What Are the 10 Steps in the Medical Billing Process?

Medical billing goes beyond a mere financial transaction; it fosters a relationship between healthcare providers, patients, and insurance companies. The patient is compensated for what they deserve, while the healthcare provider receives rightful reimbursement for the patient care offered. However, the complex billing landscape demands a commitment to precision and an unwavering adherence to an accurate workflow model. 

In this blog, we aim to simplify the essentials of the medical billing process, helping you strike a balance between delivering quality care and ensuring financial transparency.

What are the benefits of medical billing workflow?

The medical billing process workflow offers numerous benefits within healthcare systems. Firstly, it enhances financial efficiency by streamlining the billing procedures, reducing errors, and accelerating reimbursement cycles. Secondly, it ensures accurate documentation and compliance with regulatory standards, minimizing the risk of audits and penalties. Thirdly, a well-organized billing process promotes transparency in financial transactions, fostering trust between healthcare providers and patients. 

Additionally, it facilitates timely and consistent communication between healthcare institutions and payers, improving overall coordination. Moreover, the systematic approach of medical billing workflows contributes to cost containment and resource optimization, allowing healthcare organizations to allocate resources more effectively. 

What are the 10 steps in the medical billing process?

1. Patient registration

This initial step involves collecting comprehensive demographic details and insurance information from patients. The demographic information includes essential personal details such as the patient’s full name, address, contact information, and other identifiers unique to the individual. Simultaneously, healthcare facilities diligently record insurance-related details, including the patient’s insurance policy number, group ID, and any pertinent information about the insurance plan

2. Insurance verification

Following registration, the next step of insurance verification involves confirming and validating the patient’s insurance coverage. Professionals involved in the healthcare facility’s administrative and billing departments verify eligibility, coverage details, and any pre-authorization requirements. This ensures that the patient’s insurance is active and valid during the service period, enabling seamless billing without complications from lapsed or inactive coverage. For patients, it provides clarity on potential out-of-pocket costs and empowers them with financial awareness.

3. Creating superbill & medical coding

The administrative staff generates a report known as a “superbill”. A superbill is a comprehensive invoice or receipt that delineates the healthcare services rendered by a provider to their patient or client. This document includes additional details such as appointment/visit information, CPT and ICD codes, as well as patient and provider particulars. 

A medical coder then converts these superbills into universally accepted medical codes, typically using the Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes. This step is crucial for translating provided bills into a standardized language, promoting accuracy in the subsequent billing stages. This requires a certain amount of knowledge in the specific domain. Any errors or inaccuracies at this stage can lead to claim denials, delays, or underpayment. 

4. Charge entry

In charge entry, the assigned codes are matched with the applicable fee schedule. The fee schedule outlines the predetermined charges associated with each code, providing a standardized basis for determining the financial value of the healthcare services. This ensures transparency and consistency in billing practices. The codes along with the values are then entered into the billing system. 

Once the billing system has the code along with the value, a verification and validation step is conducted to look for any mistakes (both in the code and value). 

The entire charge entry step is like a data entry process which is time-consuming and labor-intensive (maintaining the number of bills and patients that visit the hospital on a daily basis). So, in such cases, you can always opt for additional help from the medical data entry service providers. 

5. Claim submission

Once services are documented and coded, the claim submission step involves sending the bill to the relevant insurance provider. Claims can be submitted electronically or through traditional means, and a timely submission is essential for efficient reimbursement. 

6. Claim adjudication

Claim adjudication is the phase where the insurance company reviews the submitted claim. The insurer cross-references the coded information with the patient’s insurance coverage, deciding the validity of services and the reimbursement amount. After review, the insurance company can accept, reject, or deny the claim.

Here is how you can handle the three different scenarios of claim adjudication—

   – Scenario 1: Approval process

Valid claims are accepted without errors, leading to an Explanation of Benefits (EOB) statement from the insurance company. The statement includes check details, policy information, patient, and payee details, along with covered services. Payments are made according to the policy agreement.

   – Scenario 2: Claim rejection

Claims lacking crucial data or miscoded data are rejected. You can edit and resubmit them, file an appeal for reconsideration, and even request an external review. If the third-party review favors the client, the insurance company covers the service provided.

   – Scenario 3: Claim denial

Claims are denied if a procedure isn’t covered by the health plan. Review and resubmit the claim; if denied again, inform the patient of their financial responsibility (to be ready mentally and financially to pay for the treatment received). Follow up on adjudication statuses due to potential delays.

