Healthcare professionals work to help people maintain and regain their health. At the same time, they cannot ignore the business aspects of healthcare. While their primary focus is patient care, providers need to monitor and optimize their revenue cycle to keep their bottom line healthy. Efficient medical billing is the key to successful revenue cycle management. With the growing challenges of handling this process amid consumerism, changing regulations, and shifting payment dynamics, most healthcare organizations rely on medical billing outsourcing to stay ahead of the curve.
Medical billing is the process of generating and submitting claims to insurance companies to obtain payment for services rendered to patients. Transforming services provided into accurate claims and obtaining proper payment from insurance companies and patients allows medical offices to stay open and thrive.
Medical billers translate healthcare services into claims, submit them to payers, and follow the claims to ensure that healthcare providers are reimbursed for their services.
The medical billing process involves the following steps:
Successful medical billing depends on having a thorough understanding of medical insurance, reimbursement methodologies, and the claims process. Lack of experience can lead to billing errors, omissions and miscommunications, and leave a substantial amount of money on the table.
The Medical Billing Process
Medical billing is the backbone of a healthcare organization’s financial health. Getting appropriate reimbursement depends on timely and accurate medical billing. The process begins when the patient schedules an appointment and is categorized into two stages: front-end and backend billing.
The patient experience begins at the front desk. Front-end billing refers to the processes that take place before the patient encounter. This stage includes all the patient-facing activities to collect correct information up-front:
- Patient pre-registration: The following information is collected ahead of the appointment
- Patient demographic information, including personal and contact information
- Patient referral
- Patient health history
- Patient eligibility verification and authorization: Medical billing teams include insurance verification and authorization experts. They will check the patient’s health insurance coverage to obtain the following information:
- Whether coverage is active
- If registration information is accurate
- Type of plan
- Co-pay, co-insurance and deductibles
- Coverage by secondary insurance
- Number of maximum allowable visits
- Prior authorization requirements
- Out-of-network benefits
- What proportion of the cost is the patient’s responsibility
Eligibility issues are one of the most common reasons for claims denial. Therefore, ensuring that correct information is acquired before care delivery is important for revenue cycle success. If a procedure or prescription requires prior authorization (PA), the insurance verification specialist will notify the provider so that they can apply for authorization before performing the procedure or prescribing the drug.
- Point-of-service collections and patient orientation: Patient responsibility is the portion of a medical bill that the patient is required to pay. Collecting copays, deductibles, coinsurance, or full balance due while the patient is at the front desk, either during check-in or checkout, is important. Best practice is also to inform patients about their financial responsibility before they leave the office so that they can plan accordingly. Improving collections also depends on providing patients with convenient payment options and discounts.
Back-end medical billing refers the processes that take place after the patient-physician encounter. Back-end billing processes include charge entry, claims generation and submission, payment posting and denial management.
- Charge entry: Charge entry is the process of assigning an appropriate fee according to the fee schedule based on the medical codes chosen to report the patient’s visit. Medical billing and coding service providers first create a superbill for each patient encounter. In addition to provider information and patient information, the superbill contains pertinent information about the medical service including date of service, procedures performed, diagnosis and procedure codes, modifiers, time, units, quantity of items used, and insurance authorization details. The superbill is used to generate the claim.
Medical billers will ensure that the claim meets compliance standards. They will review the codes, make sure that the procedures coded are billable, and that all information is entered correctly. They will also review charge capture at the end of the day to confirm that all charges and receipts were added when reconciling patient charges. Charge entry also has to be completed in a timely manner to avoid missing payers’ time limits for claim filing.
- Claim submission: During claim preparation, a medical billing company will perform claim scrubbing to ensure that procedure, diagnosis, and modifiers are accurate and that patient, provider, and medical visit information is correct. Billers submit the claims on standard forms using HIPAA compliant software that meets electronic filing requirements directly to insurance companies or via a clearing house.
- Claims tracking: When the payer receives the claim, they will begin adjudication. This involves assessing the claim to determine how much it will pay the provider. Payers will send Electronic Remittance Advice (ERA) forms back to the provider. CMS defines an ERA as an explanation from a health plan to a provider about a claim payment. In the ERA, the payer will state the costs that they will pay for the services the health plan’s member received, the reason for rejecting or denying a claim, and if additional details are needed. Medical billers track claim status daily. If a claim is denied, they will appeal, correct and resubmit the claim for reimbursement.
