Step OF Medical Billing Process | Complete Guide

Touseef Riaz

July 14, 2022

medical billing process

Providing quality healthcare to the patients isn’t the only thing that keeps the medical practice going. Revenue cycle management (RCM) or financials also require proper and close attention. The healthcare practice or physicians who fail to do so can barely remain viable and functioning compared to the one with the proper revenue cycle management. For an effective RCM, the correct medical billing and coding process has a significant role. Every healthcare organization has its way of handling claims based on its insurance payers.

Significance of revenue cycle management (RCM) in healthcare:

RCM plays an integral role in streamlining the workflow and cashflows of the healthcare practice allowing it to function smoothly. For this purpose, management and medical billing software automate several healthcare tasks including:

  • Registration or appointment scheduling
  • Claim submission
  • Tracking the claim
  • Posting of payments

The revenue cycle for any healthcare practice can be easily disrupted by even a minor mistake of entering incorrect patient information or code. Reimbursements for the services rendered by the healthcare provider or physician are what the practices rely on. Another key thing in medical billing is paperwork. The reimbursements/revenues for medical claims highly depend on accurate medical bills and documentation. The information in the medical claims should be accurate so that any healthcare provider or physician involved is getting properly reimbursed for their services. 

Medical Billing Process

Medical billing and coding are two essential processes for healthcare practices. They ensure proper data and information tracking along with the flow of information between the insurance carrier, healthcare provider, and the patient. 

Importance of medical billing and coding:

As mentioned earlier, reimbursements for the services rendered by the healthcare providers or physicians highly depend on proper medical billing. Not just for the providers, but accurate medical billing is also essential for patients. Correct medical billing ensures that patients don’t have to pay more for the service received than they should. Medical billing is a complex process involving three parties, the healthcare providers, insurance payers, and the patient. 

Medical Billing Process:

Medical billing and coding are complex and challenging tasks requiring proper and meticulous documentation. Moreover, medical billing software should be integrated with hospital management as they not only streamline the workflows, they also:

  • Ensure claims are processed properly
  • Ensure claims are being submitted in time
  • Make sure that payments for the services rendered are being collected on time rather than rejected or denied claims.

Errors in medical billing:

The entire medical billing process comprises several steps that can take up to days or weeks. Errors anywhere in the medical billing process can turn out to be quite costly in both financial as well as increased administrative tasks. These errors can lead to the medical claims being denied or rejected by the insurance payer. Common errors in medical billing include:

  • Missing or inaccurate information
  • Incomplete or incorrect documentation
  • Inaccurate codes – codes e.g., CPT, ICD-10, HCPCS, etc. 
  • Human error – typo, incorrect or switched number or alphabet in code(s). 
  • Duplicate coding – same procedure charged twice.
  • Billing the service that wasn’t provided
  • Unbundling – using separate codes instead of one comprehensive code for a single procedure.
  • Upcoding – provider billing a more expensive or comprehensive procedure than the one performed.
  • Under coding – the provider billing a less expensive code than the procedure performed.
  • Confusion between diagnosis and procedure codes. 

Step-by-step Medical Billing Process:

Compliance in medical billing is extremely important. To avoid any above-mentioned challenges and errors in medical billing following the below-mentioned steps properly can help. 

Step 1: Patient registration:

The very first step in the medical billing process begins when a patient calls in for booking an appointment with the desired healthcare physician. Information for the existing patients is already available in the file however, if a new patient is calling several details are asked. For instance, purpose/reason behind the visit, personal information, and valid insurance information. Based on the insurance information provided, healthcare providers can ensure whether the patient is eligible or the services are covered by the provider. 

Step 2: Confirming the financial responsibility:

Financial responsibility is the step that describes how much is owed by what party for the physician’s appointment. Once the valid insurance information of the patient is with the biller, they can determine what services are covered based on their insurance plan. 

There are various insurance carriers and plans that don’t cover several healthcare services. For medical claims, correct information is also extremely important. In case the patient’s insurance carrier doesn’t cover the service, the healthcare provider or the biller must inform the patient regarding their financial responsibility. In a scenario like this, the patient is the one who has to cover the service/bill entirely on their own.    

Step 3: Meeting with the physician:

This is the step where the patient and the healthcare physician meet. In this meeting, the patient explains their symptoms and healthcare issues to the physician. Based on the information provided by the patient, the physician decides on an appropriate examination and/or treatment plan. A medical claim for this encounter is prepared/transcribed based on the information gathered in this meeting via audio or video recording. Transcribing medical information into a documented form is also known as medical transcription. 

Step 4: Medical Coding: 

Medical reports from the meeting are then sent to the medical coder who uses valid and correct codes – translating the information mentioned in the report. The report contains the patient’s demographic and medical information & history, known as the superbill. Every important piece of information from patients, providers, payers, and physicians’ names to services performed and codes are included in superbill. This report includes codes for diagnosis and the procedure or services performed as well as any other necessary medical information required. 

Medical coder utilizes the information present in the medical reports and the certain guidelines provided by the American Medical Association (AMA). This information is converted into alphanumeric codes and includes the following:

  • The reason behind the medical visit
  • Diagnosis (types of diseases)
  • Treatment, procedure, or service provided by the physician
  • Location of where the procedure was performed

Step 5: Preparing the claims and checking the compliance:

The superbill is then converted into a medical claim by the medical coder who puts it into billing software or healthcare management software. The medical biller is also responsible for putting the cost of the procedures or services performed by the physician into the claim. The claim must contain the accurate amount incurred for the services or procedures provided. The claim form is entirely and thoroughly checked for any errors before submitting it to the insurance provider. This is done to reduce the risk of claim denials or rejections, therefore, avoiding any late or no payments. 

