What is medical billing?
Medical billing is the process of creating claims sent to insurance payers to reimburse procedures and services offered by healthcare providers. It helps healthcare providers maximize revenue and detect leakages. Medical billing also involves reviewing a patient's records using procedure and diagnosis information. Once a service is translated into a claim, the medical biller tracks the reimbursement process to ensure appropriate payments.
What do medical billers do?
Medical billers perform all the processes involved in the billing cycle. They work before, during, and after a patient visit. They serve as the bridge between patients, providers, and payers. They gather patient demographics, medical history, insurance coverage, and specific services or procedures.
Medical billers review patients' medical records and insurance policies. They create claims, verify their accuracy, and submit them to the payers. After the claims are processed, payers return them with the approved payment amounts.
Medical billers also prepare the patient's bill. Patient billing includes subtracting the reimbursed amount, factoring in copays and deductibles, and calculating patient balances. Invoices are sent to patients for payments. These are recorded and reconciled if needed.
Medical billing process
The medical billing process is a series of steps that medical billers follow to collect reimbursements for the services offered by healthcare providers to the patients. Most states require payers to process claims within 30 to 45 days. Payers have strict claim filing deadlines. Missing these results in claim denials with no appeal option.
Healthcare providers' financial stability relies heavily on the efficiency of front-end and back-end billing teams. Skilled medical billers can effectively manage this process. The medical billing cycle involves multiple steps that take several days to several months. Here are the steps involved in medical billing.
Patient registration/check-in
When patients register or check in, the medical biller gathers essential information such as name, address, and insurance coverage details. Collecting this information upfront is crucial to verify it before services are provided.
Insurance verification and eligibility
Once the patient is checked in, the medical biller verifies insurance details and determines whether the patient's planned procedure or service is covered under their insurance plan.
Patient demographics entry
When patients contact healthcare providers for a particular treatment, their demographic information, including age, sex, race, etc, is gathered. Some of this information is required for the treatment, while other details are collected for record-keeping or claim submission.
Obtain medical records for coding
After demographic entry, the medical biller retrieves the patient's medical records. These records provide the details needed to assign appropriate medical codes. The claim is then shared with the necessary parties involved in the billing and care process.
Charge entry
In this process, medical billers assign a dollar value to the patient's account based on the procedures performed during their visit. The medical codes determine the appropriate charges for a claim.
Claims submission
Once the claim has been reviewed and corrected for errors, it is submitted to the payers for evaluation. The insurer will determine what will be covered and what the patient's financial responsibility will be. If the claim is denied, it must be updated in the record, and the reason for the rejection must be documented and addressed.
Payment posting
Once the healthcare provider receives their payment, the medical biller posts it into the billing software. This update offers an overview of the provider's cash flow. Payment posting is also a final check to identify and correct potential errors.
Accounts receivable follow-up
Medical billers follow up on outstanding payments, also known as accounts receivable, to ensure prompt payment. It may involve contacting patients to collect any amounts they owe or contacting insurance companies to confirm the payment status.
Denial management
If a patient or a payer denies payment, the process moves into the denial management phase. During this stage, the medical biller conducts a root cause analysis to assess whether the denial is justified. If the denial is incorrect, the biller files an appeal.
Reporting sent to client
Once the billing process is finalized, the medical biller generates a report for the care facility. This report includes vital metrics such as the payments received, procedures performed, and the number of adjustments made throughout the claims process.
Type of medical billing
Medical billing is divided into three major tyoes.It encompasses the entire claims submission process to ensure that healthcare providers receive reimbursement. Medical billing systems are categorized into:
- Closed system
- Open system
- Isolated system
Medical billing systems directly affect the revenue cycle. It handles claims submission, accounts receivable management, and more. Understanding billing systems can help healthcare providers optimize their overall RCM and increase cash flow.
