What is Medical Billing? | XyberMed

Medical billing is the process of generating healthcare claims for submission to insurance companies to obtain payment for medical services rendered by providers and provider organizations. After translating a healthcare service into a billing claim, the medical biller follows up on the claim to ensure that the organization receives reimbursement for the work performed by the provider. A knowledgeable medical biller can optimize revenue performance for the physician practice or healthcare organization.

Is medical coding the same as medical billing?

Medical coding and billing are distinct but related processes. Both are part of the business of healthcare, as both are involved in reporting diagnoses, procedures and supplies to commercial and federal payers, such as Aetna and Medicare.

Both medical coders and billers work with clinical staff and must know medical terminology, anatomy and pathophysiology to understand physician notes and operative reports. Medical coders are sometimes involved in the billing process and may code for billing companies. In small physician practices, it is not uncommon for the same person to act as both coder and medical biller. And while billing and coding are not the same thing, these two functions are equally important segments of the healthcare revenue cycle.

What medical coders do

Every time a patient goes to a physician for treatment or evaluation, a medical record is created. Medical coders review the medical record and extract billable information that they then translate into standardized codes.

Procedure codes (CPT®, HCPCS Level II or ICD-10-PCS) tell the payer what service the healthcare provider performed. Diagnosis codes, which are reported using the ICD-10-CM code set, tell the payer why the patient received the services.

Related article: What does a medical coder do?

This is where medical coding and medical billing meet: in the standardized codes that medical billers now use to create insurance claims and bills for patients.

But the medical billing cycle begins before medical coding and doesn't end until the physician or healthcare organization receives all allowed reimbursement for the medical care provided.

What medical billers do

Medical billers act as intermediaries between patients, healthcare professionals and insurance companies (also known as payers) to arrange reimbursement for healthcare services. Billers first gather the necessary information. This includes patient demographics, medical history, insurance coverage, and services or procedures the patient has received.

Collecting this information requires billers to review patient medical records and insurance plans to verify coverage for services. They then generate medical claims, verify their accuracy, and submit them to payers. Once the claims are approved by the payers, they are returned to the billers with the amount the payers have agreed to pay.

At this point, or before patients see the physician, the billers prepare the patient's bill. This involves deducting the amount covered by insurance from the cost of the procedure or service, taking into account co-payments and deductibles, and adding any outstanding patient balances. Bills are sent to patients when necessary and payments are posted and reconciled. But there's a lot more that happens before, after, and in between the medical biller's workday.

The medical billing process

Although the medical billing cycle involves numerous steps that can take anywhere from a few days to several months, accurate billing and timely follow-up are the number one priorities. Most states require insurance companies to pay claims within 30 to 45 days. Conversely, payers impose claim filing deadlines that, if missed, void coverage. The late claim is rejected without recourse, and the organization loses reimbursement.

Errors occurring at any stage of the billing cycle can be costly in terms of revenue and administrative workload, underscoring the value of medical billers capable of mastering their role in the billing process. The financial health of physician practices and provider organizations, such as hospitals, health systems, and surgery centers, depends on the effectiveness of front-end and back-end billing personnel.

Front-End vs. Back-End Medical Billing

The medical billing process can be divided into stages, referred to as front-end and back-end. Front-end billing takes place before the service, i.e., before the patient sees the physician. This stage involves front-end staff and includes all patient-facing activities on which the accuracy of the billing depends.

Pre-enrollment and registration

The processing of an insurance claim begins when the patient contacts the provider's office to make an appointment or registers at the hospital. Staff typically obtain the patient's demographic and insurance information, or the patient completes a registration form after arriving at the place of service.

When billing staff maintains standard operating procedures for patient registration, they are better equipped to avoid errors in data capture. Accuracy of patient data is paramount in determining patient eligibility and benefits, in addition to obtaining prior authorization.

Insurance Eligibility Verification

To receive payment for services, office staff must confirm that the services are covered by the patient's health plan. This step, which can be done over the phone or through an insurer's electronic eligibility verification tool, verifies eligibility effective dates, patient coinsurance, copayment, deductible, and plan benefits related to the specialty and location of service.

It is also important to obtain the necessary prior authorization. Insurers often require prior authorization as a condition of payment, particularly for medical services provided outside the primary care setting.

Collections at the point of service

Once benefit information is determined during eligibility verification, staff is informed of the patient's financial responsibility. This allows the biller to collect the co-payment, deductible, coinsurance or total balance due while the patient is at the front desk, either during check-in or check-out.

Point-of-service collections are key to medical billing, as they reduce the expense of tracking patient balances and help avoid bad debt and write-offs.