Healthcare Billing

As defined in Wikipedia, Healthcare/Medical billing & Coding 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 parties involved are the Healthcare service provider and the Insurance Company. The process involves 3 basic parts- Submitting the Claim, Processing the Claim, Disbursing the Claim.The Billing Process is extremely complex and requires experienced billing professionals who understand the procedure and diagnosis coding, different insurance plans that insurance companies are offering, and the laws and regulations that preside over them.

The process flow can be depicted as follows:

For a layman the process is explained as follows:

  1. Patient Demographic Entry-The patient’s demographic details, insurance policy number and other highly personal information, including the nature of the illness, examination details, medication lists, diagnoses, and suggested treatment required for processing are collected.
  2. Insurance Eligibility Verification-Based on the medical condition and the insurance policy, the healthcare organization verifies whether or not the patient is eligible for the cover.
  3. Coding- An examination procedure and diagnosis code is then generated for the insurance claim.
  4. Audit and Charge Entry-Once the code is generated, the relationship between the diagnosis code and current procedural terminology is verified and accordingly to the billing rules pertaining to the specific carriers and locations.
  5. Claims transmission- Once the procedure and diagnosis codes are determined, the medical biller will transmit the claim to the insurance company (payer).
  6. Carrier Adjudication- Failed claims are rejected and notice is sent to provider. Most commonly, rejected claims are returned to providers in the form of Explanation of Benefits (EOB) or Remittance Advice.
  7. Cash Application- Cash Applications team receives the cash files and apply the payments in the billing software against the appropriate patient account. During cash application, overpayments, underpayments and denials are immediately identified and necessary requests are generated for obtaining approvals.
  8. Accounts Receivables – AR is the key functionalities and the biggest department of Medical Billing, which can also be called as the back-bone of medical billing. It is the financial department of Medical Billing that deals with the payment of the claims, and acts on the receivables that are outstanding. Everything from the revenue of the Doctor to the revenue of the Billing Company is determined here. The two sub-departments are AR Analysis and AR Calling where all these activities are performed.
  9. Denial Analysis – Upon receiving the rejection message the provider must decipher the message, reconcile it with the original claim, make required corrections and resubmit the claim. This exchange of claims and rejections may be repeated multiple times until a claim is paid in full, or the provider relents and accepts an incomplete reimbursement.
  10. Recording-All these transactions are recorded for future review and reference.

Challenges faced by the Healthcare Providing Company

  1. Unavailability of trained and professional staff.
  2. Great need for Provider Advocacy to help the provider navigate through the maze insurance companies claim rules.
  3. Time and Budget Constraints due to which there is a substantial decrease in profit margins.
  4. Customer data privacy.

Role of a Billing Service Provider

Keeping in view the above challenges the healthcare providers farm out their medical billing process to a third party known as a Medical Billing Service Provider.

The benefits of outsourcing the services to a KPO are:

  1. Reduced burden of paperwork for medical staff.
  2. Increased efficiencies caused by lowered workload saturation.
  3. High potential to reduce costs.
  4. Information Security assured.
  5. Speedier claims processing.
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