7. Patient statement generation

In this step, an invoice with the remaining charges is generated for the patient. The statement typically includes a comprehensive breakdown of the procedures and services, their associated costs, the portion covered by the insurance company, and the outstanding amount the patient owes to reimburse the healthcare provider for the services rendered.

8. Payment posting

Payment posting allows medical practices to receive full payment in the most expeditious manner possible. Claims are logged into the billing software, insurance payments are posted against claims, patients are billed for outstanding amounts, and patient payments are posted against outstanding balances. Proper payment posting ensures that financial records are up-to-date and accurate as per the requirement.

9. Accounts receivable follow-up

Timely collection of outstanding balances is the goal of the medical billing process. For the last time, monitor unpaid claims and patient balances, communicating with payers and patients any outstanding issues promptly. This step helps to complete the entire process and help the patient avail the claim they deserve.

10. Reporting and analysis

The final step involves generating reports to review approved and denied claims, as well as the health of the relationship with insurance companies, which directly impacts the timeliness of payment received. Tracking claims along with proactive follow-ups on unpaid claims, are essential components in ensuring effective revenue cycle management. This analytical approach helps healthcare providers refine their billing processes for enhanced efficiency and reduced errors.

What are the challenges of the medical billing process?

1. Insurance reimbursement 

The healthcare administrative staff needs to navigate a complex landscape of diverse insurance plans, each with its reimbursement rates and policies. Given the substantial volume of bills they handle, accurately calculating these rates becomes a complex task. Any errors in this process hold the potential to result in financial losses for the medical institution. Furthermore, these miscalculations can lead to non-compliance with regulatory rules and damage to the institution’s reputation. 

2. Administrative tasks 

The administrative tasks associated with the medical billing process, such as patient verification, authorization, and coordination across departments, demand time, and resources. Delays or errors in these tasks can impact the efficiency of charge entry, affecting the overall revenue cycle management of healthcare institutions.

3. Rising patient payments and responsibility

Patients need timely and accurate information related to the costs involved in treatment, medications, and various tests. Hence, it becomes imperative for healthcare institutions to establish effective communication channels and optimize the collection process. Failure to accurately estimate and communicate with patients about their dues can lead to billing disputes, financial strain on patients, and potential difficulties in revenue collection for healthcare institutions.

4. Poor patient experience

Providing a positive patient experience extends beyond clinical care, including the billing process. Inaccuracies, lack of transparency, or unclear charge entries can negatively impact the patient experience, potentially leading to dissatisfaction and affecting the reputation of health professionals and institutions.

Overcoming medical billing process challenges with professional data experts!

To deal with these challenges, hospitals that do not have an administrative section can reach out to medical billing companies. These companies comprehensively address the complexities associated with diverse insurance plans, ensuring accurate determination of reimbursement rates while maintaining compliance with varying policies. 

With a keen understanding of patients being already overwhelmed due to ongoing treatments plus the expenses, the service provider helps to streamline the billing process. This proactive approach prevents billing disputes, fosters a positive patient experience, and mitigates potential financial strain on patients.

Medical Billing Process: FAQs

Q1. What is the medical billing process?

The medical billing process refers to the series of steps undertaken to submit and follow up on claims with health insurance companies to receive payment for healthcare services provided. It involves translating healthcare services into billing codes, submitting claims to insurance providers, and managing the reimbursement process.

Q2. What are the 3 types of medical billing systems?

The three types of medical billing systems are:

1. Paper-based billing approaches: Manual, paper claims
2. Software-based billing approaches: Electronic submission using specialized software
3. Outsourced medical billing approaches: Third-party companies manage the entire billing process

Q3. Who is involved in the medical billing process?

1. The key shareholders involved in the medical billing process are:
2. Healthcare providers: Deliver healthcare services
3. Medical coders: Assign alphanumeric codes to procedures and diagnoses.
4. Medical billers: Create and submit claims.
5. Health insurance companies: Process claims and determine reimbursement.
6. Patients: Provide information and may be responsible for payments.
7. Government agencies: involved in government-sponsored healthcare programs.
8. Third-party medical billing companies: Handle outsourced billing processes.

About Author

Avish

Avish is a blogger, digital marketer, traveler, and nature lover. He loves to share knowledge with other people. To make himself fresh, he loves to spend time with family and sometimes with nature.

See author's posts