What Is Medical Billing and What Does Medical Biller Do?

With the fast-evolving healthcare environment, practices are often stretched thin, with medical staff managing a multitude of responsibilities to offer optimal medical care and operational efficiency. As healthcare professionals increasingly focus on delivering quality services, they require additional support in various areas of their daily operations.

One critical area that demands expert attention is medical billing. This essential function navigates complex insurance claims and patient billing processes and guarantees compliance with shifting regulations. By using medical billing solutions, healthcare practices can streamline their financial operations, reduce administrative burdens, and improve patient care.

What Does Medical Billing Do?

Medical billing is a fundamental part of revenue cycle management (RCM), responsible for translating healthcare services into billing claims. This process involves:

• Verifying patient insurance
• Coding diagnoses and procedures
• Preparing and submitting claims to insurers
• Addressing any issues or denials

It facilitates financial transactions between healthcare providers, insurance companies, and patients for timely and accurate reimbursements. By managing claim submissions and complying with health regulations and coding standards, medical billing streamlines the healthcare revenue cycle and guarantees providers receive compensation.

Understanding the Standard Medical Billing Process

The standard medical billing process is a systematic series of steps to make sure healthcare providers receive payment for services rendered. Below are the standard steps of a typical medical billing process:

1. Patient Registration

This is the initial step, in which the patient provides personal and insurance information. Details collected include the patient’s name, contact information, insurance policy details, and, sometimes, medical history.

2. Insurance Verification and Eligibility

Before any services are provided, the healthcare provider must verify the patient’s health plans and benefits. This involves checking the covered services, any required pre-authorizations, and the patient’s co-pay responsibilities.

3. Patient Encounter

The patient receives medical services from the healthcare provider. During this encounter, the provider documents all the medical procedures and services performed and diagnoses.

4. Medical Coding

Coders translate the physician’s notes regarding the diagnosis and treatment into standardized codes. These include ICD (International Classification of Diseases) for diagnoses and CPT (Current Procedural Terminology) for procedures.

5. Charge Entry

The coded information is used to compile a list of charges for the services provided by the healthcare practice. This includes entering all services, procedures, and the corresponding costs in numeric or alphanumeric code.

6. Claim Submission

The compiled hospital billing information (claim) is submitted to the patient’s insurance company for reimbursement. This can be done electronically or via paper forms, though electronic submissions are more common due to quick processing times.

7. Claim Adjudication

The insurance company reviews the claim to decide payment. This includes verifying all details, checking for errors, and determining whether the services are covered under the policy terms. The payer may approve, deny, or reject the claim.

8. Payment Posting

Once the insurance company processes the claim, payments and any explanation of benefits (EOB) are sent to the provider. The payments are recorded in the patient’s account, reflecting any adjustments made by the insurance company.

9. Patient Statement Preparation

After insurance payments are applied, any remaining balance the patient owes (such as deductibles or co-pays) is billed directly to the patient. A statement outlining the services provided and the amount due is prepared and sent to the patient.

10. Collections

The account may be sent to collections if the patient fails to pay the outstanding balance on time. Follow-up actions could involve reminder letters or phone calls to the patient to settle the account.

11. Reporting and Analysis

The final step involves generating reports to analyze billing patterns, claim denials, and revenue cycles. This helps identify issues and improve the billing process’s efficiency.

What Are the Two Most Common Types of Medical Billing?

The two most common types of medical billing are professional billing and institutional billing. Each serves different types of healthcare services and providers and involves specific processes and coding systems:

Professional Billing

Professional billing, also known as physician billing, mainly deals with billing for services provided by individual healthcare practitioners, such as doctors, specialists, and other non-institutional healthcare providers. This type focuses on billing physician fees for medical treatments performed by providers in clinics or private practices.

• CPT and ICD Codes. Professional billing relies heavily on CPT (Current Procedural Terminology) codes to describe the services performed by healthcare providers and ICD (International Classification of Diseases) codes to describe diagnoses used in healthcare settings.
• CMS-1500 Form. Medical claims in professional billing are typically submitted using the CMS-1500 form, which is standardized for billing non-institutional provider services to Medicare and other insurers.
• Insurance Claims. Expert billing includes verifying the patient’s insurance health plans, coding the services provided, preparing claims, and submitting these claims to insurance carriers for payment. It includes handling various details related to individual patient visits and coverage.
• Patient Interaction. Professionals handling this type of billing may frequently interact with patients to discuss demographics, insurance information, and financial responsibility. They handle patient billing queries and may liaise between insurance companies and patients to resolve claims.

Institutional Billing

Institutional billing refers to billing medical services offered by healthcare facilities such as hospitals, nursing homes, and rehabilitation centers. This billing type covers services that involve a wide array of departments within an institution.

• UB-04 Form. Claims for institutional billing are submitted using the UB-04 form, also known as the CMS-1450 form. It is used to bill inpatient and outpatient facility services.
• Revenue Codes. Instead of focusing on individual physician procedures, institutional billing uses revenue codes representing the type of service or department within the facility providing the care (e.g., radiology, laboratory services).
• DRG and APC Systems. Institutional billing involves payment plans and methodologies like Diagnosis-Related Groups (DRGs) for inpatient services and Ambulatory Payment Classifications (APCs) for outpatient services. These group procedures and services are divided into categories for reimbursement claims.
• Complexity and Volume. Institutional billing can be more complex due to the vast array of services provided and the need to coordinate billing across different departments. It surrounds larger claim volumes and extensive contractual agreements with payers, reflecting the comprehensive care delivered by the institution.

