How Does Medical Insurance Billing Work?

How Does Medical Insurance Billing Work?
Dr Josh December 13, 2021 medical billing

Smooth medical insurance billing in healthcare sectors is a prerequisite of prosperity in today’s world. As most people have health insurance and utilize it when visiting a hospital, healthcare providers must process their medical claims meticulously to ensure transparency and efficiency. This article covers what goes on in a medical billing services cycle and how it can be carried out with competence.

What is Medical Insurance Billing? 

Medical insurance billing is the process of submitting a claim and following up on it as a means of the payment of services provided by a healthcare provider. Once a claim is submitted in response to medical services, medical billers in healthcare facilities follow it up to receive remittance for them.  

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 What is the Medical Insurance Billing Process?

The medical insurance billing process may sound overly complicated, but in reality, it constitutes eight simple steps. These steps include:

  • Registration
  • Establishment of Financial Responsibility for Patient Visit 
  • Overview of Patient Check-In and Check Out 
  • Monitoring Coding and Billing Compliance 
  • Preparation and Transfer of Claims 
  • Looking into Payer Adjudication 
  • Generation of Patient Bills and Statements 
  • Assigning of Patient Payments and Arrangement of Collections 

Let us look into these steps individually.  

Registration of Patients 

The first step in medical insurance billing is patient registration. The registration process begins when a patient expresses inclination to book an appointment by calling a healthcare provider. If the patient is new, basic demographic information including name, birth date, the possible reason for visit, and insurance information is noted down. Insurance information includes the kind of insurance policy, the insurance provider’s name, and the patient’s policy number. This information then goes through a verification process by medical billers, and a file in the patient’s name is set up. If a patient is a regular at a particular healthcare facility, this process is not repeated at every visit.  

Confirmation of Financial Responsibility 

Different kinds of insurance provided by various policy plans, companies, and individuals reimburse different medical processes. The process of confirming financial responsibility ascertains which medical practices are covered in a patient’s insurance policy. The patient is made aware of any procedures or services not covered by insurance and that they would have to deal with the medical bills themselves if they decide to avail those services.   

Overview of Patient Check-In and Check Out 

Maintaining an overview of patient check-in and check-out is a relatively plain and straightforward procedure carried out by asking a patient to fill out a few forms upon their arrival. Patients visiting a healthcare provider for the first time may have to fill out a few additional forms and examine the medical practitioner’s information on their file to point out any errors. Security checks also call for patients to prove their identity via an insurance card and any official identification, driver’s license, or passport. When a patient checks out, a medical coder receives the patient’s medical report and translates the information to usable medical codes. This comprehensive report containing the medical history of a patient, information regarding the provision of medical services, information of the medical provider, and the demographic information of a patient is known as a “superbill” and is essential in creating a medical insurance claim. It is then transferred via software to a medical biller for the next step.  

Monitoring Coding and Billing Compliance 

The superbill is then put into a medical billing software or a paper claim form by a medical biller. A biller also reviews the codes generated by a coder and ensures that the claims meet the standards of compliance. Guidelines provided by the Health Insurance Portability and Accountability Act (HIPAA) and the Office of the Inspector General are typically followed. 

Preparation and Transfer of Claims 

Standard transaction claims registered under HIPAA are required to be submitted electronically. Although manual claims are possible, this medical insurance billing cycle process has many drawbacks. Claims may also be transferred via a third-party healthcare provider for added efficiency and management of workload.  

Process of Payer Adjudication 

Payer adjudication is the process where a payer evaluates the validity of a medical claim and either accepts, rejects (in case of any errors), or denies a claim (in case a medical facility not provided in the insurance is accounted for in the bill). This is done within the rules and regulations pre decided between the patient and payer. To avoid any complications in this process, the development of clean claims by healthcare facilities in the first place is essential.  

Generation of Patient Bills and Statements 

Once a claim is approved, the biller receives a report and generates a statement for the patient. A payer pays the agreed-upon amount, and the rest goes to the patient.  

Assigning of Patient Payments and Arrangement of Collections 

The last step in medical insurance billing ensures the accurate assigning of patient bills and payments. Billers also monitor and record all payments made by a patient. In case payment is delayed, the biller is held responsible for the reimbursement of a healthcare provider by sending follow-up bills, contacting patients directly, or even enlisting a collection agency. 

Dr Josh

Dr. Josh is a physician who's helping spread the knowledge about Telehealth and its advantages. At SmartClinix, he's providing his expertise and knowledge in the form of engaging articles on various health & tech related topics.

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