- Payment posting: After a claim is reimbursed, the medical billers will create a statement for the patient. This is the bill for the healthcare services the patient received. Patients receive the Explanation of Benefits (EOB) from the insurance company around the same time that they receive their billing statement from their provider. The EOB lists the total charges (amount billed), allowed amount, non-covered charges, the amount paid to the provider, and any co-pay, co-insurance, and deductibles the patient pays. The billing staff will post all the payments in the system against the respective patient accounts, reconcile payments against their claim, and determine that ERA or EOB data match payments. This provides the healthcare organization with a clear insight into insurance payments through EOBs, ERAs, and payments received from patients. Payments posted must include zero-dollar remittances, which usually include denial codes and other important information. Accurate and thorough payment posting provides a clear view of all payment details and collections from various payers.
- Denial management: Denials usually occur due to medical billing errors. These errors can be in the form of invalid or wrong CPT and ICD-10 codes, mistakes in patient insurance details such as incorrect identification numbers, incorrect patient information, coverage expired, no preauthorization, filing deadline expiration and so on. Proper denials management involves understanding the reasons for claim rejection, following it up with the insurer, correcting errors, and resubmitting the claim or filing an appeal.
- Patient payment collection: In addition to sending out accurate bills to patients in a timely manner, medical billers will follow up with patients on unpaid bills. They are responsible for contacting patients, sending follow-up bills, and collecting amounts due to ensure that providers are properly reimbursed for their services.
Each provider has specific guidelines and timelines for bill payment, notifications, and collections. Outsourcing medical billing to an expert will ensure revenue cycle management solutions that meet these standards and ensure that providers receive accurate and timely reimbursement from payers and patients.
Key Players in Medical Billing
Healthcare providers, insurance companies, patients, and medical billers and coders are the key players in the complex medical billing process.
Medical practices, hospitals and other healthcare organizations focus on providing quality care for various infectious diseases and chronic non-communicable conditions. Multidisciplinary healthcare professionals, including nurses, work as a team to diagnose and treat these conditions and deliver safe and effective patient care. Physicians should ensure that clinical documentation is up to date and completed accurately with sufficient information. Clear and concise medical record documentation is critical for the delivery of quality care and for accurate claim submission.
Most people enroll in health insurance plans, which allow them to pay expensive medical bills. In addition to government programs like Medicare and Medicaid, there are thousands of private health insurance companies operating throughout the United States. Payer guidelines are dynamic and subject to change at any time. Healthcare providers enter into agreements with health plans to provide services to plan members. Health insurance companies offer different plans with medical, dental, vision and hearing benefits. Premiums, deductibles, and copays vary across plans and everyone needs to choose the one that fits their budget and meets their health care needs. Patients are responsible for the portion of their medical bill which their health plan does not cover.
To sustain the revenue cycle and provide proper care, practitioners need to receive proper reimbursement from insurance companies and patients for the healthcare services rendered. That’s where medical billers and medical coders come in. Medical billers and coders form the link between healthcare providers and insurance companies. As explained above, these qualified professionals translate patient encounters into billable language for claims submission and strive to manage each phase of revenue cycle to ensure that providers receive optimal reimbursement.
Key Benefits of Accurate Medical Billing
- Ensures that healthcare providers get paid for services rendered: Medical coders are responsible for assigning ICD-10, CPT and HCPCS codes and modifiers to report the services provided by the physician. Billers will ensure that claims are submitted with the right billing codes, in the right format and in a timely manner. Accurate medical billing results in accurate reimbursement.
- Helps avoid denied and rejected claims: A payer can reject a claim if:
- Information is inaccurate, missing, incomplete, or outdated
- Billing codes used are not correct
- Filing deadline was not met
- Maintains the financial stability of healthcare providers: As they focus on providing quality care, providers must deal with multiple challenges that squeeze cash flow – from economic repercussions to staying up to date with new and costly technologies, hiring competent staff, risks associated with federal payment program penalties, rising malpractice insurance premiums, and more. Accurate medical billing helps healthcare providers increase their cash flow and revenue and maintain their financial stability.
