How Medical Billing Concepts Arouse?
There are three main parties in Medical Billing:
First party is the Patient (who is in need of healthcare services), second party is Provider (Clinics, Individual doctors, hospitals, laboratories or any other services where health care services performed) and the final party is Insurance Company also known as payers. Insurances also known as carriers, they take the responsibility of the Medical expenses of subscriber or his dependents.
Today the cost of medical expenses has become very high that the middle class people cannot afford it. So only the medical insurance companies come into the picture.
Whenever the Patient wants to visit a doctor office, patient has to take an appointment.
- The Patient submits Insurance card copy and his demographic details.
- As per card copy Pre-Registration department team needs to verify if a referral or Pre-Authorization needs to be obtained. If referral required from the PCP as per the patient plan, then patient will be asked to contact the respective Primary care physician (Gatekeeper) and get his documentation.
- The person in this department has major responsibility in collecting the maximum information about the patient details in forwarding clean claim by medical billing company to insurance.
Doctors Office: A Patient visits a doctor and explains his / her problem. The doctor then diagnoses what could be the ailment and then draws a chart as to what treatment needs to be rendered.
- Patient meeting a provider to take the treatment is called as “Encounter”
- Treatment given to Patient by Physician is called as “Procedure/Service
As stated earlier, the provider does not get reimbursed immediately for the health care services rendered. As majority of them have Insurance coverage, so it is the responsibility of the provider to submit the claim to the respective insurance company and get reimbursed for the services rendered. Here is where the Medical billing company comes into picture.
Health care Provider cannot provide entire attention to this Medical Billing activity. As getting reimbursed from the insurance company involves lengthy process and it is not simple as it involves a lot of rules and regulations to be followed in order reimburse from the insurance company.
Provider appoints the Medical billing Company to outsource their billing projects in order to take care of their billing. So the main source of the Medical billing company is to maximize the collection by maintaining the federal rules and regulation. In simple term the role of the Medical billing company is to maintain compliance set by HIPAA-Health Insurance Portability and Accountability Act and help the provider to get paid on time from the insurance company.
What are the functions of Medical Billing Company?
Medical Billing is the process of submitting the claims to insurance company in order to reimburse the payment for the health care services rendered by the health care provider on time. As stated it involves a lengthy process to reimburse the payment from insurance company, so let us discuss the important steps of Medical billing process.
- When Patient visits doctor office the conversation between Patient and Provider will be recorded in Dicta Phone and same recorded data will be forwarded to the Medical Transcription departments.
- MT department will analyze the overall conversation then the same reports will be converted to a word format or a file.
Medical Coding team will assign the Alpha and Numerical codes for treatment called CPT (Current procedural terminology) and Diagnosis codes based on the description given by the provider.
Considering the entire patient Diagnosis and Procedure is called “Coding”
- CPT/ HCPCS – the treatment given by the physician to patient will be denoted in the format of codes called as CPT Codes or Procedure or Service Codes.
Below are few Examples:
- 99201 – Initial visit of a new out patient
- 99281 – Initial or Established visit on Emergency cases
Diagnosis Codes or ICD-10 Codes
Diagnosis codes are coded by Medical coding department by reviewing the Patient medical diagnosis descriptions in the format of ICD-10 Codes.
Entering the basic Patient Demographic information in format designed by the software, this process captures the details of Patient. Entering the details also plays a very important role in medical billing process, if suppose charge entry department capture the information wrongly and submit the same to insurance may end up with denial. So it very important from charge entry team to capture the information accurately in medical billing process.
Details of Patient while entering the Charge Entry.
- Patient Name (Last Name, First Name and Middle initial)
- Insurance Details (Primary , Secondary and Tertiary Insurance)
- Subscriber Details
- Policy ID
- Group Numbers
- Insurance Plan Types
- Patient Employer Details
- Procedure Codes
- Diagnosis Codes
- Additional Diagnosis
- Place of service
- Admit Date
- Discharge Date
- DOI-Date of Injury
- Number of units billed
- Referring Physician and Rendering Physician and their ID’s
- Finally a Charge entry associate will be applying charges & creating a claim and claim is also known as Bill or Invoice.
- Billed amount for the procedure (CPT) will be inbuilt through “Charge Description Master” software.
In Medical Billing we have two types of claim form which are billed while submitting to insurance company.
- Individual Providers – CMS 1500 (Which has 33 Fields)
- Facility Providers – UB04 (Which has 81 Fields)
Once all the above information have been recorded, coded, and checked for compliance, the claim is ready to be sent out to the insurance company. Next is a very important process in the medical billing.
Medical Claim can be submitted in two ways
- Paper Claims-Directly mailed to insurance company
- Electronic Claims- Electronic Claims are sent through a Clearing House by the Medical Billing Company before forwarding it to the insurance company for adjudication.
Majority of the insurances prefer to submit the claims electronically.
- Clearing house acts as a scrubber, in which all the basic required data’s will be checked in all the claims.
- Filled claims will be sent to the Transmission department.
The clearinghouse will then send a report to the Medical billing office, which is known as the SCRUBBER REPORT.
This Scrubber report includes:
- Total number of claims received
- Number of Clean claims.
- Total number of dropped claims and
- The reason for dropping the claims.
Process of Clearing House
- Claims are successfully transmitted to carriers by following each carrier’s instructions and policy.
- If the claims clean in all the respects, the same may get forwarded electronically in 14 days, if the same has any minor defects such as if the Patients address is incorrect or the zip code is not correct, then claim will be printed at vendor’s office with a warning and will be forwarded to the carrier via paper mode in 28 days.
- Once the claims are transmitted electronically, conformation reports are obtained which will clearly state how the claim had traveled to the Insurance Electronically or by paper.
- Claims with attachments are printed in paper only Manual Submission, if necessary, put into envelopes and sent to the US for postage and mailing.
- A Claim which passes through all fronts and edits is called “Clean Claim”.
Insurance Adjudication Process
Once the insurance company receives the claims from Medical billing company thru clearing house or via mail, the claim is reviewed through a process called adjudication.
In this stage Insurance Company evaluates the bill and decides whether to pay or deny the claim.
Insurance company decides to pay based on the patients plan and the provider’s contract.
Once they processed and paid the claim, the Explanation of Benefits will be issued to the provider, Medical Billing Company and Patient. This EOB will contain the payment details, which include the Claim received date, Claim Processed Date, Billed Amount, Allowed Amount, Contractual Adjustment, Paid Amount, Check#, Patient’s Responsibility, Claim# and so on.
In the same way if the claim is denied also, insurance company will intimate the provider, patient or Medical Billing Company with remittance advice or Denial EOB or Correspondence letter.
Denial EOB or ERA-Electronic Remittance Advice contains Denial Date, Denial code, Reason for Denial, Claim# and so on.
Once we receive EOB or ERA from the insurance company, the information (either payment or denial) is entered into the respective patient account from the Medical billing team and this process is called as Payment Posting.
Accounts Receivable Management:
Whenever there is a denial or balance pending or partial paid from the insurance company. AR team will follow –up with the insurance company and try to resolve & reimburse the payment from Insurance Company.
This is a very important step in medical billing process because AR denial management is all about bringing number of denials down to the lowest.
In simple words we can say AR Analyst or AR Caller will analyze the EOB or ERA whether insurance company has been paid the claim precisely. Resolving the claims denied or disputed by the insurance company & resubmitting the claims to process towards payment.
I hope you have understood the concept of Medical Billing.