out, it’s time to compile all the documents and gather information about the treatment and care to form a SuperBill. This superbill will make an initial statement for your claim as it contains all the information, including what happened at the facility during patient visits what treatment is prescribed, etc. Here is an overview of what your Superbill may include;
- Provider information
- Patient Information
- Full Name
- Date of Birth
- Contact Information
- Insurance Information
- Full Name
- National Provider Identifier (NPI) number
- Location
- Contact Information
- Referring Provider Name and NPI
- Signature
- Visit Information
- Date of Visit
- All Relevant CPT and ICD Codes
- Any Fees Charged
- Duration of Visit
Step 5: Preparation and claim submission
A superbill will be used to make a claim and submit it to the insurer for reimbursement. The medical claims can easily be rejected by missing information, a small mistake or code error, and just by not providing the complete information of the patient.
This is why it is always handy to provide as much information you have which may lead to higher and quicker acceptance rate of your claims. When your claims get first-pass acceptance, they are also referred to as “clean claims”. They provide the best way to measure how efficient is your medical billing cycle.
Step 6: Payer decree on medical claims
When the insurance payers receive your medical claims, they will evaluate its validity and analyze its acceptance, denial, or rejection. It is essential to determine the difference between these three to understand the medical billing process better:
Acceptance
If a claim is accepted, it is an ideal outcome for a service provider. Once the claim is accepted, it will be processed for payment. It is not necessary that the claim will be paid in full for all the services and treatments. However, depending upon the insurance plans and coverage, the services and claimed amount will be evaluated and reimbursed.
Denials:
Denied claims are the ones that are denied even when they are filled properly but they miss the information or the service doesn’t apply under patient’s plan. This is why it is important at the first step of medical billing process to ensure the services are covered under patients plan.
Once the claim is denied, understanding the reason for denial is important so you can prevent your claims from being denied again.
Rejection:
Rejected claims cannot be resubmitted as denied claims. A claim is rejected mostly due to mistakes in providing information or filing the claim during the medical billing process. In the United States, a large number of claims are never catered, resulting in a huge revenue loss every year. This is why it is necessary to re-evaluate the rejected claims and have a system in place to rework the rejected claims in a timely and keep the revenue cycle going.
Step 7: Creating patient statement
After when the insurance payer passed the claims, they sent the remaining owed amount to the patient in a separate patient statement. If everything is listed accurately according to the rendered services, the patient ill pay the remaining amount to the provider and the visit requisition from the patient will come to an end.
The steps can be different according to the payer and the insurance company’s requirements. This is why you always make sure to understand the process of medical billing from your payer to have a smooth revenue cycle.
Step 8: Follow up
It is important to follow up on the claims that reside with the patients. Once the payer sends the statement to the patient, the service provider has the liability on its own to work and reduce payment issues and take necessary measures to make the payments as smooth as possible.
Remove barriers and simplify the payment process by maintaining a smooth payment system online or making it simple and convenient for them to pay. The more patient finds it challenging to pay, the more it is likely for patients to pass the case to collection agencies.
Final Thoughts
The medical billing process is a challenging yet tiring job for medical billers. Keeping yourself updated with the medical billing and coding process will help your practice receive on time and complete reimbursements. Make sure that a medical billing system is adapted for quicker and easy payment solutions. This will help providers make accurate billing claims and reduce billing errors that may lead to claim denials and rejections.
FAQs:
What is the basic process of medical billing?
The basic process of medical billing involves registering the patient by taking history and insurance information, analyzing if the patient is covered for the treatment asked for, the use and implication of the correct codes, compiling the codes by complying with the guidelines provided by the insurance and medical organizations, preparation of the insurance claims and submission, and follow up on claim status and the patient’s statement.
How do medical bills work?
Once a patient is discharged from the hospital, the billing department invoices insurance companies for the rendered services. These invoices also called medical bills or claims represent the medical liability of the insurer and patient against the hospital facility or private clinic.
What does medical billing do?
Medical billing process is important to get paid for the services provided by the healthcare providers in every facility and specialty. It helps providers to smooth the process of their revenue cycle.
Is medical billing difficult to learn?
Medical billing can be daunting for those who are not aware of the medical terminology, billing procedure, and coding. The process becomes more challenging when the codes for every disease or process get updated. This is why to jump in to the medical field, one must have a good understanding of medical billing and coding.
