Introduction to Medical Billing

3.01: Introduction to Medical Billing

By now you have a good idea about the practice of medical coding. But we still don’t know much about what those codes are used for.

While it’s true that we can use diagnosis and procedure codes to track the spread of disease or the effectiveness of a particular procedure, their main use in the United States is in the reimbursement process. In other words, codes help us bill accurately and efficiently.

Let’s take a closer look at why we bill.

Why we bill

Going to the doctor may seem like a one-to-one interaction, but in reality it’s part of a large, complex system of information and payment. While the insured patient may only have direct interaction with one person or healthcare provider, that check-up is actually part of a three-party system.

The first party is the patient. The second party is the healthcare provider. The term ‘provider’ includes hospital, physicians, physical therapists, emergency rooms, outpatient facilities, and any other place where medical services are performed. The third and final party is the insurance company, or payer.

It’s the medical biller’s job to negotiate and arrange for payment between these three parties. Specifically, the biller ensures that the healthcare provider is compensated for their services by billing both patients and payers. We bill because healthcare providers need to be compensated for the services they perform.

In order to do this, the biller collects all of the information (found in a “superbill”) about the patient and the patient’s procedure, and compiles that into a bill for the insurance company. This bill is called a claim, and it contains a patient’s demographic information, medical history, and insurance coverage, in addition to a report on what procedures were performed and why.

More about Insurance

Let’s take a quick step back to talk briefly about the insurance process. Health insurance is insurance against medical expenses. Put simply, people with health insurance, sometimes called ‘the insured’ or ‘subscribers,’ pay a certain amount in order to have a degree of protection against medical costs.

Health insurance comes in a number of forms, including:

• Indemnity, or pay-for-service insurance, in which the patient may choose any provider they like. This insurance is typically costlier, but grants the insured person more flexibility. As healthcare prices rise, indemnity insurance is becoming less and less popular.
• Managed care organizations (MCO): This is a blanket term that includes organizations like Healthcare Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Patients have fewer options as to which providers they can see, but their premiums and deductibles are fixed and are generally lower. Essentially, managed care insurance restricts patient’s options but also lowers the cost of having health insurance. This is the most popular form of health insurance in the United States today.
• Consumer-driven health plans
• We’ll look more at health insurance in just a bit, and we’ll look even deeper into the insurance claims process later on.

With each of these types of insurance, there are procedures and services that are covered, and some that are not. It’s the medical biller’s job to interpret a patient’s insurance plan (or plans) and use this information to create an accurate claim.

More About Claims

The creation of the claim is where medical billing most directly overlaps with medical coding. Medical billers take the procedure and diagnosis codes used by medical coders and use them to create claims.

Procedure codes, whether Current Procedure Terminology (CPT) or Healthcare Common Procedure Coding System (HCPCS), tell the payer what service the healthcare provider performed. Diagnosis codes, documented using ICD codes, demonstrate medical necessity. In other words, procedure codes tell the what of a patient’s visit, and the diagnosis codes tell the why.

The biller adds information about the patient and the patient’s visit, along with the cost of the procedure or procedures performed, to the claim. So the claim now has a what, a why, a who, a when, and a how much.

At this point, the biller also checks to make sure a claim is compliant. That is, the claim is factually and formally correct. This is a complicated process, as the biller must know what the claim allows so that the payer can fully evaluate the procedure and decide how much they will reimburse the provider. If the claim is approved, it’s sent back to the biller with the amount the payer is going to pay. The biller then takes the amount, called the balance, and sends it on to the patient.

Day-to-Day Activities

Now that you’ve got a little more information about the overall process, here’s a quick look at the day-to-day activities of a professional medical biller.

Working with Patients

• When a patient receives medical services from a healthcare provider, they’re typically presented with a bill at the end of their services. The biller creates this bill by looking at the balance (if any) the patient has, adding the cost of the procedure or service to that balance, deducting the amount covered by insurance, and factoring in a patient’s copay or deductible.
• Billers also work daily with a patient’s medical records. Where coders use medical reports to accurately translate medical services into code, billers abstract information from patients’ medical records and insurance plans to create accurate medical bills.

