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Medical billing & coding is the
process of submitting and following up on claims to insurance
companies in order to receive payment for services rendered by
a healthcare provider. The same process is used for most
insurance companies, whether they are private companies or
government-owned. Medical billers are encouraged, but not
required by law to become certified by taking an exam such as
the CMRS Exam, RHIA Exam and others. Certification schools are
intended to provide a theoretical grounding for students
entering the medical billing field.
Billing Process
The medical billing process is an interaction between a health
care provider and the insurance company (payer). The entirety
of this interaction is known as the billing cycle. This can
take anywhere from several days to several months to complete,
and require several interactions before a resolution is
reached. 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 including, but not
limited to, the patient's name, address, social security
number, home telephone number, work telephone number and their
insurance policy identity number. If the patient is a minor
then guarantor information of a parent or an adult related to
the patient will be appended. Upon the first visit, the
provider will usually give the patient one or more diagnoses
in order to better coordinate and streamline their 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, including
the nature of the illness, examination details, medication
lists, diagnoses, and suggested treatment.
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 standardized five digit procedure
code drawn from the Current Procedural Terminology database.
The verbal diagnosis is translated into a numerical code as
well, drawn from a similar standardized ICD-9-CM(latest review
being 10 [ICD-10-CM] database. These two codes, a CPT and an
ICD-9-CM (will be replaced by ICD-10-CM as of 10/1/2013) are
equally important for claims processing.
Once the procedure and diagnosis codes are determined, the
medical 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
or HCFA (Health Care Financing Administration claim form) was
commonly used. The CMS-1500 form is so named for its
originator, the Centers for Medicare and Medicaid Services. At
time of writing, 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 usually by
medical claims examiners or medical claims adjusters. For
higher dollar amount claims, the insurance company has medical
directors review the claims and evaluate their validity for
payment using rubrics (procedure) for patient eligibility,
provider credentials, and medical necessity. Approved claims
are reimbursed for a certain percentage of the billed
services. These rates are pre-negotiated between the health
care provider and the insurance company. Failed claims are
rejected and notice is sent to provider. Most commonly,
rejected claims are returned to providers in the form of
Explanation of Benefits (EOB) or Electronic Remittance Advice.
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 over payments is
high (often reaching 50%), mainly because of high complexity
of claims and/or errors due to similarities in diagnosis' and
their corresponding codes. This number may also be high due to
insurance companies denying certain services that they do not
cover (or think they can get away without covering) in which
case small adjustments are made and the claim is re-sent.
Depending on the denial, filing an appeal with the appropriate
documentation and proof can successfully overturn the original
decision.
[edit]Electronic Billing Process
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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 patient's 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.[1] A response to an eligibility request is
returned by the payer through a direct electronic connection
or more commonly their website. This is called an X12-271
"Health Care Eligibility & Benefit Response" transaction. Most
practice management/EMR software will automate this
transmission, hiding the process from the user.
This first transaction for a claim for services is known
technically as X12-837 or ANSI-837. This contains a large
amount of data regarding the provider interaction as well as
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.
[edit]Payment
In order to be clear on the payment of a medical billing
claim, the health care provider or medical biller must have
complete knowledge of different insurance plans that insurance
companies are offering, and the laws and 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.
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 example, although a psychiatrist
may charge $80.00 for a medication management session, the
insurance may only allow $50.00, and so a $30.00 reduction
(known as a "provider write off" or "contractual adjustment")
would be assessed. After payment has been made a provider will
typically receive an Explanation of Benefits (EOB) or
Electronic Remittance Advice (ERA) along with the payment from
the insurance company that outlines these transactions.
The insurance payment is further reduced if the patient has a
copay, deductible, or a coinsurance. If the patient in the
previous example had a $5.00 copay, the doctor would be paid
$45.00 by the insurance. The doctor is then responsible for
collecting the out-of-pocket expense from the patient. If the
patient had a $500.00 deductible, the contracted amount of
$50.00 would not be paid by the insurance company. Instead,
this amount would be the patient's responsibility to pay, and
subsequent charges would also be the patient's responsibility,
until his expenses totaled $500.00. At that point, the
deductible is met, and the insurance would issue payment for
future services.
A coinsurance is a percentage of the allowed amount that the
patient must pay. It is most often applied to surgical and/or
diagnostic procedures. Using the above example, a coinsurance
of 20% would have the patient owing $10.00 and the insurance
company owing $40.00.
In Medicare the physician can either be 'Participating' - in
which they will receive 80% of the allowable Medicare fee and
20% will be sent to the patient - or can be 'Nonparticipating'
in which the physician will receive 80% of the fee, and may
bill patients for 15% or more on the scheduled amount.
For example, the regular fee for a particular service is
$100.00, while Medicare's fee structure is $70.00. The
physician will therefore receive $56.00 and the patient will
pay $14.00. Similarly Medicaid has its own set of policies
which are slightly more complex than Medicare.
Steps have been taken in recent years to make the billing
process clearer for patients. The Healthcare Financial
Management Association (HFMA) unveiled a "Patient-Friendly
Billing" project to help healthcare providers create more
informative and simpler bills for patients. Additionally, as
the Consumer-Driven Health movement gains momentum, payers and
providers are exploring new ways to integrate patients into
billing process in a clearer, more straightforward manner.
[edit]History
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 amounts 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.
Due to the rapidly changing requirements by U.S. health
insurance companies, several aspects of medical billing and
medical office management have created the necessity for
specialized training. Medical office personnel may obtain
certification through various institutions who may provide a
variety of specialized education and in some cases award a
certification credential to reflect professional status. The
Certified Medical Reimbursement Specialist (CMRS)
accreditation by the American Medical Billing Association is
one of the most recognized of specialized certification for
medical billing professionals.
[edit]HIPAA
The medical billing field has been challenged in recent years
due to the introduction of the Health Insurance Portability
and Accountability Act (HIPAA).
HIPAA is a set of rules and regulations which hospitals,
doctors, healthcare providers and health plans must follow in
order to provide their services aptly and ensure that there is
no breach of confidence while maintaining patient records.
Since 2005, medical providers have been urged to
electronically send their claims in compliance with HIPAA to
receive their payment.
Title I of this Act protects health insurance of workers and
their families, when they change or lose a job. Title II calls
for the electronic transmission of major financial and
administrative dealings, including billing, electronic claims
processing, as well as reimbursement advice.
Medical billing service providers and insurance companies were
not the only ones affected by HIPAA regulations, many patients
found that their insurance companies and health care providers
required additional waivers and paperwork related to HIPAA.
As a result of these changes, software companies and medical
offices spent thousands of dollars on new technology and were
forced to redesign business processes and software in order to
become compliant with this new act. This was in part because
providers who inadvertently released Protected Health
Information to the wrong entity would now be exposed to
litigation under HIPAA.
The major information need to be followed is to maintain
privacy of both the patient's personal or demographic details
as well as providers details.
[edit]Role of the Medical Billing Service
In many cases, particularly as a practice grows beyond its
initial capacity to cope with its own paperwork, providers
farm out their medical billing process to a third party known
as a Medical Billing Service. These entities promise to reduce
the burden of paperwork for medical staff and recoup lost
efficiencies caused by workload saturation, paving the way for
further practice growth. A recent trend towards outsourcing in
countries such as India has shown a potential to reduce costs,
but it is not clear if this trend will continue or decline as
a result of customer concerns over privacy. |
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