Closed system
A closed medical billing system uses digital tools to manage records within a single practice. One of the most common tools is EMRs (Electronic Medical Records), which store comprehensive patient information: diagnosis, treatment, and care plans. EMRs act as electronic versions of paper charts and are restricted to use within the practice. A closed system may be sufficient for practices with fewer physicians or those not connected to more extensive networks. However, transitioning to an outsourced revenue cycle management approach may be necessary for broader needs.
Open system
An open medical billing system is designed for greater collaboration and accessibility. It allows various stakeholders to access and share information. This system uses EHRs, which can be edited by multiple medical professionals while ensuring data security against unauthorized access. The flexibility and integration of open systems helps healthcare providers optimize revenue cycle management.
Isolated system
An isolated medical billing system is maintained personally by patients, who use specific software tools to record their health information. This system relies on PHRs (Patient Health Records), where patients manually input and manage their details. While PHRs facilitate personal record-keeping and communication, they do not replace legally recognized systems like EMRs and EHRs. PHRs are primarily for patients' personal use and do not offer the same integration or security features as other billing systems.
Medical billing stages
Medical billing stages are the steps and processes medical billers follow while submitting their claims. The medical billing process is divided into two key stages: front-end and back-end.
Front-end billing involves patient-facing tasks, such as check-in, registration, and verifying insurance information. This stage begins when a patient schedules an appointment or registers at a hospital, and front office staff collect demographic and insurance details. They also generate an encounter form, or superbill, to document the services provided during the patient visit. Front-end staff must be familiar with the organization’s payer mix and know how to verify insurance eligibility.
Back-end billing handles more complex tasks related to claims management and reimbursement. After the patient visits, charge entry staff input service details from the superbill and adjust for any upfront payments. Back-end staff then create and scrub the claim, ensuring all necessary codes and patient information are accurate and complete. Claim scrubbing software often helps identify and correct errors to avoid denials. Once finalized, the claim is submitted electronically to the payer.
Outsourcing medical billing services benefits
Outsourcing medical billing services has numerous benefits to healthcare providers. They can focus on what matters most—caring for their patients and staying updated with modern treatments. Much of their staff shares this focus, so it’s no surprise that medical billing often falls lower on the priority list.
Today, outsourcing medical billing to companies like PCH Health offers world-class service to healthcare organizations. With the latest technological innovations and expertise, some providers see up to 30% savings in billing and collection costs! Here are the other benefits of outsourcing medical billing services.
Reduce errors
Outsourcing medical billing services leads to fewer errors in insurance coding and patient communication. Without the burden of maintaining an in-house billing team, your practice can run more efficiently and cost-effectively. The savings can be reinvested in patient care, equipment, and service upgrades.
Stay compliant with industry standards
Private payers and government programs constantly update their guidelines. Keeping up with these changes can be a full-time job. Outsourcing this function ensures that your practice stays compliant, avoiding costly mistakes and lost revenue.
Improve cash flow
Outsourced medical billing services streamline the process, sending out bills faster and receiving payments sooner, all while reducing administrative costs.
Increase revenue
Medical billing service providers can introduce additional revenue opportunities, such as trans-promotional marketing. It includes offering screenings, vaccines, other medical services, and patient bills, encouraging engagement, and boosting revenue streams.
Enhance security
Reputable outsourcing companies like PCH Health have secure processes to protect sensitive data, adhere to HIPAA standards, and ensure patient confidentiality.
Maintain control
Your practice can offload billing tasks with a trusted billing partner while maintaining transparency and accountability.
Boost patient satisfaction
Outsourced billing providers represent your practice, and the best way to treat this responsibility is with care. They can offer the same professionalism and empathy your patients experience in your office.
Top 10 medical billing challenges
Healthcare providers, regardless of their specialty, encounter challenges when it comes to medical billing. Here are the top 10 medical billing challenges:
Lack of resources
Insufficient resources—such as poor customer support, limited patient education tools, or inadequate billing software—force providers to rely on outdated methods. Proper medical billing resources are essential for maximizing clean claims and boosting revenue.
