Medical Billing

The billing process is an interaction between a healthcare provider (such as a doctor Mr. Asad) and the insurance company (payer). The interaction begins with the office visit: a doctor or their staff will typically create or update 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. In the absence of a definitive diagnosis, the reason for the visit will be cited for the purpose of claims filing. The patient record contains highly personal information, the nature of illness, examination details, medication lists, diagnoses and suggested treatment. The extent of the physical examination, the complexity of the medical decision making, and amount of 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 International Classification of Diseases, Ninth Edition, or ICD-9. These two codes, a CPT and an ICD-9, are equally important for claims processing. Once the procedure and diagnosis codes are determined the biller will transmit the claim to the payer(insurance). 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 name for its originator, the Centers for Medicare and Medicaid Services. Even to this day a sizable portion of medical claims get sent to payers using paper forms. 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%)(HBMA 7/07), mainly because of high complexity of claims and data entry errors.