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Medical Billing

Medical billing is the process of submitting and following up on claims to insurance companies in order to receive payment for services rendered by a healthcare provider. The same process is used for most insurance companies, whether they are private companies or government-owned.

Billing Process: The billing process is an interaction between the provider and the insurance company (payer). It begins with the office visit. After the provider sees the patient, depending on the service provided and the examination, the doctor creates or updates the patient's medical record. This record contains a summary of treatment and demographic information related to the patient. Upon the first visit, the provider will usually give the patient a diagnosis (or possibly several diagnoses), in order to better coordinate and streamline his/her care.

The treatment, diagnosis, and duration of service combine to determine the procedure code that will be used to bill the insurance. The doctor then either provides this information to a medical coder or other billing specialist. From this, a billing record, either paper (usually on a standardized form called an HCFA) or electronic, is generated. This form includes the various diagnoses identified by numbers from the current ICD-9 manual.

This billing record or claim is then submitted either to a clearinghouse that acts as an intermediary for the information (this is typical for electronic billing) or directly to the insurance company.

The insurance company (payer) processes the claim. The insurance side of the process begins with testing the validity of the claim for payment. The tests cover patient eligibility for payment, provider credentials, and medical necessity. Upon passing successfully the tests, the payer pays the claim. If a claim fails the tests, the payer rejects the claim and communicates the rejection message to the claim submission source.

Upon receiving the rejection message, the provider must decipher the message, reconcile it with the original claim, make required corrections, and resubmit the claim again. This exchange of claims and messages may repeat multiple times until the claim is paid in full.

The frequency of rejections, denials, and underpayments is high (often reaching 50%), mainly because of high complexity of claims and data entry errors. Straight Through Billing technology, procedures, and training help manage the billing process to receive all payments on time.

Billing Quality: Billing Quality is measured in terms of timeliness and completeness of payment. The shape of the distribution curve of Accounts Receivable illustrates billing quality. Specific measures include median and percent of accounts receivable beyond 30 days, 60 days, and 120 days. A good quality billing process has relatively small median, e.g., half of the claims must be paid within 30 days, and a steep drop in terms of percents of accounts receivable, e.g., reaching less than 10% of A/R beyond 120 days. The actual amount of Accounts Receivable beyond 120 days is considered uncollectable and labeled as a provider's loss for write off.

Billing Transparency: Billing Transparency allows every participant in the billing process to see continuously both its big picture and the minute detail. The big picture consists of total cash flow in a given time period, current submitted and failed claims, and Billing Quality. The minute detail pertains to individual claims making up the big picture, including complete history from the moment of creating the claim, testing its validity, corrections, submissions, and reconciliations, until payment.

Straight Through Billing: Straight Through Billing integrates billing process within the practice management workflow, connecting patient scheduling, care delivery, and medical record management. Every participant of the practice management workflow receives a unified and coherent picture of practice workload, patient and provider location, resource availability, and cashflow. Straight Through Billing requires integrated technologies for Electronic Medical Records (EMR) and Straight Through Billing.

Straight Through Billing Technology: Straight Through Billing technology streamlines and expedites billing process by automating claim validation, payer message reconciliation, and billing workflow management. First, automated claim validation eliminates errors downstream and reduces processing time because it flags errors before submitting the claim to payer. Next, automated claim-message reconciliation eliminates costly search for the original claim and standardizes message communication, further eliminating the need to decipher the (often cryptic) payer's message. Finally, billing workflow management drives the followup discipline required for resolution of claim denial and underpayment incidents and establishes high degree of process transparency for all billing process participants, resulting in full and timely payments.

History: For several decades, medical billing was done almost entirely on paper. However, with the advent of computers it has become possible to efficiently manage large amounts of claims. Many software companies have arisen to provide medical billing software to this particularly lucrative segment of the market.

The billing field has been challenged in recent years due to the introduction of the HIPAA act. Due to the many restrictions that were enacted as a result of this new law, many software companies and medical offices spent thousands of dollars on new technology and were forced to redesign and rebuild their business processes and software in order to become compliant with this new act.

Terms and Codes: Knowing common abbreviations and terms is the key to deciphering a medical bill. A partial list follows:

  • ANES: Anesthesia service administered by anesthesiologist.
  • DESFLURANE: A breathable anesthesic
  • GROUNDING PAD or PATIENT PLATE or RETURN ELECTRODE: A Dispersive Electrode which can safely direct electrical charges out of the patient's body to prevent burn.
  • STERI STRIPS: Sterilized strips of bandaging.
  • PACU: Post Anaesthesia Care Unit. The area one is placed after surgery is complete.



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