Wednesday, February 8, 2012

Medical Billing in a Nut Shell

So what’s next at the doctor’s office? After the patient visit is concluded, the doctor makes his/her notes and completes a superbill for the billing staff.

A superbill is the method communication between the doctor and the billing staff. It is how the doctor tells the billing staff what was done in the exam room with the patient and what they should billed. The superbill, sometimes referred to as an encounter form, usually contains codes that indicate the patient’s problem and codes that indicate with the doctor did to treat the patient. A superbill or encounter form is often a sheet of paper with the practice’s most commonly used diagnosis and procedures. There is one superbill per patient, per visit to the medical office. The patient’s name will be written on top with the date that the services were rendered. The doctor generally circles the diagnosis and procedure that best describes the patient’s visit.

The codes to which I referred above are a standardized ‘language’ to describe the patient’s diagnosis and the procedure performed on/for the patient.   Diagnosis codes are standardized and available for lookup and reference in a book called ICD-9 which is published by the World Health Organization. Soon, a new version of diagnosis codes, called ICD-10 will replace the currently ICD-9 codes.  The procedure codes are referred to as CPT which stands for Current Procedural Terminology. These have a similar reference book called CPT published by the American Medical Association. 

The billing staff enter the codes on the superbills in to a computer software designed for medical billing. Medical billing software is like an accounting program specifically for a doctor’s office. This software allows the billing staff to keep track of the patient’s paid and unpaid bills, to generate insurance bills and patient statements. Sometimes, this software is called a practice management system.  After the codes from the superbill are entered in to the medical billing software the data entered are called charges.  

Next, a bill for the medical services rendered must be generated and sent to the insurance company for payment or reimbursement. This bill to the insurance company is called a claim. There are two way to produce a claim. First is a “paper claim” this is a standard form called a CMS 1500 form. The other way (the better way) is an electronic claim. An electronic claim is sent electronically (almost like email but a little more complicated) to a clearinghouse.  A clearinghouse is like a mass distribution center. The clearinghouse receives claims from many doctors all across the country, sorts the claims by insurance company, and sends it off to the correct insurance through electronic means. Claims are routed to the insurances with an electronic address called a payor ID.

Most clearinghouses perform “claim scrubs” before sending the claims to the insurance.  A claim scrub is a very basic review. It is not intended to check for accuracy, but the scrub will determine if all of the required information is present. For example, a patient’s birth day is required; the clearinghouse cannot know if you have the right date but will tell you if it is missing from the claim information. Many clearinghouses are now adding more carrier specific scrubs, also sometimes referred to as edits. This means that they are trying to keep up on specific insurance companies (also known as insurance carriers or just carriers) preferences and requirements. This helps the doctor’s billing staff to find out if there are any problems on the claim more quickly.

Electronic claims are received by the insurance and the insurance begins to review the claim to determine if they will make a payment on the claim or not. This is called processing and begins within a couple of days of receipt. Sending a paper claim required additional mailing time, then mail room time, it has to be sorted, and sent to the right department, before an insurance representative can either scan the claim or manually enter the claim’s data in the insurance’s processing system. The paper process can take up to two weeks before the insurance can even look at your claim. Obviously there is a lot of room for error in paper billing and it takes a longer time to get the claims paid.

When the electronic claim is initially received by the insurance company, it is reviewed by the EDI department. EDI means electronic data interchange. This department is responsible for reviewing the claims to be sure that there are no major errors that prevent processing. If the claim has any errors it will be returned to the doctor’s office in electronic reports called EDI Reports. If the claim is clean, meaning there are no errors or mistakes, many carriers will also send an acknowledgement report letting the doctor know that the claim will be processed. Claim processing is sometimes also referred to as adjudication. Clean claims are sent from the EDI department’s computer system to the insurance company’s processing system called the adjudication system.

The reports sent to the doctor from the insurance’s EDI department must be reviewed carefully as this may be the only rejection that the doctor will receive for problematic claims. If any errors are found on the EDI report the doctor’s billing staff must make the necessary corrections and send the corrected claim back to the insurance company again.   The previously mentioned acknowledgment reports do not require any action, since they are simply a confirmation of successful receipt and acceptance for processing.

Once a claim is accepted in to the insurance’s adjudication system the claim will process. In processing the claim is reviewed by the insurance company against their rules and the terms of the patient’s insurance policy.  Processing times vary from insurance company to insurance company. Some process as fast as a few days and others can take up to 30 days. Once processing is complete, a reply will be sent to the doctor. The reply may be a payment or a refusal to pay. At times, the reply can even be a letter asking the doctor to provide additional information that the insurance needs for processing. A good rule of thumb is to assume that you should receive a reply to a claim in no more than 30 days.  After the 30 day mark, the doctor’s billing staff should call the insurance to see why no reply has been received.

Assuming that the claim was accepted for processing by the EDI department, the doctor’s office will receive a correspondence and hopefully a payment on the claim. This correspondence goes by different names but most commonly it is known as an explanation of benefits (EOB). An EOB provides the doctor’s billing staff with detail about the patient’s coverage for  this claim and specific payment or denial information. An EOB is generally a paper form sent to the doctor’s office by traditional mail. Alternatively, more and more insurances are offering  an electronic format for this information. This is called an electronic remittance advice (ERA).

Upon receipt of the EOB or ERA, the billing staff will review it for accuracy and denials. Then the doctor’s billing staff will record the payments into the practice management system assigning specific payments  amounts to specific patients accounts. A claim that is not paid by the insurance company, is often a denial. There are many reasons why a claim does not pay, some examples will be given in a later, more specific post.  The important thing to know is that denials need attention and cannot be ignored.

Quickly, let’s review the medical process in diagram form for clarity sake. 

Now that you have a basic understanding of what happens on the backend in a physician’s office, we will take a step back and go in to detail.

P.S. As you read this post, I am sure you noticed that some words are in bold. If you are trying to learn medical billing, consider these vocabulary words. They are complete and total jargon - but you will find very useful in billing. 


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