Medical billing for all medical providers is the process of confirming benefits and requirements for authorization and creating healthcare claims to be submitted to insurance companies to receive payment for medical services rendered.
Common Terms you will see in this article:
- International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM)
- Current Procedural Terminology (CPT)
- Healthcare Common Procedure Coding System (HCPCS)
- Management Services Organization (MSO)
- Electronic Remittance Advice (ERA)
- Medical Practice Management (MPM)
- Explanation of Benefits (EOB)
The medical billing revenue cycle is quite complex and, if not managed correctly, could have negative financial implications for healthcare organizations. Due to its complexity, many healthcare providers significantly experience challenges optimizing the medical billing processes when scaling the business.
This article serves as a general overview for all provider types to help understand medical billing and showcases opportunities to improve revenue growth.
Medical Coding and Medical Billing
Medical billing and coding, although related, are two separate functions. In small organizations, these jobs might be managed by a single individual, but in most cases, these responsibilities are assigned to different people.
Medical coders use the information from a patient’s medical record, such as chart notes, x-ray reports, laboratory reports, etc., to identify the specific services the patient received. CPT codes need to be looked up first based on the service provided. These can be looked up on the CMS website. Then appropriate diagnosis or DX codes (based on signs and symptoms or confirmed diagnosis) and to determine if a modifier needs to be added.
Standard universal codes are then assigned to each procedure or service using CPT, and HCPCS codes. The diagnoses, in other words, DX codes, are identified using ICD-10-CM codes.
Why So Many Codes
These codes are needed so that the patient’s insurance company can identify the service rendered, process claims and provide payment for claims submitted. Errors in medical billing can lead to claim denials and will require corrections and resubmission once errors are corrected. Improper coding slows down the billing process and has a direct effect on the revenue of the business.
Medical billing codes change constantly, and codes are frequently deleted, revised and/or added. If you want to learn more about codes, we highly recommend reading our article dedicated to Speech Therapy, Occupational Therapy, Psychotherapy, Evaluation and Management and more on our website.
Medical billers work between patients, providers, and insurance companies with the primary objective of ensuring proper reimbursement of services provided. Medical billing and coding meet each other where the codes are generated. Before a medical billing and coding process, a biller or coder needs to set up the EMR/Billing software with the appropriate CPT codes and fee schedules. They also add the most frequently used diagnosis codes to the billing system for the practice providers to choose for each patient’s treatment plan.
Once the setup is completed, medical coders need to check and confirm if each claim has the appropriate coding (CPT/Modifier/Diagnosis) appended to each claim before the claim is submitted. This will increase the possibility of sending a crisp, clean claim out. There are two stages for billing, which are front-end and back-end billing. Front-end billing tasks need to be completed before your practice provider sees a patient. Since the start of 2022, this stage has become more complex, thanks to the No Surprises Act. But more about that in the next section.
Back-end billing occurs after the patient receives services or other medical care. The medical coder assigns the appropriate codes and then hands them to the billing staff. The rest of the process is non-patient-facing, and therefore the term back-end is used.
Medical Billing and Federal Laws
Medical billing was previously completed on paper back in the day. However, in October 2003, Congress mandated that providers submit electronic claims for payment. This was called the Administrative Simplification Compliance Act.
This paved the way for new medical billing processes, software development for medical billing, clearinghouses, and more. But that certainly was not the last federal intervention. New laws and acts arise frequently, the most significant recent one being the No Surprises Act of 2022.
The No Surprises Act, or NSA, is a Federal Act that covers all states and is meant to supplement instead of replacing other state-specific patient protection laws. In short, the NSA aims to protect consumers from surprise bills arising from medical care. But the implications apply to front-end and back-end billing stages.
Non-compliance can lead to penalties of up to $10,000, so it is best to ensure that you comply with all the requirements of the No Surprises Act. We highly recommend reading our article dedicated to the impact of the No Surprises Act on the medical billing process.
The Medical Billing Process
From first client contact to full reimbursement can take anything from days to months. Several factors contribute to this timespan, but the most significant contributor to delays is improper claims submissions, and it can already happen at the front-end stage of billing.
Pre-Registration and Registration
As mentioned before, the billing process starts when the patient contacts the practice for the first time. Here the patient’s demographic information is collected as well as insurance information.
