Medical billing is the process of receiving payments from health insurance companies for medical procedures. The process involves encoding, submitting, and reviewing claims for payment. Patients are notified of payment or denial through an Explanation of Benefits letter, and any remaining balance is billed to the patient.
Medical billing is the process by which doctors and hospitals receive payments from health insurance companies. It also involves resolving any disputes and following up on complaints that have been delayed or rejected. Medical billing is a complex series of time-consuming procedures by trained professionals. In fact, large hospitals often have an entire billing department. The medical billing process is vital to any healthcare organization; hospitals and medical practices cannot operate without payments from insurance companies.
When you visit a doctor’s office or hospital, a detailed record is kept of all tests, procedures or examinations performed in the treatment of your condition. All diagnoses made by medical personnel are also noted. This is your medical record and provides the information needed for the billing process. After you provide your insurance information to the doctor’s office or hospital, the medical billing cycle begins.
Before sending an invoice to an insurance company for payment, it must be encoded. When coding, each service or procedure must be assigned an alphanumeric code based on a standardized system. In the United States, procedures are assigned a code based on the Current Terminal Procedural Terminology (CPT) manual, and diagnoses are coded using the International Classification of Diseases (ICD-9) manual.
Some electronic medical billing programs can assign these codes automatically, pulling the information directly from the medical record; however, the bill is often manually checked by a staff person to ensure accuracy. Once the coding process is complete, the invoice is forwarded to the insurance company. This is normally done electronically, but in some cases it is possible to send an invoice by fax or postal mail.
When the insurance company receives the claim from the doctor, the information is reviewed to determine if the patient was covered at the time of service and if the treatment is appropriate for the diagnosis presented. If the procedure or treatment is part of the standard and usual treatment for that condition, it is deemed medically necessary and the bill is approved for payment. Your payment amount will depend on the amount you allow, which varies based on your specific policy and whether your doctor is listed on a network provider list.
Next, the insurance company will send the appropriate payment electronically to your health care provider or send you a denial notice if your claim did not meet payment standards. In both cases, the patient will also be notified of the result of the complaint. This is usually done via a letter called an Explanation of Benefits (EPL) letter, which details the amount that has been paid and the portion of the bill that is the patient’s responsibility. The EOB letter will also provide a reason for refusal if payment has not been made.
If the insurance company denies payment, the health care provider will review the claim to determine if it has errors or missing information, make corrections, and resubmit the claim for payment. Medical coding is a very complex process and data entry errors are quite common; a claim can be resubmitted to the insurance company several times before being finally paid.
Once the insurance company has paid, the health care provider will then send a bill to the patient for any remaining balance, such as a deductible or unpaid co-pay. Each provider has their own policies on collecting payments from patients. The medical billing department may attempt to collect money from the patient over several years, although many larger hospitals transfer old debts to a collection agency, which frees billing clerks to focus on current billing.
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