The Different Types of Healthcare Billing Services Explained

Touseef Riaz

June 21, 2023

healthcare billing services

Do you want to avoid sifting through confusing healthcare bills and not knowing what services you’re being charged for? Look no further! In this blog post, we will break down the different types of healthcare billing services, from traditional fee-for-service to capitation and everything in between. Whether you’re a patient or a provider, understanding these billing models is crucial to navigating the complex world of healthcare payments.

healthcare billing services

Exploring Different Types of Healthcare Services

There are a variety of healthcare services that organizations can use to streamline their billing process and improve their bottom line. Here is a brief description of the many types of healthcare services:

Electronic health records (EHR) and practice management (PM) systems.

Organizations can use EHRs and PM systems to automate their healthcare billing process. These systems can help organizations keep track of patient data, manage appointments, and submit claims electronically.

Revenue cycle management (RCM) services.

RCM services can help organizations streamline their revenue cycle by providing tools and resources for claim submission, denial management, collections, etc.

Medical coding services.

Medical coding services can help organizations ensure they correctly code diagnoses and procedures for reimbursement purposes. However, inaccurate coding can lead to delayed or denied claims, so it is essential to have an accurate medical coding system in place.

Types of Healthcare Billing Services

There are two types of billing services: medical and insurance. Regarding medical billing, the process involves filing claims to health insurance providers and following up on them. Therefore, partnering with the best medical billing company is crucial to ensure efficient and accurate medical billing. On the other hand, insurance billing refers to the submission and follow-up of claims with government programs such as Medicare or Medicaid.

A medical biller, a physician, or a staff member at a hospital or other healthcare facility can do medical billing. The medical biller is responsible for coding the patient’s diagnosis and procedure codes and filing the claim with the insurance company. The physician or other healthcare provider is responsible for providing the medical biller with the necessary information to file the claim.

An insurance biller, a staff member at a hospital or other healthcare facility, or a physician can do insurance billing. The insurance biller is responsible for coding the patient’s diagnosis and procedure codes and filing the claim with the government program. The physician or other healthcare provider is responsible for providing the insurance biller with the necessary information to file the claim.

– Medical Coding

Medical coding is translating medical diagnoses and procedures into code numbers. The codes are used to bill insurance companies and other payers for healthcare services.

Three primary categories of medical coding exist the International Classification of Diseases (ICD), the Current Procedural Terminology (CPT), and the Healthcare Common Procedure Coding System (HCPCS).

ICD codes describe diagnoses, CPT codes describe procedures, and HCPCS codes describe supplies and services. Most insurance companies use a combination of all three coding systems.

Medical coding is a vital part of the healthcare billing process. With accurate coding, insurers could reimburse providers for their appropriately delivered care. 

Coding is typically done by trained medical coders who review patient records and convert the information into code numbers. In some cases, doctors or other clinicians may also do their coding.

– Claims Management

Several billing services are available to providers, each with strengths and weaknesses. Here, we’ll look at the most popular billing services to help you decide which suits your practice.

One of the most prevalent healthcare services is called claims management. This service handles all aspects of the claims process, from filing to payment. Claims management companies typically have a staff of experienced billers familiar with insurance company reimbursement policies and can get your claims paid quickly and efficiently.

However, claims management can be expensive, and it’s only sometimes necessary for smaller practices. If you’re starting out or only see a few patients per week, you may be better off handling your billing. But if you have a busy practice with many patients, claims management could be a good option.

– Patient Eligibility Verification

Patient eligibility verification is a critical component of the healthcare billing process. By verifying a patient’s eligibility, you can ensure that they can receive the care they need and avoid any potential delays in treatment. There are different ways to verify patient eligibility, including online tools, phone calls, and manual processes.

Online tools: Many healthcare billing software programs now offer devices that allow you to quickly and easily verify patient eligibility. These tools typically require entering the patient’s information into a database and returning results within a few minutes.

Phone calls: Another option for verifying patient eligibility is to contact the insurance company directly. This can be done by calling the customer service number on the back of the insurance card. Ensure all the necessary information before making the call, such as the policy number and date of birth.

Manual processes: Sometimes, you may need to verify patient eligibility manually. This can be done by requesting copies of insurance cards or other documentation from the patient. Once you have the necessary data, you can contact the insurance provider to verify coverage.

– Payment Posting and Reconciliation

There are a few different types of healthcare billing services, and each one offers another way to handle payments and reconcile them with patient records. The most common type of healthcare billing service is the claims-based billing service. This type of service uses a software system to submit claims electronically to insurance companies. The software system then tracks the claim’s status and ensures that it is paid promptly.

Another type of healthcare billing service is the fee-for-service (FFS) billing service. With this type of service, providers bill patients directly for their services. Patients then pay the provider either out-of-pocket or through their insurance company. Fee-for-service billing is often used by providers who do not accept insurance or offer benefits not covered by insurance plans.

