Jane Dotson
Medical billing is a critical process within the healthcare industry, ensuring that healthcare providers are compensated for their services and that patients can access care without financial barriers. The medical billing process involves several steps, from patient registration and insurance coverage verification to claim generation, submission, and payment management. It's important for patients to understand key terms and steps in the process to prevent unexpected costs and identify errors. This includes knowing CPT codes, which help standardise billing and facilitate communication between healthcare providers and insurance companies.
| Characteristics | Values |
|---|---|
| Medical billing process | Involves compiling claims, coding medical procedures, submitting claims to insurance companies, and managing payments and follow-ups |
| Medical coding | Medical coders review the medical chart and extract billable information that they then translate into standardized codes |
| Procedure codes | CPT, HCPCS Level II, or ICD-10-PCS |
| Diagnosis codes | ICD-10-CM code set |
| Insurance coverage verification | Contacting the insurance company to verify the policy’s effective dates, the type of plan, and covered services |
| Preauthorization | A healthcare provider needs approval from the health plan before you can get certain treatments or procedures |
| Patient registration | Gathering demographic details, insurance information, and creating a comprehensive patient profile |
| Claim forms | CMS-1500, UB-04 |
| Claim decision-making process | Adjudication |
| Consent document | Advance Beneficiary Notice of Noncoverage (ABN) |
| Insurance terms | Allowed amount, Applied to Deductible (ATD), Assignment of Benefits (AOB), Authorization, Authorization Number, ChampVA, Secondary Insurance, Deductibles |
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What You'll Learn
Understanding key terms in medical billing
Medical billing involves a lot of jargon, which can be confusing for patients and medical professionals alike. Here is a list of terms to help you understand the process better:
Medical Biller
A medical biller is an individual who works between patients, healthcare providers, and insurance companies to arrange for the reimbursement of healthcare services. They review medical charts and insurance plans, verify coverage, generate medical claims, and prepare patient bills.
Medical Coding
Medical coding is the process of translating medical information from a patient's chart into standardized codes. These include procedure codes, such as CPT, HCPCS Level II, or ICD-10-PCS, and diagnosis codes using the ICD-10-CM code set. These codes are used to create insurance claims and bills.
CPT Codes
CPT stands for Current Procedural Terminology. These are five-digit codes that correspond to specific medical services and procedures. CPT codes allow healthcare providers and insurance companies to communicate and track billing efficiently.
HCPCS Codes
HCPCS stands for Healthcare Common Procedure Coding System. These are standardized five-character alphanumeric codes used for billing Medicare and Medicaid patients. HCPCS codes include CPT codes and are used for services, procedures, and equipment not covered by CPT codes.
Insurance Claim
An insurance claim is a request sent to an insurance company for reimbursement or coverage of medical services. The claim includes details of the services provided, along with the corresponding CPT or HCPCS codes.
EOB (Explanation of Benefits)
An EOB (Explanation of Benefits) is a statement sent by the insurance company to the patient, explaining what services were covered and the associated costs. It may include the allowed amount, which is the negotiated cost between the insurance plan and the healthcare provider.
Primary Insurance
The primary insurance plan is responsible for paying the bill first. If a patient has multiple insurance plans, the secondary insurance will cover additional costs, such as deductibles and copays, after the primary insurance has paid its share.
Deductible
A deductible is the amount a patient pays out-of-pocket before their insurance plan starts covering the costs. Deductibles typically apply per person per calendar year and may vary depending on the insurance plan and the type of service.
Preauthorization
Preauthorization, also known as prior approval or precertification, is when a healthcare provider needs approval from the insurance plan before providing certain treatments or procedures. If preauthorization is not obtained, the insurance plan may not cover the care.
Allowed Amount
The allowed amount, or negotiated rate, is the pre-negotiated cost agreed upon between the insurance company and the healthcare provider for a specific service. The combined total paid by the patient and their insurance should not exceed this amount when using an in-network provider.
Understanding these key terms can help you navigate the medical billing process more effectively and ensure that you are adequately informed about your financial responsibilities.
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How to verify insurance coverage
Verifying a patient's insurance coverage is a crucial step in the healthcare revenue cycle. It helps providers and patients plan for their financial responsibilities and ensures that patients are not met with unexpected bills. It is also important for the financial security of the organisation, minimising claim rejections and delays in payment.
The first step in verifying insurance coverage is to obtain the patient's insurance ID and policy number. This will allow you to identify their insurance account accurately. It is also important to collect the patient's personal details, such as their full name, date of birth and address, and match them with the information on the insurance card. Take note of the type of insurance plan (HMO, PPO, etc.) and gather employer information for plans provided through work. If the patient has secondary insurance, ensure that you collect these additional coverage details as well.
Once you have the necessary information, there are several methods you can use to verify insurance coverage. One traditional method is to call the insurance provider and speak to a representative. This allows for direct communication and a comprehensive understanding of the patient's benefits and eligibility. You can ask the representative to confirm the information you have collected, check if the policy is active and when it expires, and inquire about the patient's copay and deductible amounts. Alternatively, many insurers have online portals where you can enter the patient's information to verify their coverage. However, these portals may not always be up-to-date, so your verification results could be inaccurate.
To streamline the insurance verification process, many organisations are now turning to automated insurance verification software. These systems can automatically check a patient's policy and notify staff of any changes, reducing the manual workload and minimising errors. With the patient's insurance information entered into the system, you can instantly verify their coverage and benefits.