The information included in a medical claim form includes:

  • Patient information
  • The patient’s medical history – provided by them
  • Procedures or services provided by the physician along with their correct codes
  • National Provider Identifier (NPI) number
  • Insurance provider’s information
  • Place of service code

Step 6: Claim submission:

Once the medical claim is prepared with the valid patient, physician, and insurance payer’s information in the claim form, it is then submitted to the payer. In the era of advanced technology, medical claims are now submitted electronically via EDI (also known as Electronic Data Transfer). To ensure proper claim submission, the following are the three steps to be followed:

  • The relevant information in the claim form is checked by the electronic health record (EHR) software. It checks whether required fields are filled along with their codes or not in the claim form. 
  • Patient information like name, date of birth (DOB), policy coding errors, name of the policy, etc. are verified by a third-party vendor. 
  • Lastly, the insurance payer also verifies the information of the patient present on the claim along with:
    • Policy
    • Coding errors
    • Or whether the requirements have been fulfilled. 

In case, any discrepancies are found in the medical claim, the insurance payer can deny or reject the claim. 

Step 7: Monitoring adjudication:

Once the medical claim is submitted to the insurance payer, it undergoes a process called adjudication. In this process, the insurance payer thoroughly verifies the information present in the claim and decides on whether it is valid or not. This also determines what amount will be paid by the payer to the healthcare provider. Adjudication is the stage where the medical claim can be accepted, rejected, or denied. 

Once the information is verified and a decision is made, the final report is sent to the healthcare provider. This report contains information on how much or what amount will be paid by the insurance payer (if the claim is approved). It details all the procedures along with their respective payments and what procedures are covered. After the report is received by the provider, they can appeal in case of any discrepancies in the report. 

Step 8: Generating patient’s statements:

After the report from the insurance payer has been received, the biller can begin the process of preparing the patient’s statements. This statement contains the procedures covered or received by the patient. Once the insurance payer has agreed to pay/cover a specific amount of the procedure on the medical claim, the rest has to be paid by the patient. 

Step 9: Denial management:

Another major fact about medical claim submission is that insurance payers only accept timely and accurate claim submissions. Therefore, late submissions will be denied or rejected. In case the insurance payer also finds any discrepancy in the claim, they can deny or reject it. Denied claims are revisited by the medical billers/provider and submitted back to the insurance payer to generate maximum revenues. Healthcare provider also notes the errors previously made in the medical claim to lower the risk of repeating the errors and future claim denials or rejections. 

Step 10: Follow-up with the patients:

This is the final step of the medical billing process which includes following up with the patients regarding their copayments. Medical billers are the ones responsible to ensure that the healthcare provider is properly reimbursed for the services rendered by them. This process may include:

  • Directly getting in touch with the patients
  • Sending a follow-up of the medical claim

Every healthcare provider follows its own set of rules, regulations, and guidelines for billing timelines based on the payers. Before engaging in any activities, one must understand the provider’s set of guidelines, notifications, and regulations. 

Why should medical billing software be implemented?

Healthcare practices have several insurance payers on board with each one of them having its own set of rules and guidelines for billing. For proper medical billing, the provider must know and check in with every payer to ensure error-free claim submission and revenue generation. 

However, a highly sophisticated medical billing software can automate the entire medical billing process, therefore, lowering the risk of errors. Hence, lower claim rejections or denials as well as ensuring a smooth revenue cycle management. Highly advanced medical billing software can be easily integrated with the hospital management system and you are good to go! 

Best practices for proper medical billing:

  • Keep a clean claim rate above 95%
  • Keep up-to-date with coding guidelines and payer requirements
  • Verify patient’s insurance information, coverage, and eligibility criteria
  • Minimize errors in medical coding
  • Manage the claim denials and rejections promptly

Outsourcing medical billing:

Benefits of outsourcing medical billing to well-reputed medical billing include the following:

  • Reduced risk of errors 
  • A team of highly experienced and dedicated professionals 
  • More focus on providing quality patient care
  • Lesser claim denials 
  • Higher clean claim rate
  • Faster payments
  • Higher reimbursement rate
  • Improved revenue cycle
  • Timely submissions 

Frequently Asked Questions (FAQs)

What is the purpose of the appeals process in medical billing?

The medical billing appeals process is used by the healthcare provider or physician. It takes place if the insurance payer or the patient doesn’t agree with the procedure performed and the provider isn’t reimbursed. 

How does the medical billing process work?

The medical billing process comprises several steps (back-end and front-end). These steps include:

  • Registration/check-in
  • Verifying the insurance information
  • Meeting between patient and the provider
  • Medical Transcription
  • Medical coding
  • Preparing the claim – charge entry
  • Submitting the claim
  • Denial management
  • Account receivables
  • Collecting the payments

Who is involved in the medical billing process?

The medical billing process comprises a total of three parties; the healthcare provider/biller, the insurance payer, and the patient. The medical biller is the one responsible for ensuring proper reimbursements for the provider as well as a smooth and error-free claim submission. The medical biller is also responsible for claim preparation. 

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