The third type of healthcare billing service is the managed care billing service. Managed care organizations contract with providers to give members access to certain services at a discounted rate. Providers who participate in a managed care plan usually follow specific guidelines set by the managed care organization, such as using preapproved drugs and ordering tests only when necessary.

Regardless of your healthcare billing service, you must ensure your payments are posted promptly and accurately. You can do this by regularly reconciling your payment records with your patient’s medical records.

– Revenue Cycle Management

Revenue cycle management (RCM) is a process that healthcare facilities employ to keep tabs on patient care events from beginning to end. The goal of RCM is to optimize cash flow and reduce accounts receivable. 

There are three main steps in the revenue cycle management process: 

  1. Charge Capture: This step involves creating a record of the services rendered and coding them correctly for billing purposes. This ensures that the provider gets reimbursed for all their services. 
  2. Billing and claims processing: In this step, the claim is generated and submitted to the payer. Once the payer processes the claim, they will pay the provider.
  3. Collections: This step involves follow-up with payers who still need to pay the provider. It also includes working with patients who need help paying their bills in full. 

The method of revenue cycle management is intricate, yet it is crucial to ensure that providers get paid for their care. Many types of healthcare services are available to help with this process. Here are some of the most common: 

– Software as a service (SaaS): SaaS RCM platforms offer a web-based solution for managing all aspects of the revenue cycle. These platforms typically include features such as claims scrubbing, electronic billing, and automated collections. 

– Professional billing services: Professional billing services can help with all aspects of RCM, including coding and billing, collections, and denials management. 

– Onsite billing departments: Onsite billing departments can provide more personalized attention to the revenue cycle management process. They can offer coding, claim submission, and collections follow-up services. 

Management of the revenue cycle is crucial to the functioning of any healthcare business. By leveraging the right tools and services, providers can ensure they are paid for the care they provide promptly.

Benefits of Using a Healthcare Billing Service Provider

There are two types of billing services: in-house billing services and outsourced billing services. Regarding outsourced billing services, some of the largest medical billing companies in the industry offer their expertise. There are many benefits to using a healthcare billing service provider, especially when you partner with one of the largest billing companies. The most obvious benefit is saving you significant time and money. In addition, outsourcing your medical billing needs to one of these reputable companies allows your staff to focus on more critical tasks, such as patient care.

In addition, using a healthcare billing service can help improve your cash flow. A good billing service will diligently pay your claims promptly and correctly. They will also keep track of any payments that are still outstanding so that you can follow up with insurance companies or patients if necessary. This can help you avoid costly delays in getting paid for your services.

Another benefit of using a healthcare billing service is that it can help reduce your administrative costs. When you outsource your billing, you will no longer need to purchase expensive software or hire additional staff to handle billing tasks. In addition, many billing services offer discounts on their fees if you agree to use their electronic claims processing system, which can further reduce your costs.

Using a healthcare billing service can give you peace of mind knowing that your medical billing is handled by professionals who understand the ins and outs of the medical billing process. This is particularly useful if you are unfamiliar with all the medical billing and coding details. In addition, by entrusting this task to experts, you can focus on providing quality patient care without worrying about ensuring all the bills get paid on time.


Healthcare billing services are invaluable to any medical office, as they help ensure patients are billed accurately, and payments are received on time. We anticipate that this blog has improved your comprehension of the services available, so you can decide which is best for your practice. Whether you need basic invoicing or full-service revenue cycle management, there’s sure to be a solution that meets your needs.

Frequently Asked Questions

What are the three main types of healthcare services billing methods?

The three main types of healthcare services billing methods are:

Fee-for-Service: In this method, healthcare providers charge fees for each service rendered to the patient. The prices are typically based on a fixed rate or a fee schedule, and patients or insurance companies are responsible for paying the charges.

Capitation: Capitation involves a fixed payment per patient to a healthcare provider or a group of providers, regardless of the services provided. The provider is responsible for delivering all necessary healthcare services within the agreed-upon payment, incentivizing cost-effective and efficient care.

Bundled Payments: A single payment covers all services related to a specific episode of care or treatment. This method encourages coordination among healthcare providers, as they are financially responsible for the entire episode and have the incentive to deliver high-quality care while managing costs.

Do healthcare companies need baa with the billing provider?

Healthcare companies usually need to agree with their billing provider called a Business Associate Agreement (BAA). This agreement is a particular contract required by HIPAA in the United States. It helps to decide what the healthcare billing company and the billing provider must do to protect people’s private health information. The BAA ensures that both parties follow the rules of HIPAA and keep patients’ information safe and secure.

Does HIPAA apply to healthcare billing companies?

Yes, HIPAA applies to healthcare billing companies. The Health Insurance Portability and Accountability Act is called HIPAA, a law that protects people’s health information in the United States. Healthcare billing companies handle sensitive patient information, such as medical records and insurance details, as part of their billing services. HIPAA ensures that these companies follow specific rules to keep this information private and secure. It sets guidelines for how healthcare billing companies handle and protect patients’ personal information.


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