Working with Computers

• Today, almost every doctor’s office in the country uses some form of practice management software. This software keeps track of patients, helps schedule visits, stores important medical information and generally helps the practice run smoothly.

Creating Claims

• The majority of a medical biller’s day is spent creating and processing medical claims. Billers need to be familiar with what type of claim an insurance payer accepts, and adjust their claim creation accordingly. Billers may also work frequently with insurance clearinghouses to streamline the claims process. Billers also have to check that each claim is compliant. Ideally, every claim a biller sends out will be “clean.” A clean claim contains no errors, and will be processed speedily by the payer, ensuring that the healthcare provider gets reimbursed quickly and efficiently.

Notification and Communication

• A biller is constantly in communication with insurance payers, clearinghouses, providers, and patients. Since the biller acts as the waypoint for the reimbursement process, they frequently have to clarify and follow-up with all parties of the healthcare process.
• Billers also explain and notify patients of their bill. Billers are in charge of issuing Explanations of Benefits (EOBs) to patients, which list which procedures are covered by the payer and why.
• Billers must also follow up with patients about paying the balance on their medical bills.

Collections

• In the case of a patient with delinquent bills, a medical billing specialist may have to arrange for collections on that debt. This is not necessarily a “day-to-day” activity, as one would hope that a provider’s patients were not ignoring their medical bills on a daily basis, but it is something to be aware of.

In the courses that follow, we’ll learn more about the steps of the medical billing process, the insurance claims process, Medicare and Medicaid, and HIPPA.

 

The ten steps in the process of Medical billing are as follows:

1. Patient registration
2. Insurance verification
3. Encounter
4. Medical transcription
5. Medical coding
6. Charge entry
7. Charge transmission
8. AR calling
9. Denial management
10. Payment posting.

1. Patient Registration:

• Data or the information which includes insurance verification is detailed in a format to process the claim for the service rendered by healthcare.
• RCM  company holds a strong grip on patient’s record in order to support flawless billing.
• The above method applies only for the new appointment. The information of the old appointments will be already saved.
• It gives medical billers a chance to verify with details provided before claim submission.

2. Insurance verification:

• Medical billing team verifies the patient’s insurance strictly end to end.
• Eligibility and policy benefits are thoroughly focused.
• It makes a clear note if the insurance claim can be obtained for the services rendered.
• It checks the patient responsibilities such as co-pay, deductible and out of pocket whether patient had accumulated the expenses.
• Under certain services, prior authorization is required from insurance company, if not service is ready to be provided.
• The staff uses software system to verify the patient’s data in order to speed up the work.

3. Encounter:

• When patient consults healthcare provider, the details of the condition and service performed is recorded either by audio or video.
• These particulars may be recorded in front of the patient or after the encounter.
• It gives a clarity about the condition and medications that healthcare provider had prescribed.
• They submit the record to the RCM company to process medical billing and claim the revenue.

4. Medical Transcription:

• Recorded audio or video is transferred into a medical script. The script contains complete condition of the health record.
• The process of transferring voice-recorded or video-recorded medical reports by healthcare providers is termed as medical transcription.
• Maintaining a formatted and edited file is important. Make sure the transcription does not hold any false or wrong data as it might put patient’s health at risk.

5. Medical Coding:

• The transcripted information is converted into medical codes for easy and time-saving procedure.
• The transformation of patient’s condition, medical services, medical prescription into medical codes is called medical coding.
• Reading the complete medical history of the patient consumes more time. So, it’s scripted into codes.
• Only the medical team is involved in medical coding. They ought to have experienced and skilled in particular areas of medical coding.
• Coders rely on DX (condition of the patient), CPT (service rendered to the patient) to transcript the medical record into medical coding.

6. Charge entry:

• Charges for the services rendered are specifically entered in the sheet before claiming from insurance company.
• Patient’s medical records are clearly monitored and charged with an appropriate value.
• The charges entered will be claimed by the medical billing company with insurance for reimbursement.
• Charge entry sheet must contain no errors or else it may reflect during a claim.
• For easy revenue claims and payment posting, accurate entry is necessary.

