The extent of the
physical examination,
the complexity of the
medical decision
making and the
background information
(history) obtained
from the patient are
evaluated to determine
the correct level of
service that will be
used to bill the
insurance. The level
of service, once
determined by
qualified staff is
translated into a five
digit procedure code
from the Current
Procedural
Terminology. The
verbal diagnosis is
translated into a
numerical code as
well, drawn from the
ICD-9-CM. These two
codes, a CPT and an
ICD-9-CM, are equally
important for claims
processing.
Once the procedure and
diagnosis codes are
determined, the biller
will transmit the
claim to the insurance
company (payer). This
is usually done
electronically by
formatting the claim
as an ANSI 837 file
and using Electronic
Data Interchange to
submit the claim file
to the payer directly
or via a
clearinghouse.
Historically claims
were submitted using a
paper form; in the
case of professional
(non-hospital)
services and for most
payers the CMS-1500
form was used. The
CMS-1500 form is so
named for its
originator, the
Centers for Medicare
and Medicaid Services.
To this day about 30%
of medical claims get
sent to payers using
paper forms which are
either manually
entered or entered
using automated
recognition or OCR
software.
The insurance company
(payer) processes the
claims. The insurance
company has medical
directors review the
claims and evaluate
their validity for
payment using rubrics
for patient
eligibility, provider
credentials, and
medical necessity.
Approved claims are
reimbursed for a
certain percentage of
the billed services.
Failed claims are
rejected and notice is
sent to provider.
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.
The frequency of
rejections, denials,
and overpayments is
high (often reaching
50%)(HBMA 7/07),
mainly because of high
complexity of claims
and data entry errors.
What is electronic
billing process?
A practice that has
interactions with the
patient must now under
HIPAA send most
billing claims for
services via
electronic means.
Prior to actually
performing service and
billing a patient, the
care provider may use
software to check the
eligibility of the
patient for the
intended services with
the patients insurance
company. This process
uses the same
standards and
technologies as an
electronic claims
transmission with
small changes to the
transmission format,
this format is known
specifically as
X12-270 Health Care
Eligibility & Benefit
Inquiry transaction.A
response to an
eligibility request is
returned by the payer
through a direct
electronic connection
or more commonly their
website. It is called
an X12-271 "Health
Care Eligibility &
Benefit Response"
transaction. Most
practice management/EMR
software will automate
this transmission,
making them hidden
from the user.
This first transaction
for a claim for
services is known
technically as X12-837
or ANSI-837, and it
contains a large
amount of data
regarding the provider
interaction as well
reference information
about the practice and
the patient. Following
that submission, the
payer will respond
with an X12-997,
simply acknowledging
that the claim's
submission was
received and that it
was accepted for
further processing.
When the claim(s) are
actually adjudicated
by the payer, the
payer will ultimately
respond with a X12-835
transaction, which
shows the line-items
of the claim that will
be paid or denied; if
paid, the amount; and
if denied, the reason.
Due to limited
technology, many
payers (especially
states' Medicaid)
still adjudicate
claims manually; this
results in significant
delays — up to 48
hours or even weeks to
issue 835 responses to
properly submitted 837
transactions. In many
cases this manual
processing subverts
the entire point of
Congress in mandating
a standardized
electronic billing
process. These delays
can also present
catastrophic problems
to the availability of
healthcare for those
patients with
difficult payers —
such as happened in
California with the
state Medicaid program
referred to as "Medi-cal".
Payment process for
medical billing?
In order to be
clear on the payment
of a medical billing
claim, the healthcare
provider or medical
biller must have
complete knowledge of
different insurance
plans that insurance
companies are
offering, and the laws
& regulations that
preside over them.
Large insurance
companies can have up
to 15 different plans
contracted with one
provider. When
providers agree to
accept an insurance
company’s plan, the
contractual agreement
includes many details
including fee
schedules which
dictate what the
insurance company will
pay the provider for
covered procedures and
other rules such as
timely filing
guidelines.
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