It is vital to avoid errors during this data capturing stage of the billing process. Simple demographic errors are a common mistake. The patient’s first and last names are switched, spelling errors occur, or other such human errors.
se tiny errors sometimes go through all the stages of the billing process and find their way to the clearinghouses, who then pick up the error and deny the claim. Now, the resubmission process starts, and the entire process is slowed down. Delaying revenue.
Insurance Eligibility and Authorization Verification
Practices should require patients to verify providers in-network participation of the medical provider, copays, and deductibles prior to their first visit. Some requirements have changed in verifying this information due to the SNA.
The prospective patient should be informed in writing of any inadequacies, and surprise billing could lead to penalties.
Point of Service Collections
The point of service is vital to the billing process. During check-in or check-out, billers can collect copay, deductibles, or the full balance. Getting it right the first time saves time and money as it prevents patient follow-up later.
Encounter Form Generation
An encounter form is also known as a fee ticket or superbill is generated during each patient visit. This form includes demographics, services that include CPT, HCPCS codes, as well as clinician diagnosis. After the visit, the provider will tick the boxes and sign the form to confirm that the services can be billed. This could also be done electronically on an electronic health record (EHR).
This is the last point of the front-end billing stage and the start of the back-end billing stage. The encounter form should be complete, fees collected, if necessary, and a follow-up appointment scheduled if required.
If they were not involved before, this is the point where the medical coder reviews the medical records to create codes for billing purposes.
Services Review Process
The charge entry staff uses the information on the encounter form and enters it into the practice management system, along with payment information from check-in or check-out.
Charge entry staff double-check to see if all the relevant information is on the encounter form. They also need to contact the provider if they omitted information such as diagnoses information.
Medical billers prepare the claim by pulling information from the encounter form or superbill. This could be done manually or electronically.
Apart from patient and procedure information, additional info regarding the service provider such as name, location, signature, NPIs, and more. If you need more information about NPIs, we highly recommend watching our video explaining the several types of NPIs.
The CMS-1500, also known as the HCFA 1500 form, is used by medical service providers to claim for medical services rendered.
Scrubbing and Submitting Claims
This part of the process refers to inspecting and clearing the claims of errors. This is done by medical billers using software or by the clearinghouse.
Medical billers can submit claims directly to payers using HIPAA-compliant software, the majority of offices use clearinghouses. A clearinghouse checks for errors and, if there are none, the clean claim is submitted to the payer. If errors are detected, the claim is delayed and sent back for corrections. Many offices do not pay attention, and the rejections are not worked for months. Leading to timely filing or delayed payments.
Tracking claims is essential to speed up the reimbursement process and should be done daily. Clearinghouses provide dashboards that provide status updates for medical billers to monitor, to help with identification of rejected and not paid claims. After the payer receives the claim, the adjudication process commences.
The adjudication process refers to the review process of insurers. It entails the outcome of whether a claim should be paid and how much will be paid. After this process, the payers generate Electronic Remittance Advice (ERA) statements for providers and Explanation of Benefits (EOB) statements for patients. ERA forms include the details of the payment or reasons why a claim was denied.
After receiving ERAs, medical billing staff must post payments and match the patient accounts to the payments received. This reconciliation process is necessary to make sure that no errors slipped in along the way and that the correct amount was received.
Patient statements are sent out after the remittance advice is posted. Patient statements should include dates, services performed, insurance claims paid, payments received during visits, and an explanation of the outstanding balance.
Once patients’ payments are received, they should be posted, and the accounts balanced. This is usually the end of the billing process, but not always.
When payers deny claims, medical billers should get to work as soon as possible addressing the issue for the denial. The remittance advice provides denial codes and explanations which the billers can use to commence mitigation procedures.
If it is a data problem, medical coders, and billers’ team up to get to the root of the problem, such as a missing diagnosis, CPT code, modifiers, or other erroneous data. Alternatively, medical billers could appeal the denial.
Accounts Receivable Collections and Credit Balances
For a myriad of reasons, patients may fail to pay their final account, and medical billers need to follow up to ensure that accounts do not remain delinquent.
Oftentimes, medical billers will need to follow up with patients, if necessary, to discuss payment plans if offered by your practice. Once payments are received, medical billers can submit the payment to accounts receivable management.
Credit balances often require investigation and resolution as soon as possible for positive balances. Supposing more money is received than what should have been paid. In that case, medical billers need to investigate and repay the funds correctly as soon as possible. If they fail to do so, it could lead to patient frustration with practice, lawsuits, and penalties.