7. Charge Transmission:

• Transmitting the claims with accurate coding through EDI (Electronic Data Interchange) to the insurance company is called Charge transmission.
• Only clean claims without errors will be transmitted through EDI.
• Errors in transmission carry three levels:

1. Scrubbing- Mandatory fields has to be filled without any mistake.Otherwise, the software would reject the claim.
2. EDI rejection- Invalid information held in the patient’s record will cause claim rejection by EDI.
3. Payer rejections- Rejection in claims occur according to the insurance guidelines and payer details.

• Denials or payments are processed only after these three levels.
• Medical billing claims follow a secured and encrypted transmission process.

8. AR Calling:

• AR caller concentrates on lower denials and increase payment flow in Revenue Cycle Management.
• Their timely follow up with insurance company increases payment receivals.
• AR caller’s main focus is to ensure payment posting for the services rendered by healthcare providers.
• They hold a responsibility in sharing accurate details or information of patient and rectify if any errors found.
• Correspondence and return mails from insurance and patient.

9. Denial Management:

• Denial management is an important key factor in Revenue Cycle Management.
• It motivates a profitable revenue growth by reducing the denials with insurance company.
• Addressing the denied claims on various issues and maintain constant follow-up.
• Taking appropriate actions to decrease denials and increase revenue payments.
• Determine the causes for denials and to reduce the risk of future denials.
• Each denied claim is analysed and researched by denial management team for best cource of action.
• Quicker payments for the denied claims within short period of time.
• Prioritize denied claims based on payer,amount and others to ensure maximum reimbursements.

10. Payment Posting:

• Role of payment posting team is to ensure frequent payment posting to the patients without facing denials.
• EOB (Explanation of benefits), correspondence, ERA (Electronic remittance advice) received from the insurance will be posted to concerned patient claims.
• Denials and payments are captured by the posting team with EOB or correspondence receivables from insurance companies.
• It’s important for the posting team to match the bulk payment receivables in order to tally with the cheque amount.
• With the reference to the payment posted to the practice accounts including patient and insurance revenue will be calculated.

Medical Billing Process at Outsource2india

As a busy healthcare provider, you need a medical billing solution you can count on. That's where Outsource2india excels! We have a proven record of success in expert medical billing procedures. Our medical billing process flowchart shows how our focus on accuracy and quality ensures the best results for your practice.

Medical Claims Submission Process - 8 Steps

The medical billing process flowchart at O2I follows a series of clearly defined steps with a complete focus on accuracy, quality and process audits. The following are the steps involved in the medical billing process at O2I -

Claims
Transmission

1

Retrieval & Checking of Medical Claims

2

Medical
Coding

3

Charge
Creation

4

Medical
Claims Audit

5

Medical Claims Transmission

6

Claims Submission to Agencies

7

Follow-up and Settlement

8

1. Claims Transmission to O2I - The hospital forwards the claims to our medical billing team digitally or via courier. The medical claim is supported by patient details such as charge sheets, a copy of the insurance card, demographics, insurance verification data, super bills, and any other patient related information. All such documentation is then uploaded to our secure FTP server for access by our expert staff.
2. Retrieval and Checking of Medical Claims by our Team - Once the documents are retrieved, they are checked for legibility and completeness. If necessary, the hospital billing office is notified so that any discrepancies can be solved.
3. Medical Coding - An important step in the medical claims submission process is fixing the procedure and diagnoses codes for each patient based on standards like CPT (Current Procedural Terminology) and ICD-10 (International Classification of Diseases). The level of service determines the associated 5-digit procedure code; the diagnosis code is based on the medical diagnosis made by the doctor.
4. Charge Creation - Incomplete or incorrect information is the number one cause of medical claim rejections. Our expert medical billing professionals will guard against this by careful attention to detail. We create appropriate medical claims based on billing rules pertaining to specific carriers and locations. All medical claims are created within agreed turnaround times - generally 24 hours. The medical claims are checked for complete information, correct procedures and correct diagnosis codes.
5. Medical Claims Audit - A thorough medical claims audit is done at multiple levels within O2I.
6. Medical Claims Transmission - Medical claims are filed for follow up before they are sent electronically to the claims transmission department with all relevant information.
7. Claims Submission to Insurance Agencies - The audited, listed and recorded medical claims are now printed out and dispatched to the appropriate insurance agencies. Any necessary attachments or supporting documents that may be required for ultimate settlement are included.
8. Follow-up and Settlement - In this final stage our expert medical billing team follows up with the insurers and payment agencies until the final settlement is disbursed.

