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Medical Billing Workflow

     Note : In Medical Billing, people use different words for the same thing; Here are those most commonly used;

1. Patient Calls / Walks to the Physician(or Doctor or Provider) office to fix an Appointment.
2. On the Appointment day, patient checked In to the office and give all the demographics information(last name, first name, DOB, address,etc) and insurance information;
3. Doctor check the Patient Previous medical record and does the treatment to the patient for the current problem(or Disease);
4. Each Disease represents by a Code. That code is called ICD. It is also called Dx Codes or Problems or ICD Codes or Diagnosis Codes; So for each patient visit, doctor choose the correct ICD Code; ( ICD means International Statistical Classifications of Diseases. ICD codes are alphanumeric designations given to every diagnosis, description of symptoms and cause of death attributed to human beings.Some example for ICD Codes)
   
5. Each treatment represent a code and that code is called CPT. It is also called Procedure Codes; So for each patient visit, doctor choose the correct CPT Code; (CPT means Current Procedural Terminology codes, are procedural codes published by the American Medical Association, describing what services the provider actually performed on the patient. Some example for CPT Codes)
6. Once all the process are over, now patient leaves the doctor room. Now the doctor office to get paid for the service provided to the the patient;
7. Since the patient has health insurance, so patient leaves(checked out) the clinic and ask the clinic to get money from the insurance company;
8. Now the Billing department of the Clinic prepare the Bill(Claim) by entering all the necessary information. This process is called Charge entry or Charge Posting;
9. Once the Claim is prepared and send to the Insurance company for payment; 
10. Insurance company pays the doctor office;

     Use case 2 : In House Billing with Two Insurance

Many patients only have one insurance plan but it is  possible for a patient to have two or three medical insurance policies. The first insurance billed would be
the primary insurance. The next one billed would be the secondary, and the last would be the tertiary.

First the primary carrier must be billed first and then balance is billed to the second insurance carrier with the primary insurance payment  information.
If there is a third or tertiary insurance, it is billed last with payment information from the first two.


1. Patient Calls / Walks to the Physician(or Doctor or Provider) office to fix an Appointment. 
2. On the Appointment day, patient checked In to the office and give all the demographics information(last name, first name, DOB, address,etc) and insurance information; 
3. Doctor check the Patient Previous medical record and does the treatment to the patient for the current problem(or Disease); 
4. Each treatment represent a code and that code is called CPT. It is also called Procedure Codes; So for each patient visit, doctor choose the correct CPT Code; 
5. Once all the process are over, now patient leaves the doctor room. Now the doctor office to get paid for the service provided to the the patient; 
6. Since the patient has health insurance, so patient leaves(checked out) the clinic and ask the clinic to get money from the insurance company; 
7. Now the Billing department of the Clinic prepare the Bill(Claim) by entering all the necessary information. This process is called Charge entry or Charge Posting; 
8. Once the Claim is prepared and send to the Primary Insurance company for payment;  
9. Primary Insurance company pays the doctor office; 
10. Billing Department notified that claim has still some balance after Primary Insurance is paid. Since the Patient has another insurance (secondary), so now the billing department send the claim to the patient secondary insurance to collect the remaining balance.
11. Secondary Insurance Process the claim and pay the remaining amount to doctor office

     Use case 3 : Self Pay

Patients who are not covered by health insurance(does not have any insurance) are considered “self pay” patients. They or the responsible party they designate are totally responsible for their own bill. Not everyone is covered by health insurance. The ones that aren’t covered are considered self pay and just like in the old days, these people must pay for their visits themselves.

1. Patient Calls / Walks to the Physician(or Doctor or Provider) office to fix an Appointment. 
2. On the Appointment day, patient checked In to the office and give all the demographics information(last name, first name, DOB, address,etc). 
3. Doctor check the Patient Previous medical record and does the treatment to the patient for the current problem(or Disease); 
4. Each treatment represent a code and that code is called CPT. It is also called Procedure Codes; So for each patient visit, doctor choose the correct CPT Code; 
5. Once all the process are over, now patient leaves the doctor room. Now the doctor office to get paid for the service provided to the the patient; 
6. Since the patient has health insurance, so patient leaves(checked out) the clinic and ask the clinic to get money from the insurance company; 
7. Now the Billing department of the Clinic prepare the Bill(Claim) by entering all the necessary information. This process is called Charge entry or Charge Posting; 
8. Once the Claim is prepared and since there is no insurance for the patient, so patient statement is generated and send to the patient for payment;  
9. Patient Receives the Statement and Payment is made to the doctor office.