Patient education
Patients who understand their bills can probably make timely payments. All providers face the challenge of educating patients about their billing. Quality practice management systems, EHRs, and billing software can help streamline patient education and improve outcomes.
Payment accessibility
Providers that limit payment options often experience payment delays. Offering multiple payment methods, including online payments and credit card options, increases accessibility and improves payment timeliness.
Quality customer support
Your medical billing software vendor should provide reliable, U.S.-based customer support to resolve operational issues quickly. Providers lacking access to solid customer support may struggle to optimize their software fully, reducing overall efficiency.
On-time payments
It can be difficult to ensure timely payments from insurance companies or patients. Some medical billing software vendors offer tools that help practices increase on-time patient payments by automating reminders and simplifying the payment process.
Filing multiple claims
Filing multiple claims can be a time-consuming process. For example, nephrologists often file hundreds of dialysis claims at once. Without a mass claim creation tool, they must file each claim individually, which disrupts clinical workflows and hinders efficiency.
Denied claims
Denied claims are frustrating and hurt the bottom line. For constantly changing billing codes, using the right tools can help providers increase their clean claim rate to 99%, reducing the risk of denial and protecting revenue.
Lack of implementation support
Insufficient vendor implementation support can spell trouble when adopting new medical billing software. A smooth implementation process is crucial for billing success and ensures your practice's workflow isn't disrupted.
Inadequate medical billing software
Medical billing software that isn't customized for your practice can cause inefficiencies. Avoid "all-in-one" solutions that claim to work for all specialties. Instead, seek a billing system tailored to your specific needs.
Revenue loss
Revenue loss due to simple errors is incredibly frustrating for providers. Investing in tools that help minimize these mistakes is vital for a healthy bottom line and meeting financial goals.
Medical billing best practices
Medical billing best practices are tried-and-tested processes that can help healthcare providers achieve growth goals. These steps are previously followed by leaders in medical billing, and they help healthcare providers increase accuracy and efficiency. These practices establish a structured framework and offer a clear roadmap for staff. Here are the medical billing best practices healthcare providers must follow.
Collect accurate patient information
Collecting accurate patient information helps healthcare providers make informed decisions, ensures patient safety during treatments, and supports medical billing and claims processing. It streamlines the entire medical billing process. Patient information refers to data, including demographics, diagnoses, treatment plans, medication records, allergies, and past medical procedures.
This process involves:
- Cross-referencing patient-provided information
- Verifying insurance coverage
- Validating medical codes and billing details.
Clear documentation
Clear documentation comprehensively records patient information, medical procedures, diagnoses, and treatment plans. These records are crucial as they provide a detailed account of the patient's healthcare journey and enable accurate coding and billing.
- Physical records include a patient's medical history, diagnoses, test results, and treatment plans. They are typically stored in paper or electronic health records.
- Coding and billing records focus on translating medical services and diagnoses into standardized codes.
Physical records offer a complete view of a patient's health, and coding and billing records are essential for effective revenue cycle management.
Efficient coding
Efficient coding in medical billing involves translating complex medical services, procedures, and diagnoses into codes.
ICD, CPT, and HCPCS are essential coding systems in medical billing. These systems play distinct but complementary roles in the healthcare RCM. Medical codes ensure adequate documentation and communication of patient diagnoses and procedures while facilitating billing and reimbursement.
ICD-10 is a standardized system for coding and classifying diseases, conditions, and medical procedures. It ensures accurate and consistent documentation supporting diagnosis, treatment, and insurance claims.
On the other hand, CPT coding is a standardized system used to describe surgical, medical, and diagnostic services and procedures provided by healthcare professionals.
HCPCS codes are similar to CPT codes. They include codes for equipment, supplies, and other services not covered by CPT codes, such as ambulance rides, DME, and prosthetics.
On-time claim submission
The timely claim submission process in healthcare involves sending detailed bills and documentation to payers. It typically includes patient information, provider details, medical procedures, diagnosis codes (such as CPT, HCPCS, and ICD-10), and itemized billing.
There are two primary types of claim submission processes in healthcare: paper-based and electronic.