Medical records of patients at a hospital contain demographic details about the patient, summary of his medical history, summary of diagnoses and regular medical updates on each physician visit. The patient settles the payment by submission of his medical insurance details at the hospital front desk. It is implied that the hospital or healthcare facility receives the final payment only when the insuring agency settles the claim.

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Advantages of Outsourcing Medical Billing Process to O2I

There are some of the most common concerns while outsourcing medical billing services to India, these are - chances of healthcare fraud, inaccuracies in submission of medical claims, non-conformance to existing Federal, State and Payer regulations, stringent compliance requirements and unfamiliarity with US medical billing laws.

Read an article to know more about healthcare fraud and abuse - a grave problem that needs attention.

However, Outsourcing Medical Billing Process to India can be a boon if you get in touch with reliable service providers like Outsource2india who follow all the rules and regulations, and can offer high-quality affordable prices. We have wide experience in offering healthcare outsourcing services including patient demographics entry, charge entry and posting, accounts receivable and claims follow-up, among others. Read more about the advantages of outsourcing medical billing to India.

Outsource2india has over 22 years of experience in providing expert medical billing services to healthcare BPO providers, medical billing companies and insurance companies in the US and UK.

1. Quality Assurance at O2I

   • Medical claims audit
   • Strict quality control standards
   • Quality assurance reviews of all claims before submission
   • Billing and coding claims review log
   • Monthly billing review

2. Communication Best Practices

   • Email, fax and voice communication
   • Use of templates and protocols to streamline medical billing process. Both O2I and the customer review updated spreadsheets and medical billing review logs
   • All electronic documents preserved for 120 days unless otherwise specified (with all paper documents being destroyed)

3. Security Measures at O2I

   • Confidentiality of billing data
   • Restricted employee access to files and folders
   • Patient data privacy
   • Secure FTP servers
   • Systematic data backup of all patient visits
   • Detailed internal data and communication backup

4. Compliance Standards at O2I

   • HIPAA compliant
   • Trained in regulations related to Indemnity Insurers, Managed Care, Medicaid, Medicare, Preferred Provider Organizations, Third-Party Liability, Workers Compensation,
   • Proficient in medical claims standards such as CPT, HCPCS, ICD-10
   • Proficiencies in Medical Coding - Level I, II, III

Outsource Medical Billing Services to O2I

Outsourcing medical billing is a common practice today and O2I has the skill, expertise, and knowledge to deliver cost effective, quality results. If you would like to find out more about O2I's medical billing services, please fill in the inquiry form and our Client Engagement Team will contact you within 24 hours.

We will be privileged to assist you through the outsourcing process by catering to all your medical billing requirements. 

The Medical Billing Process - Step By Step

Detailed medical billing instructions, with screenshots.

1. Patient Registration (IF you are on the front lines)

Greet the patient upon arrival.

If the patient is new or hasn't been in for quite a while, give them a registration form (This contains all the demographic information needed in the next few steps).

Give the patient the HIPAA Privacy notice after the office policies in regards to Protected Health Information have been explained (this will need to be signed by the patient).

Make a copy of the Patient's Insurance Card (front and back).

Create a new patient account or update an existing account using the information provided by the registration form.

Create a new encounter form and attach it to the patient file (This is usually done in offices that are still using paper methods).

2. Insurance Verification/Authorization

This is to be done before the patient is seen by the doctor!

You need the patient's name, the policy holder's name and date of birth, group number, and the policy number. With the exception of the patient's name (if they are not the policy holder) this information is located on the insurance card.

Call the number for the insurance provider; this information is located on the back of the patient's insurance card. Ask to verify medical coverage.

The representative will ask you a series of questions. Provide the information required. Insurance verification information will be provided. This may include such things as the policy's effective dates, co-insurance, deductibles, etc.