1. Patient Calls / Walks to the Physician(or Doctor or Provider) office to fix an Appointment. 
2. On the Appointment day, patient checked In to the office and give all the demographics information(last name, first name, DOB, address,etc). 
3. Doctor check the Patient Previous medical record and does the treatment to the patient for the current problem(or Disease); 
4. Each treatment represent a code and that code is called CPT. It is also called Procedure Codes; So for each patient visit, doctor choose the correct CPT Code; 
5. Once all the process are over, now patient leaves the doctor room. Now the doctor office to get paid for the service provided to the the patient; 
6. Since the patient has health insurance, so patient leaves(checked out) the clinic and ask the clinic to get money from the insurance company; 
7. Now the Billing department of the Clinic prepare the Bill(Claim) by entering all the necessary information. This process is called Charge entry or Charge Posting; 
8. Once the Claim is prepared and send to the Primary Insurance company for payment;  
9. Primary Insurance company pays only 80 % of the Bill to the doctor office; 
10. Since there is no other insurance for the patient and claim balance is still 20 %, so now the billing department change the responsibility of the balance to patient and patient statement is generated.
11. Billing Department send the Statement to the Patient.
12. Patient Receives the Statement and Payment is made to the doctor office.

     Use case 5 : Clearing House Work flow

1. Patient Calls / Walks to the Physician(or Doctor or Provider) office to fix an Appointment.
   
2. On the Appointment day, patient checked In to the office and give all the demographics information(last name, first name, DOB, address,etc) and insurance information;
   
3. Doctor check the Patient Previous medical record and does the treatment to the patient for the current problem(or Disease);

4. Each Disease represents by a Code. That code is called ICD. It is also called Dx Codes or Problems or ICD Codes or Diagnosis Codes; So for each patient visit, doctor choose the correct ICD Code;

5. Each treatment represent a code and that code is called CPT. It is also called Procedure Codes; So for each patient visit, doctor choose the correct CPT Code;

6. Once all the process are over, now patient leaves the doctor room. Now the doctor office to get paid for the service provided to the the patient;

7. Since the patient has health insurance, so patient leaves(checked out) the clinic and ask the clinic to get money from the insurance company;
   
8. Now the Billing department of the Clinic prepare the Bill(Claim) by entering all the necessary information. This process is called Charge entry or Charge Posting;
   
9. Once the Claim is prepared and send to the Insurance company for payment; 
   
   
10. Billing Department using the Practice Management System (PMS), send the claim via EDI File. The EDI Transaction used to create the claim in the Electronic format is EDI 837
    Refer the Following Link to understand more on EDI 837
    What is an EDI ?
    EDI 837 Health Care Claim
    
11. Once the 837 EDI File is created, then it will be send to the Clearing House.
    
12. Clearing House will validate the EDI File and send to the particular insurance company.
    
13. Insurance Company Process the Claim and prepare the Check (Cheque) and Statement(This statement is called Explanation of Benefits OR Remittance Advisory (EOB)          
    Refer the following Link for EOB
    EOB - An explanation of benefits 
    
14. Insurance company also generates the EDI 835 File using their System. EDI 835 is electronic version of EOB.
    The Electronic Remittance Advice (ERA), or 835, is the electronic transaction which provides claim payment information in the HIPAA mandated ACSX12 005010X221A1   Format. These files are used by practices, facilities, and billing companies to Auto Posting payments into their systems.
    Refer the following link for Sample
    EDI 835 Health Care Claim Payment/Advice:
    
15. Once the Check, Statement (EOB) and ERA File are ready, then insurance company first send the ERA File and EOB to the clearing house.Second , insurance company  will send the Check and copy of the EOB to the billing provider address . Third for each patient in the statement, the copy of the EOB will be emailed.
    
16. Now the Billing Team download the EOB and ERA from the clearing house. If the PMS system has Auto Posting Using ERA File, then they will download the EDI File and do auto posting. If there is no auto posting Module, then they will download the EOB PDF and apply posting manually.Remember, some time, ERA/EOB file will be reach the clearing house, even before the insurance company send the payment check to the doctor.

Available link for download

Medical Billing Process in detail

Now let us see each activity on medical Billing

Insurance Verification

Process started from here and usually front desk people are doing this process. Its a process of verifying the patients insurance details by calling insurance or through on line verification. If this department works well, we could resolve more problem. We have to do this even before patient appointment. Here is the nice flowchart from the ZIMMER site on the insurance verification process.

There are different ways you can verify the patient insurance is active or not as follows

1. Using medical Billing Clearing house, you can verify each patient insurance.
2. There are some public websites where you can verify each patient insurance.
3. Most of the insurance company web site has the option of verifying their patient policy is active or not.
4. You can create Electronic file (EDI) for bunch of patients and then you can submit to the clearing house to verify. Clearing house in turn will give the report of each insurance.
5. You can call the insurance company customer support and check the status.
6. You can integrate any third party to check on line with your software to verify the insurance.

By verifying the patient insurance before the appointment, we can save our time and inform the patient to pay from their pocket before the service is rendered.Non- verification of insurance eligibility would lead to problems such as delayed payments, rework, increased errors and patient dissatisfaction. All this underlines the importance of insurance verification in Medical Billing.

Creating the claim and send to the Insurance Company.

Next step is prepare the claim and send to the insurance company via clearing house or directly to the payer.

Claim Processing by the insurance company.

Rejected Claims
When the insurance company receives the claim from the doctor, first level check or first level edit process will start. Here insurance company will check the accuracy  of the date submitted before filing the claim into their computer system. If any data is not valid or missing, then it is treated as rejected claims. A rejected claim is  one that has not been processed due to problems detected before health care claim processing. Claims are typically rejected for incorrect patient names, date of birth, insurance ID’s, address, etc. Since rejected claims have not been processed yet, there is no appeal - the claim just has to be corrected and resubmitted.