- Supports the continuity of patient care: When healthcare providers receive timely and appropriate payment with the support of an efficient medical billing service, it allows them to deliver proper care without disruption, despite all the complexities of the health care system.
Challenges in Medical Billing
Providers face many medical billing challenges that range from the transition to value based care, changing and expanding codes, and new billing guidelines. Here are the four top medical challenges they have to deal with:
First, insurance policies and procedures are complex. Providers may participate on multiple insurance panels. They need to have the ability to navigate the many different claims processes of government and commercial health insurance companies. Today’s complex insurance plans come with intricate cost calculations and complicated language and terminology that can be very difficult to understand for providers and patients. Also, top health insurance companies like UnitedHealth Group, Anthem, Aetna, Cigna, and Humana have different requirements for filing claims. Likewise, while Medicare and Medicaid claims are very similar to the claims sent to commercial payers, there are certain notable exceptions. Being knowledgeable about complex insurance policies and each payer’s procedures is crucial to ensure timely and accurate billing.
Another challenge is rapidly changing regulations. Government regulations have made a complex billing system even more complex and frustrating for providers, insurance companies, patients, and medical billing companies. The American Hospital Association (AHA) notes that Medicare rules and regulations alone are more than 130,000 pages, much of which is devoted to submitting bills for payment.
Increased scrutiny of claims by payers and regulators adds to medical billing complexity. Many insurers require some form of prior authorization for procedures and each may have different requirements. With the close evaluation of claim payments, pre-approvals, and appeals, providers need to understand each insurer’s requirements to navigate this increased scrutiny. CMS has ramped up their coding and documentation auditing, and according to a new www.obroncology.com report, projects $1.46 million in improper payments to oncology practices.
Increased denial rates also increase the complexity of medical billing. Experian Health’s recent report on The State of Claims in 2022 revealed that claims are denied 5%–15% of the time. Authorizations, provider eligibility and coding errors were identified as main reasons for claim denials. Respondents cited lack of in-house expertise in denials and staff training as key operational challenges.
According to Grand View Research, the medical billing industry is expected to grow at a CAGR of 11.2% from 2021 to 2028. With providers striving hard to keep their revenue cycle on track, the demand for medical billers and coders in the US is rising. However, several recent reports point to the shortage of skilled medical billers as a major concern facing the health care industry. In this scenario, providers can find it very difficult to hire and retain an in-house medical billing and coding team. This explains the rapid growth of medical billing outsourcing in recent years.
What does the future hold for medical billing? Digital technology has significantly improved healthcare delivery. Likewise, technology is also streamlining each revenue cycle function.
While electronic health records allow providers to maintain clear and complete patient records, medical billing software saves time, reduces paperwork and lowers the risk of errors that can affect claim processing and payment collection. Along with practice management software, these systems have streamlined day-to-day operations in healthcare organizations. Today, many vendors provide computer-assisted coding systems that utilize artificial intelligence, natural language processing, and other advanced technologies to identify the appropriate codes based on clinical documentation in medical records.
With the COVID-19 pandemic, medical billers and coders had to adapt to new billing requirements, including telehealth and COVID-19 billing and coding. They had to find new ways to manage the administrative side of healthcare. Though advanced technologies may support a strong revenue cycle, high inflation rates and labor shortages are expected to continue to cloud the healthcare industry. Providers cannot do without skilled and experienced medical coding and billing professionals to manage the revenue cycle amid changing government regulations and payer requirements. Outsourcing the billing process is the best solution.
Experienced medical billing companies have expert billers and coders on board who can manage every phase of the revenue cycle efficiently. They are experts in using the latest technologies and stay up to date on changing industry rules and payer regulations. Partnering with a reliable medical billing company can help providers overcome labor shortages, save costs, and receive timely and accurate payments. With an expert handling their billing tasks, physicians can focus on providing optimal care.
Bottom line: A clear understanding of the medical billing process, industry regulations, and payer guidelines are the key to billing accuracy, successful claim submission and appropriate reimbursement.