Finally, request the information to be emailed or faxed to your office. Place a copy in the patient's medical records for future use.

You can also verify insurance information using the office Practice Management System.

Start by opening the Online Eligibility button from the main menu of the PMS. Open the patient's account. The patient's information is already entered for you. Check for any errors and make sure the correct insurance type (primary, secondary, or other) is selected.

If everything is correct, click the Send to Payer button to begin the verification process. When the transfer is complete, click the view button to see the results.

The information provided by the Online Eligibility Report includes the Insurance Provider name, Policyholder name, status (hopefully it states ELIGIBLE), patient's name, patient's DOB, patient's gender, office co-pay/deductible, account number, and the healthcare provider's name.

Click the Save button to place it in the patient file and close the window.

3. Encounter Form

The encounter form contains both procedural and diagnosis codes which correspond with the patient's examination. It is filled out by the physician after the patient encounter.

Make sure the encounter form is filled out completely. Identify any additional notes the physician has made.

Parts of the encounter form:

• Patient name - the name of the patient receiving the services.

• Reference number -identifies and matches documentation of services posted to the PMS.

• Place of service - where the encounter took place - office, hospital, homecare.

• Date of service - date of the patient encounter.

• Procedure list - lists the practice's most common procedures and their codes.

• Miscellaneous - where any procedures not listed can be written in.

• Amount paid - deductibles and copays made by the patient at the time of the encounter.

• Diagnoses not listed - are where any unlisted diagnosis are filled in.

• Diagnoses list - the physician places a "1," "2," or "3" on the line to the right of the diagnosis code to represent the primary, secondary, and tertiary diagnoses.

• Advanced Beneficiary Notice (ABN) - lets patients know when Medicare is likely to deny payment for certain services.

• Doctor's Signature - signature to confirm the information the encounter form contains.

• Patient return - indication of when the patient should be seen again.

• Practice and physician information - practice demographic information and EIN number.

4. Coding

First identify any diagnosis listed on the encounter form. If a diagnosis cannot be assigned, note any symptoms as reasons for the visit. Also, locate any procedures performed during the patient's visit; these are also found on the encounter form.

To code for the diagnosis you need the ICD-9-CM code book.

First look up the name of the diagnosis in the alpha-index followed by the tabular index. Verify any diagnoses codes found on the encounter form. Each diagnosis must match the code description.

Always locate the term you are looking for in the alpha-index before trying to find it in the tabular list; this will keep errors to a minimum.

To code for any procedures, drugs, or other services provided to the patient use the CPT code book.

The encounter form is the first place to look. There will be codes for the type of encounter as well as codes for the procedures performed during the patient encounter.

First look up the procedures in the alpha-index followed by the numerical index. If you are not familiar with a procedure, start your search by the anatomical body system.

READ CAREFULLY. The CPT code descriptions can be very tricky. Just like the ICD-9 codes, CPT codes have to match exactly. Verify any codes found on the encounter form.

5. Demographic Entry

Most of this section should have been done at registration and is located in the practice management system (PMS).

The following steps may vary depending on the type of PMS your office utilizes.

Assuming you work in a computerized office, open the PMS, click on patient registration, and find the patient you are dealing with.

Input any information required including the patient's name, social security number, address, gender, marital status, date of birth, employer/school, phone number, and whether the patient is the guarantor (person responsible for paying medical expenses).

Next enter the spouse/parent/other information. Usually this consists of their name, gender, birth date, Social Security Number, address, employer, and whether they are the guarantor.

If it is not already done, enter all the data for the patient's primary insurance. Include the type of plan (HMO, PPO, BCBS, etc.), the patient's relationship to the policy holder (self, spouse, child), the policy holder's information (name, address, DOB, phone number, etc.), the office co-pay, etc.

6. Charge Entry

Refer to the encounter form for required information.

Open the Practice Management Software and click on the procedure posting button. Open the patient's account information and click the add button.

Enter the reference number, service provider, place of service, date of service, procedures, diagnoses, modifiers, insurance to be billed, and whether the encounter was related to an accident.

This has to be done for each CPT code. The PMS will automatically generate the charge for each CPT code used.