Most Common Reasons for Rejected Claims

1. Errors to patient demographic data - age, date of birth, sex, etc. or address.   
2. Error in Doctor License No.
3. Incorrect Patient Policy No.
4. Patient Insurance is inactive.
5. Incorrect Treatment code or Disease Code.
6. Incorrect Modifiers

Claims adjudication
After process of first level edit, the information is reviewed to determine whether the patient was covered at the time of service, and whether the treatment is appropriate for the diagnosis submitted. If the procedure or treatment falls within standard and customary treatment for that condition, it  is considered medically necessary and the bill is approved for payment. The payment amount will depend on the allowed  amount, which varies depending on your particular policy and whether or not your doctor is on a list of network providers. This process is called Claims Adjudication.

There are generally three possible outcomes of adjudication of a claim, whether it is valid and should be paid, it is invalid and should be denied, or more information is need to make a proper determination, in which case it is "pended" for further (usually manual) processing.

Denied Claims
During Claim adjudication, claim may also be denied. Please remember, A denied claim is not the same as a rejected claim, however both terms are frequently used interchangeably. A rejected claim is one that has not been processed due to problems detected before health care claim processing. Claims are typically  rejected for incorrect patient names, date of birth, insurance ID’s, address, etc. Since rejected claims have not been processed yet, there is no appeal - the claim just has to be corrected and resubmitted.

A denied claim is one that has been through health care claim processing and determined by the insurance company that it cannot be paid. A denied claim can be appealed by submitting the required information or correcting the claim and resubmitting.

Most Common Reasons for Denied Claims

1. Services non-covered. Are the billed services covered under the patients policy?
2. Patients non-coverage or terminated coverage at the time of service may also be the reason of denial That is why, it is very important that you check on your patients benefits and eligibility before doctor see the patient.
3. Taken long time to submit the claim from the date of the service provided to the patient. Has the claim been sent within the payers time limits for filing claims? The time limit is generally between 90 and 180 days from the date of service.
4. Duplicate dates of service.Is the claim billing for a service on the same date that has already been adjudicated?
5. Valid code linkages.
6. Missing documentation attached to the claim. Payers may require additional documentation, such as the operative note or implant invoice, attached to the claim

The Following picture demonstrates how insurance company processing the claims received from the clearing house.

Payment
Next, the insurance company will either send the appropriate payment electronically to the health care provider, or send a notice of denial if the claim has not met the standards for payment. In either case, the patient will also be notified of the result of the claim. This is usually done via a letter called Explanation of Benefits (EOB) letter, which details the amount that was paid and the portion of the bill that is the patients responsibility. The EOB letter will also give a reason for denial if payment was not made.

EOB means Explanation of Benefits. Insurance companies send information to both the patient and provider on exactly what they paid and allowed. Allowed amount means the maximum amount the insurance company would consider for payment. Any difference above the allowed amount is written off if the provider participates with the insurance company.

You can see some sample EOB here.

Available link for download

Medical Billing Process

Medical Billing is a Process of Submission of Bills/Claims to the Insurance Company in a specified format for the service rendered (for the treatment given) by the doctor for the patient. Why the doctors approach the insurance company for the payment? Since the Majority of patients has insurance coverage and details of such coverage are provided to the doctor before the treatment. So it is the responsibility of the doctor to send the claims to the insurance company and get paid for the treatment given.

Here is the overall medical billing process. In the later section, we will see more detail on each section.

Insurance Verification:
Process started from here and usually front desk people are doing this process. Its a process of verifying the patients insurance is active or inactive by calling insurance or  through online verification. If the insurance is inactive, it does not make any sense to send the claim/bill to the insurance company to get paid. So the front office people have to make sure that patient insurance is active even before the patient appointment. If the insurance is not active, then they have to collect the fee from the patient itself(In medical billing, this normally called as Self Pay claim or Patient Responsibility claim).

Charge Entry:
Charge entry is nothing preparing the claim to be sent to the insurance company. After getting the treatment details and patient disease details from the doctor, the billing department will start preparing the claim.The claim details, that are needed to get your insurance claims processed are entered here, and includes, the face sheet of the patient, doctor details, information about the insurance coverage of the patient and billing information.

Payment Posting:
Payment posting is simply posting payments from the insurance company into the system. The insurance company sends a check along with an Statement(This is statement is called as Explanation of benefit , shortly as EOB). On the EOB the insurance company will tell you the allowed amount and the amount they paid.

Denial Management:
The insurance companies reject(deny) paying claims for a number of reasons. Incomplete claim form, inconsistent patient information, etc.The insurance company indicates the reason for the denial in the Statement. Billing department will resolve those errors and again submit the claim to the insurance company.

Here is the overall medical billing process. In the later section, we will see more detail on each section.

        

Questions or feedback are always welcome. You can email me at vbsenthilinnet@gmail.com.

Available link for download