Key Differences Between Medical Billing and Coding

Medical billing and coding are two distinct but interrelated functions in the healthcare revenue cycle. Although people typically mention them together, they each have specialized purposes, processes, and skills. Here’s a comprehensive look at the key differences between the two:

Purpose and Function

Medical Billing

• Objective. The primary purpose of medical billing is to make sure healthcare providers are compensated for their services. The process involves preparing and submitting claims to insurance companies and following up on payments.
• Process. Billing involves various steps, including verifying patient insurance information, posting charges, submitting claims, and managing payments and collections.
• Communication. Billers frequently interact with insurance companies, patients, and healthcare providers. They are responsible for resolving disputes or claims-related issues, such as denials or underpayments.

Medical Coding

• Objective. The primary goal of medical coding is to accurately translate healthcare diagnoses, procedures, medical services, and equipment into universal codes. This ensures uniformity and standardization in documenting patient care and facilitating billing.
• Process. Coders review clinical documentation from healthcare providers to identify relevant information and then assign appropriate procedure codes using coding systems like ICD (International Classification of Diseases), CPT (Current Procedural Terminology), and HCPCS (Healthcare Common Procedure Coding System).
• Communication. Coders generally interact less with external entities but must work closely with healthcare providers to guarantee that documentation is sufficient to support the codes assigned.

Skills and Expertise

Medical Billing

• Knowledge. Medical billers need to understand insurance policies, regulations, and the healthcare reimbursement process. Familiarity with medical billing software and systems is also crucial.
• Skills. Strong communication skills are important for interacting with patients regarding their financial responsibilities and with insurers to verify benefits or appeal claims.
• Attention to Detail. Billers must ensure claims are error-free and compliant with payer requirements to avoid payment denials and delays.

Medical Coding

• Knowledge. Coders must have an in-depth understanding of the healthcare industry, including anatomy, physiology, medical terminology, and the nuances of coding guidelines. They also need to be proficient with the various coding systems and stay updated on changes.
• Skills. Analytical skills are important for interpreting medical records and documentation to assign the correct codes. Coders must have a sharp eye for detail and accuracy.
• Technology Proficiency. Coders frequently work with electronic health records (EHR) and coding software, requiring familiarity with digital platforms and tools.

Impact on Healthcare Revenue Cycle

Medical Billing

• Financial Cycle. Billers play an important role in managing the financial workflow of healthcare facilities. Delayed or inaccurate billing can significantly impact cash flow and revenue.
• Patient Experience. Effective billing practices improve patient satisfaction by clarifying financial obligations and minimizing confusion over insurance payments and charges.

Medical Coding

• Data Accuracy. Accurate coding is fundamental for proper billing and maintaining records that assist in healthcare analytics and research. Errors in the coding process can lead to denied claims or legal issues.
• Regulatory Compliance. Coders ensure compliance with regulatory standards and protocols by applying the correct codes, which helps avoid audits and fines.

While medical billing and coding overlap in the healthcare revenue cycle, they have distinct roles, skill sets, and impacts. Coding provides the foundational language that translates clinical documentation into billable charges, whereas billing manages the complex claim submission and reimbursement process. Both functions are critical to the organization’s financial health and patient record accuracy.

Various Common Billing Issues to Expect

Like with most things, issues can happen in various stages of the medical billing process, leading to delays in payment or denials. You can find a list of the common types of billing issues to help you avoid them in the long run:

• Coding Errors. Misentering codes for diagnoses or procedures can cause claim denials or incorrect payments. Common errors include using outdated codes to misinterpret medical documentation or mismatching diagnosis and procedure codes.
• Incomplete Documentation. Inadequate or missing information in patient records can make it difficult to code services accurately. Without proper documentation, payers may deny claims or request additional information, delaying reimbursement.
• Incorrect Patient Information. Errors in patient demographic information, such as name, date of birth, or insurance details, can cause claim rejections. Accurate information is essential for the submission and approval of claims.
• Insurance Verification Failures. If a patient’s insurance information is not verified before services are rendered, claims may be denied due to coverage issues. This includes submitting claims to the wrong payer or the patient not being covered during service.
• Authorization and Pre-certification Issues. Many insurance plans require pre-authorization or pre-certification for certain services. Failure to obtain these can result in denied claims, as the insurer may not recognize the service as medically necessary.
• Duplicate Billing. Submitting multiple claims for the same service can result in denials or audits. This often happens due to misunderstandings or errors in the billing process, which suggests potential fraud or administrative confusion.
• Timing Issues. Submitting claims outside of the insurer’s established timeframe can lead to denials. Each payer has a specific window in which claims must be submitted, and missing these deadlines typically means forgoing payment.
• Bundling Issues. Certain services that are considered integral to a major procedure are supposed to be billed together. Incorrectly separately billing these services can lead to denied or reduced payments, as insurers often bundle them for payment purposes.
• Coordination of Benefits Failure. When a patient has multiple insurance plans, the primary payer must be billed first. Errors in the coordination of benefits can cause denied claims, improper sequencing of claims, or delayed payments.
• Lack of Follow-Up. Once claims are submitted, consistent follow-up is needed to guarantee payment. Neglecting to track and address denied or delayed claims can result in lost revenue and increased accounts receivable age.

Planning to Hire Medical Billing and Coding Services? Turn to Practice Support Anytime!

Searching for expert and reliable medical billers and coders is a must to help your healthcare practice function smoothly. If you’re still searching for medical billing companies, you should consider Practice Support. Our main goal is to maximize revenue and minimize costs to any client we work with.

Our expert medical billers and coders have years of experience partnering with various healthcare practices. We have studied each practice, enabling us to tailor our services effectively. We also work closely with our clients to implement the right processes.

Contact us if your practice is in need of reliable medical billing and coding services.