In some cases, it may be more efficient to outsource insurance verification to a third-party medical billing and collection service. These services can handle the entire medical billing and coding process, including insurance verification, claim submission, and denied-claim management.
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Medical coding and billing
The billing process often begins as soon as the patient makes an appointment, as codes may be entered and submitted to an insurer for pre-approval. This helps determine what the patient’s out-of-pocket expenses will be, so the office can charge the patient for that amount at the time of the visit. A medical biller needs to understand the industry codes, review the reasons behind any denied insurance claims, and may be responsible for updating the codes before resubmitting the claims. A medical biller will also verify that the codes are entered correctly before submitting the initial claim. Once the insurance billing is settled, the remaining balance will be invoiced to the patient. This process also falls to the medical billing specialist. Medical billers also determine co-pay requirements, track payments, and follow up on outstanding payments from insurance companies and patients.
Medical coders review the medical chart and extract billable information that they then translate into standardized codes. Procedure codes tell the payer what service the healthcare provider performed, while diagnosis codes, reported using the ICD-10-CM code set, tell the payer why the patient received the services. Medical billers primarily use one of two claim forms to obtain payment from insurers: the CMS-1500 claim form and the UB-04 claim form. The CMS-1500 claim form is used to report professional services performed by providers and Ambulatory Surgical Centers, while the UB-04 claim form is used to report services and procedures performed at inpatient facilities, such as hospitals.
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Claim denials and appeals
If your health insurance claim is denied, you have the right to appeal the company's decision. Approximately 17% of in-network medical insurance claims were denied in 2019 by HealthCare.gov issuers, so this is not an uncommon issue. There are typically two levels of appeal: internal appeal and external review. In an internal appeal, you ask the insurer to reconsider its decision. You must file your internal appeal within 180 days (6 months) of receiving notice that your claim was denied. You can write to your insurer with your name, claim number, and health insurance ID number, and submit any additional information that you want the insurer to consider, such as a letter from your doctor. The insurer must then provide you with a written decision.
If your claim is still denied after the internal appeal, you can request an external review. This is where an independent third party reviews your claim and makes a decision. The insurance company no longer has the final say over whether to pay a claim. You can request an external review at the same time as your internal appeal if your situation is urgent.
For health plans purchased through the Affordable Care Act (ACA) Marketplace, there are typically two levels of appeal. However, non-ACA health plans may have three levels—two internal appeals and one external review. For both original Medicare and Medicare Advantage (MA) plans, there are five levels to the appeals process. Each decision notice will include instructions for moving to the next level of appeal. You may be able to combine claims to meet the minimum dollar amount required for a judicial review in federal district court.
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Billing and payment posting
Billing
Medical billing refers to the process of creating and submitting insurance claims and bills for patients. Medical coders review medical charts and extract billable information, which they translate into standardised codes. These codes include procedure codes, such as CPT, HCPCS Level II, or ICD-10-PCS, and diagnosis codes using the ICD-10-CM code set. These codes inform the payer about the services performed and the reason for the patient receiving them.
Once the codes are assigned, medical billers generate medical claims, review them for accuracy, and submit them to insurance companies (payers). The payers then process and approve the claims, determining the amount they agree to pay. This approved amount is based on the patient's insurance coverage and the pre-negotiated contracts or regulations.
Payment Posting
Payment posting is a critical stage in the medical billing and revenue cycle management process. It involves recording payments in medical billing software, allowing providers to view payments from patients, Explanations of Benefits (EOBs), and insurance checks from Electronic Remittance Advice (ERAs). This process provides financial oversight, enabling the early identification and resolution of any issues, such as incorrect calculations or entries.
Payment posting helps streamline the billing process, reducing errors and saving time. It assists in identifying uncovered procedures that require prior authorisation and notifying patients. Additionally, it aids in reconciling patient accounts, ensuring accurate billing, and facilitating the collection of outstanding patient balances.
To ensure a smooth billing and payment posting process, it is essential to have a well-organised system, efficient claim submission, and prompt attention to any issues or errors that may arise.
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Frequently asked questions
Medical billing is a critical process within the healthcare industry that ensures healthcare providers are accurately compensated for the services they offer. This process involves compiling claims, coding medical procedures, submitting claims to insurance companies, and managing payments and follow-ups.
The steps involved in medical insurance billing include:
- Patient registration: Gathering patient information such as demographic details, insurance information, and creating a comprehensive patient profile.
- Insurance coverage verification: Contacting the insurance company to verify coverage, effective dates, and preauthorization requirements.
- Medical coding: Translating medical procedures and diagnoses into standardized codes for billing purposes.
- Claim submission: Submitting claims to insurance companies for reimbursement.
- Payment posting: Receiving and reconciling payments from insurers or patients, updating patient accounts and sending statements for outstanding balances.
- Follow-up and appeals: Investigating and resolving any denied or underpaid claims, and providing additional documentation if needed.
Some key terms include:
- CPT codes: Standardized codes used to describe medical procedures, ensuring uniformity in billing.
- Preauthorization: Approval from the insurance company that may be required for certain treatments or procedures.
- EOB (Explanation of Benefits): A summary of the services provided, costs, and the amount covered by insurance.
- Deductible: The amount a patient pays before the insurance company starts paying.