When entering the diagnosis codes, be sure to enter the primary code in the first spot (usually box A) followed by the secondary code (box B) and so on.

When you are finished with the entries, check them for accuracy. Click the post button when entry is completed.

7. Claims Submission

Each insurance provider may have different requirements for information provided on claim forms. It is beneficial to check with the insurance provider regarding the specific process required.

The 2 most widely used methods to submit a claim is electronically or by paper.

Electronic claims are more efficient in terms of reimbursement. The office's PMS has a claim preparation function to help you process a claim.

The following steps may vary with each PMS:

1. Click the Insurance billing button in the main menu.

2. Select the following settings: sort by patient name; bill by the healthcare provider you are processing the claim for (bill by all if you are sending a batch).

   Select the service dates by entering them in the "From" and "trough" fields; select the patient name and patient account number (select all in both fields if sending a batch); check "electronic" in the transit type field; check which billing option you are using - "primary" for primary insurance, "secondary" for secondary insurance, and "other" for any other payers; select which payer is being billed.

3. Click the Prebilling Worksheet button to view the report of claims and check for any errors. (Return to patient account to make any corrections.) If no corrections are needed, close this window and proceed to the next step.

4. Click generate claims button. View the claim form and check for any errors. If no corrections are needed, close this window and proceed to the next step.

5. Click on the Transmit EMC button to send the claims to the insurance provider/clearinghouse. An automated upload will start and display a Transmission Status window. The transmission is complete when the window says that is has disconnected.

To submit a paper claim manually, enter all the necessary information on the CMS form required. Once completed, review the claim for any errors. If there is no errors, mail the claim forms and any attached documentation to the insurance provider. If possible, mail as a certified letter; this allows for easier tracking.

A Practice Management System may also be used to generate paper claims. The following steps may vary with each PMS:

1. Click the Insurance billing button in the main menu.

2. Select the following settings: sort by patient name; bill by the healthcare provider you are processing the claim for (bill by all if you are sending a batch); select the service dates by entering them in the "From" and trough" fields; select the patient name and patient account number (select all in both fields if sending a batch); check "paper" in the transit type field; check which billing option you are using - "primary" for primary insurance, "secondary" for secondary insurance, and "other" for any other payers; select which payer is being billed.

3. Click the Prebilling Worksheet button to view the report of claims and check for any errors. (Return to patient account to make any corrections.) If no corrections are needed, close this window and proceed to the next step.

4. Click generate claims button. View the claim form and check for any errors. If no corrections are needed, close this window and proceed to the next step.

5. Click on the Print Forms button to send the forms to the printer. Check the claim for any errors.

6. Mail the claim to the insurance provider using the address shown at the top of each form.

8. Reimbursement

After payment is received by the insurance provider, review the remittance advice (RA) to make sure the correct amount was paid.

If the payment is correct, follow these simple steps to apply the payment to the patient's account (note - these steps may vary depending on the PMS utilized.):

1. Open the main menu and click the Posting Payments button. The patient selection window should open.

2. Select the patient the reimbursement applies to by single clicking their name, then clicking the Apply Payment button.

3. Refer to the RA for the patient and find the first CPT code that payment was applied to. Single click the procedure charge area containing the first CPT code. Then, click the select/edit button. The balance due should show in the Balance Due field.

4. Enter the date of posting in the Date field. Select PAYINS in the Payment Type field. Enter the ICN provided by the RA for the patient in the Reference number field.

5. Enter the reimbursement amount in the Amount Paid field. Press enter. The new balance should show in the Balance Due field.

6. If applicable, the adjustments are entered next. Select ADJINS in the Adjust field. Then, enter the amount of the adjustment in the Adj. Amt. field. Press enter. The new balance should show in the Balance Due field.

7. Click the Post button to apply the payment/adjustment.

8. Repeat steps 1 - 7 for each additional CPT code included on the RA for the patient.

9. When all payments are applied, click on the view ledger button to review the postings. Check for any errors.

After the patient's account is updated, notify the patient of the remaining balance.

Read more: http://www.mb-guide.org/medical-billing-process2.html#ixzz6jDBFFqup