Medical Billing & Coding is the process of submitting and following up on claims to insurance companies in order to receive payment for services rendered by a healthcare provider. The same process is used for most insurance companies, whether they are private companies or government sponsored programs.
Medical Billing is often and more accurately termed practice management. An specialty area that provides a valuable service to healthcare professionals. Medical billing is the area of a medical practice responsible for obtaining reimbursement (payment) for the health care providers. Medical Billing and its related occupations are one of the fastest growing opportunities in health care. Insurance companies and the government are spending more time and money researching and controlling claims’ fraud, abusive practices, and medical necessity issues. Because of this, insurance companies are hiring more, and doctors, hospitals, pharmacies, and other providers are also hiring more.
Medical billing is the process of submitting and following up on claims to insurance companies in order to receive payment for services rendered by a health care provider. The same process is used for most insurance companies, whether they are private companies or government-owned.
The billing process is an interaction between a healthcare provider (such as a doctor) and the insurance company (payer). The interaction begins with the office visit: a doctor or their staff will typically create or update the patient's medical record. This record contains a summary of treatment and demographic information related to the patient. Upon the first visit, the provider will usually give the patient a diagnosis (or possibly several diagnoses), in order to better coordinate and streamline his/her care. In the absence of a definitive diagnosis, the reason for the visit will be cited for the purpose of claims filing. The patient record contains highly personal information, the nature of illness, examination details, medication lists, diagnoses and suggested treatment.
The extent of the physical examination, the complexity of the medical decision making, and amount of background information (history) obtained from the patient are evaluated to determine the correct level of service that will be used to bill the insurance. The level of service, once determined by qualified staff, is translated into a five digit procedure code from the Current Procedural Terminology. The verbal diagnosis is translated into a numerical code as well, drawn from the International Classification of Diseases, Ninth Edition, or ICD-9. These two codes, a CPT and an ICD-9, are equally important for claims processing.
Once the procedure and diagnosis codes are determined the biller will transmit the claim to the payer. This is usually done electronically by formatting the claim as an ANSI 837 file and using Electronic Data Interchange to submit the claim file to the payer directly or via a clearinghouse. Historically claims were submitted using a paper form — in the case of professional (non-hospital) services, and for most payers, the CMS-1500 form was used. The CMS-1500 form is so name for its originator, the Centers for Medicare and Medicaid Services. Even to this day a sizable portion of medical claims get sent to payers using paper forms.
The insurance company (payer) processes the claim. The insurance side of the process begins with testing the validity of the claim for payment. The tests cover patient eligibility for payment, provider credentials, and medical necessity. Upon passing successfully the tests, the payer pays the claim. If a claim fails the tests, the payer rejects the claim and communicates the rejection message to the claim submission source.
Based on the amount negotiated by the doctor and the insurance company, the original charge is reduced and payment is then made to the doctor's office by the insurance company. For example: although a psychiatrist may charge $80.00 for a medication management session, the insurance may only allow $50.00, so a $30 reduction would be assessed. This is called a "provider write off" or "contractual adjustment." After payment has been made a patient will typically receive an Explanation of Benefits (EOB) from his insurance company that outlines these transactions.
The insurance payment is further reduced if the patient has a copay, deductible, or a coinsurance. If the patient in the previous example had a $5.00 copay, the doctor would be paid $45 by the insurance. The doctor is then responsible for collecting the out-of-pocket expense from the patient. If the patient had a $500.00 deductible, the contracted amount of $50 would not be paid by the insurance company. Instead, this amount would be the patient's responsibility to pay, and subsequent charges would also be the patient's responsibility, until his expenses totaled $500. At that point, the deductible is met, and the insurance would issue payment for future services.
A coinsurance is a percentage of the allowed amount that the patient must pay. It is most often applied to surgical and/or diagnostic procedures. Using the above example, a coinsurance of 20% would have the patient owing $10 and the insurance company owing $40.
In Medicare the physician can either be 'Participating' in which he will receive 80% of the allowable Medicare fee and 20% will be sent to the patient or can be ‘Nonparticipating’ in which the physician will receive 80% of the fee, and may bill patients for 15% or more on the scheduled amount. For example: the regular fee for a particular service is $100, while Medicare’s fee structure is $70. Therefore the physician will get $56, and the patient will pay $14. Similarly Medicaid has its own set of policies which are slightly more complex than Medicare.
Assignments:
1. Read and study textbook pages 195-208
2. Answer questions on pages 210-212
3. Please view the videos below:
Instructor's Note: There are many different types of billing software used by medical offices, hospitals and clinics. The videos below show the basics that work with most billing software packages, but your office software will likely differ a bit and you will need some time to be come familiar with the differences.
Copyright © 2024 Eastern Institute, Inc. (BVI) IBC. - All Rights Reserved.