Optimizing Medical Billing
Medical Practice Management (MPM) software takes care of administrative and financial tasks in practice. It integrates scheduling, EHR, billing, and patient management software into one system.
A Medical Management Services Organization (MSO) offers management support services that include the above-mentioned and more, including marketing and accounting services. So, Which One Should Our Clinics Invest In?
Although EHR software can do a lot to expedite the process in billing your providers claims and making every transaction paperless, this does not mean that your EHR software can operate without human help. This is where the managerial and financial expertise of MSOs comes into play.
Certain reports cannot be created by MPM software, even if it has a built-in data generator. These are unique reports and depend on the services that the provider offers. For example, a new set of treatments has been added, and the doctor would like to know which among the insurances is going to pay for it, deny it, or underpay it.
Yes, the built-in report generator can print a general report of all the services, but this specific request cannot be made without manually altering the data obtained, and, of course, the data would not be able to explain the trend without the help of the administrative department.
Aside from reports, provider credentialing and payer contracting are still some manual processes. Some EHR software can determine whether the provider is in-network or not, but most of the time, the software only requires the provider information to be entered and the claims to be billed accordingly for the software to process the claims.
A provider credentialing team is particularly important for all medical providers and patients to be reimbursed appropriately. A Neolytix case study illustrates a very good example of what happens with proper provider credentialing. There was a clinician that was thought to be credentialed with a particular insurance company, so the claims were billed correctly. However, when Neolytix received a couple of electronic remittance advice (ERA’s), this does not make sense due to the patient being charged a higher amount than before when claims were billed to a contracted provider.
It turns out that the insurance was not able to update their system; thus, the provider was still appearing as Out-of-Network, and the claim was processed under Out-of-Network benefits. This is a good example of what EHR software cannot spot on its own.
About claim denials, the EHR software can account for the denial but will not be able to alert the clinic about the pattern or trend in denials. Another case study from Neolytix provides an excellent example.
Neolytix received a denial for a certain CPT code, and the team received a denial from the patient’s insurance provider. It turns out that the said insurance has a limit to the number of units to be billed when it comes to this procedure code. So, in order to cut the back-and-forth exhausting part of doing an appeal, sending the documents, and waiting for the final status, a certain protocol has been established for that specific CPT code and that specific insurance to ease the process.
Another field where MSO overshadows MPM software is communication within the billing process, especially billing questions from the patients. The software provides monthly billing statements and sometimes can be sent online. Regardless of having an online patient portal or e-mail capabilities, this will not explicitly tell them what is happening in the account.
Instead of the clinic and provider answering and explaining patient queries, the provider member services side of an MSO can do this task from them.
The accounting department is another key element that separates the MSO from MPM software. The provider does not have the spare time to oversee and audit financial statements. The software is useful for providing snapshots of the current stand of things, but it cannot pick up trends or hypothesize like humans can.
MSO accounting departments typically assist the provider when it comes to their financial management. The information received usually includes personal insights that software cannot provide.
Why Choose Neolytix as MSO for Your Practice?
Neolytix’s HIPAA-compliant medical billing services have been helping healthcare providers for over a decade to improve their billing processes and maximize returns. We would like to illustrate some of the differentiating factors that set us apart from other MSOs.
At Neolytix, we are very keen on creating protocols specifically for the needs of our clients. The everyday clinic is unique which is why we started an internal standardized process. We are still agile enough to adapt to specific types of requests per client or protocol according to their specialty. Each department in Neolytix collaborates with specific clients to understand the reports that were generated for them.
Furthermore, nothing will be lost in our system. The point person-person for a specific client that overviews the account’s status. All departments are interconnected, structured, and monitored optimally to minimize errors and improve efficiency.
Another differentiating characteristic of Neolytix is the continuous development of critical metrics whereby personnel are measured. Online platforms are provided mandatory courses to upskill them and keep them updated regarding industry changes.
Neolytix offers a-la-cart services that include everything from medical billing to marketing and finance. Our services can assist you all along the value chain from the patient’s first encounter to verification, billing, and more. Our focus is to help improve your internal processes so that practices not only benefit from one outsourced service but experience a synergy throughout their practice. Schedule a no-obligation free consultation by completing the box for more information about medical billing for your practice or other related services below.