Paper-based claim submission
It involves generating physical claim forms, filling them out with patient and service details, and mailing or faxing them to the payers. This process is slower, prone to errors, and can lead to delays in reimbursement.
Electronic claim submission
Electronic claim submission involves submitting claims electronically through healthcare software. Providers input patient data and codes into the system, which then transmits the claim directly to the payer. Electronic submission is faster and more accurate and reduces the risk of errors, leading to quicker reimbursement and a more streamlined billing process.
Regular audits and compliance
Regular audits are essential components of medical billing. Audits involve systematic reviews of patient records, claims, and billing procedures. These audits help identify errors, irregularities, or fraudulent activities in billing practices.
Compliance with HIPAA is also crucial. It involves following federal and state laws. Healthcare practices should conduct internal audits to review billing and coding practices for accuracy and compliance. This proactive approach helps detect and correct errors before they cause considerable damage.
HIPAA compliance focuses on adhering to regulations that protect patient privacy and healthcare data security. This federal law requires healthcare providers, insurers, and related entities to maintain the confidentiality and integrity of patient information.
Regular audits and compliance measures protect patient data, enhance billing accuracy, and ensure that healthcare practices operate within legal and ethical boundaries.
Medical billing software
Medical billing software is a MedTech solution designed to automate billing tasks and optimize business management processes in healthcare. These tools replace traditionally manual practices, such as billing and claims management, with automated systems.
Healthcare providers use medical billing software to submit claims and manage communications with multiple insurance providers. Additionally, healthcare providers can utilize this software for payment tracking and patient billing management, streamlining their financial operations.
Benefits of medical billing software
There are endless benefits to medical billing software. The right medical billing software can simplify the complexities of billing and collections. Here are a few of the critical benefits that medical practices can gain from using billing software:
Error reduction
Automated systems help minimize human errors in coding, billing, and claims management, leading to efficient processes.
Automated processes
Routine tasks such as claim submission, payment tracking, and patient invoicing are streamlined, freeing staff time to focus on other essential duties.
Data security
Advanced medical billing software ensures that sensitive patient information is securely stored and managed, helping practices comply with HIPAA regulations.
Flexible payment options
Medical billing software often includes features that offer patients various payment methods, improving payment accessibility and timeliness.
What is medical billing and coding?
Medical billing and coding are the most critical processes of healthcare RCM. Medical coding involves translating diagnoses, treatments, and medical procedures into standardized codes used by healthcare providers, insurance companies, and government agencies. In contrast, medical billing focuses on submitting and managing claims with insurance companies to ensure payment for the medical services provided to patients.
The importance of medical coding and billing
Medical coding and billing are important for maintaining accurate patient records, ensuring efficient communication among healthcare providers, and managing healthcare costs.
Medical coding ensures that procedures and treatments are accurately documented, enabling healthcare providers to deliver high-quality care.
Medical billing is essential for securing proper reimbursement for services rendered, which helps maintain the financial stability of healthcare organizations.
Differences between medical coding and medical billing
The primary distinction between medical coding and medical billing lies in their objectives. Medical coding involves converting medical procedures into standardized codes. In contrast, medical billing is focused on submitting claims and securing payment.
While medical coding centers on translating procedures into codes, medical billing ensures that payment for those services is appropriately managed.
Another critical difference is the training required for each role. To achieve proficiency, medical coders must complete specialized training programs and pass certification exams. Medical billers also undergo specific training, emphasizing understanding insurance requirements and mastering the billing process.
RPD in medical billing
RPDs (Remote Patient Devices) are wearable health monitors and home-based diagnostic tools, enabling continuous tracking of a patient's health metrics outside traditional clinical environments. They are revolutionizing healthcare delivery and management. Integrating RPDs into healthcare has improved patient outcomes by allowing real-time monitoring and early intervention. However, they have also added new complexities to the medical billing process.
