WHAT IS MEDICAL BILLING?

Medical billing is the process by which healthcare organizations submit claims to payers
and bill patients for their own financial responsibility. While coders are busy translating
medical records, the front-end billing process has already started.

FRONT-END MEDICAL BILLING

Medical billing begins when a patient registers at the office or hospital and schedules an
appointment.

During pre-registration, administrative staff members ensure patients complete

required forms and confirm patient information, including home address and insurance
coverage. After verifying that the patient’s health plan will cover the requested services
and submitting any prior authorizations, staff should confirm patient financial
responsibility.

During the front-end medical billing process, staff informs patients of any costs they are
responsible for. Ideally, the office can collect any copayments from the patient at the
appointment.

Once a patient checks out, medical coders obtain the medical records and begin to turn
the information into billable codes.

BACK-END MEDICAL BILLING

Together, medical coders and back-end medical billers use codes and patient
information to create a “superbill,” according to AAPC.

The superbill is an itemized form that providers use to create claims. The form typically
includes:

 Provider information: rendering provider name, location, and signature, as well

as name and National Provider Identifier (NPI) of ordering, referring, and
attending physicians
 Patient information: name, date of birth, insurance information, date of first
symptom, and other patient data
 Visit information: date of service(s), procedure codes, diagnosis codes, code
modifiers, time, units, quantity of items used, and authorization information
Providers may also include notes or comments on the superbill to justify medically
necessary care. Billers pull information from the superbill to prepare claims.

Billers tend to deal with two types of claim forms. Medicare created the CMS-1500 form
for non-institutional healthcare facilities, such as physician practices, to submit claims.
The federal program also uses the CMS-1450, or UB-04, form for claims from
institutional facilities, such as hospitals.

Private payers, Medicaid, and other third-party payers may use different claim forms
based on their specific requirements for claim reimbursement. Some payers have
adopted the CMS-generated forms, while others have based their unique forms on the
CMS format.

During claim preparation, billers “scrub” claims to ensure that procedure, diagnosis,
and modifier codes are present and accurate and that necessary patient, provider, and
visit information is complete and correct.

Then, back-end medical billers transmit claims to payers. Under HIPAA, providers must
submit their Medicare Part A and B claims electronically using the ASC X12 standard
transmission format, commonly known as HIPAA 5010.
Other payers have followed in Medicare’s footsteps by requiring electronic transmission of
claims. According to CAQH, electronic claims management adoption could save
providers around $9.5 billion per year.

Medical billers submit claims directly to the payer or use a third-party organization,
such as a clearinghouse. A clearinghouse forwards claims from providers to payers.
These companies also scrub claims and verify the information to ensure reimbursement.

Clearinghouses may help providers who do not have access to a comprehensive practice
management system to edit and submit claims electronically. Clearinghouses can help
reduce potential errors stemming from manual processes.

Once a claim makes its way to the payer, adjudication begins. During adjudication, the
payer will assess a provider’s claim and determine how much it will pay the provider.
Payers can accept, deny, or reject claims.

Payers send Electronic Remittance Advice (ERA) forms back to the provider
organization explaining what services received reimbursement, if additional information
is needed, and the reason for rejecting or denying a claim. Depending on the reason,
billers can correct and resubmit the claims for reimbursement.
After receiving reimbursement for a successful claim, medical billers create statements
for patients. Providers will typically charge patients the difference between the rate on
their chargemaster and what the payer reimbursed. 

Traditionally, if a patient received care at an out-of-network provider, it was the

patient’s responsibility to negotiate out-of-pocket expenses with the health plan.
However, under the No Surprises Act, which went into effect on January 1,
2022, providers must submit a claim to the health plan for out-of-network
services to see if the payer will provide coverage.

The policy calls for providers to comply with new claims submission requirements and
communicate with out-of-network plans. Payers and providers have 30 days after a
claim is submitted to negotiate the price for a surprise bill. If they cannot agree, they
must go through an independent dispute resolution process to determine the
payment rate.

The final phase of medical billing is patient collections. Medical billers collect patient
payments and submit the revenue to accounts receivable (A/R) management, where
payments are tracked and posted.

Some patient accounts may land in “aging A/R,” which indicates that patients have
failed to pay their patient financial responsibility, typically after 30 days. Medical billers
should follow up with patient accounts in aging A/R batches to remind patients to pay
their bills and ensure the organization receives the revenue.

Revenue cycle management automation has helped some practices boost

A/R management efficiency, including staff productivity and workflows.

Once a medical biller receives the total balance of a patient’s financial responsibility and
payer reimbursement for a claim, they can close the patient account and conclude the
medical billing and coding cycle.