Medical Billing

The process of medical billing is submitting and preceding up on claims to insurance companies in order to receive payment for services rendered by a healthcare provider. The process is used for insurance companies, whether they are private companies or government-owned.

The process of billing is an interaction between a healthcare provider and the insurance company. The interaction started with the office visit: A doctor will typically update the patient's medical record. This record contains a summary of treatment and demographic information related to the patient. The provider will usually give the patient one or more 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 record of patient contains personal information: the nature of illness, medication lists, diagnoses, and suggested treatment. The extent of the physical examination, the complexity of the medical decision making and the background information 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.

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. A response to an eligibility request is returned by the payer through a direct electronic connection or more commonly their website. 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.

Providers typically charge more for services than what has been negotiated by the doctor and the insurance company, so the expected payment from the insurance company for services is reduced. The amount that is paid by the insurance is known as an allowable amount.

For several decades, medical billing was done almost entirely on paper. However, with the advent of medical practice management software also known as health information systems it has become possible to efficiently manage large amouns of claims. Many software companies have arisen to provide medical billing software to this particularly lucrative segment of the market. Several companies also offer full portal solutions through their own web-interfaces, which negates the cost of individually licensed software packages.