RPD in medical billing involves considering various factors, such as the cost of the devices, data transmission fees, and the professional services needed to interpret the collected data. As a result, billing systems must be highly flexible to ensure that all services associated with RPDs are appropriately documented and reimbursed.
The increasing use of RPDs also calls for a reassessment of current billing codes and practices. Existing codes may not fully capture the range of services provided through remote monitoring, which could result in gaps in reimbursement. Healthcare providers and billing professionals must stay updated on the latest regulations and codes related to RPDs to avoid these issues.
Furthermore, insurance companies are still in the process of adjusting their coverage plans to include RPDs, which can lead to inconsistencies in reimbursement. To navigate these challenges, healthcare providers should invest in advanced billing systems capable of managing the specific requirements of RPD-related services. This approach ensures appropriate compensation for the care provided and supports the ongoing expansion of remote monitoring technologies, ultimately improving patient care and outcomes.
EOB in medical billing
An EOB (Explanation of Benefits) is not a bill. It is an essential reference for understanding the financial aspects of medical care, helping patients track their healthcare expenses, and identifying any discrepancies or errors in billing. It communicates between the insurance company and the patient, explaining how the claim was processed and how much the patient may owe out-of-pocket. It is a crucial document in medical billing that provides:
- Detailed breakdown of the services a patient receives
- Amount billed by the healthcare provider
- Portion covered by the patient's insurance
The EOB includes several critical pieces of information:
- Date of service
- Type of service provided
- Amount the healthcare provider charged
- Amount the insurance company allowed
- Any payments made by the insurance
- Amount the patient is responsible for paying.
EOD may also detail reasons for any adjustments or denials of coverage, such as non-covered or out-of-network services.
EOBs in medical billing are critical to ensure that patients are being billed correctly and to avoid unexpected medical expenses. Additionally, healthcare providers rely on the EOB to confirm the accuracy of the reimbursement process and to address any issues that may arise, ensuring the financial health of their practice.
What is authorization in medical billing?
Authorization in medical billing is the process of obtaining approval from a patient’s insurance company before a specific medical service, procedure, or prescription is provided. This approval, also known as prior authorization, pre-authorization, or pre-certification, is required to ensure that the insurance will cover the cost of the service. It is typically necessary for more expensive or specialized procedures, hospital stays, certain medications, and other services that are not routinely covered under a patient's health plan.
The authorization process involves:
- The healthcare provider submitting a request to the insurance company, detailing the medical necessity of the service.
- The insurance company then reviews the request to determine if the service is covered under the patient’s plan and whether it meets the criteria for medical necessity.
- If approved, the insurance company will provide an authorization number, which the provider includes in the billing process to ensure proper reimbursement.
- If the service is not authorized, the patient may be responsible for the full cost of the service, or the provider may need to appeal the decision.
Authorization is a critical step in the medical billing process because it helps prevent delays in payment and ensures that both the provider and patient understand what will be covered. Failing to obtain proper authorization can result in denied claims, financial losses for the healthcare provider, and unexpected costs for the patient. Therefore, it is essential for healthcare providers to have a thorough understanding of the authorization requirements of the insurance plans they work with and to communicate clearly with patients about their responsibilities.
Charge entry in medical billing
Charge entry in medical billing is a critical process where the healthcare provider's rendered services are recorded and entered into the medical billing system. This step involves assigning the appropriate charges to each patient's account based on the services provided, typically documented by the healthcare provider through medical codes. The accuracy of charge entry is vital because it directly impacts the revenue cycle, determining the amount billed to the patient or their insurance company.
During the charge entry process, billing specialists must ensure that all relevant patient information, including demographic details, insurance information, and the correct coding for services, is accurately recorded. Any errors or omissions in this stage can lead to claim denials, payment delays, or even underpayment, which can affect the financial health of the healthcare provider. Additionally, accurate charge entry is essential for compliance with healthcare regulations, as improper coding or billing can result in penalties or audits. Healthcare providers can optimize their revenue cycle by ensuring precision in charge entry, minimizing claim rejections, and maintaining a smooth billing process.