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The Basics of Medical Billing

Medical billers are responsible for the timely submission of technical or professional medical claims to insurance companies, including medical offices, hospitals , nursing homes, or other healthcare facilities. In a hospital setting , medical billers perform different functions than medical billers working in other settings.

Understanding the basics of health insurance plans enables the medical office staff to effectively communicate with patients regarding their health insurance benefits and discuss patient account details with representatives from the insurance companies.

Having a basic understanding of each type of insurance will minimize the hassle of filing claims and collecting payments. 

  1. Indemnity insurance – fee-for-service plans
  2. Managed care plans
    1. Health Maintenance Organizations (HMO)
    2. Preferred Provider Organizations (PPO)
    3. Exclusive Provider Organizations (OEP)
    4. Point of Service (POS) Plans

Medical billing companies in USA

Government health care programs

Medicare  : Medicare is the federal program that provides health care coverage to more than 40 million Americans, including:

  • The elderly over 65 years.
  • Permanently disabled adults under 65 years of age.
  • individuals suffering from end-stage renal disease (ESRD), which is permanent kidney failure requiring dialysis or a kidney transplant

If there is third-party liability, then Medicaid is always the payer of last resort. This simply means that Medicaid always pays last when other insurance is present.

The medical billing process

Patient Registration –  During the patient registration process, patient demographic information is entered, including insurance payer, policy number, and other information necessary to process a clean claim.

 Insurance Eligibility and Verification –  Because insurance  information can change at any time, even for normal patients, it is important for the provider to verify the member’s eligibility each time services are rendered. This step in the process is also required to obtain benefit and authorization information.

Charge Entry: Charge  Entry is the entry of charges for services received by the patient and includes the proper linking of medical codes to services and procedures provided during the patient’s visit.

Coding of diagnosis, procedures and modifiers  : Coding of claims allows the insurance payer to know the illness or injury of the patient and the method of treatment

Claims Submission  : Once the claim is completed, the third party is sent for payment to the insurance payer. In order to efficiently file medical claims, medical billers must know or have access to a lot of information for each insurance company.

Payment posting –  Payment posting involves posting and deposit functions and reconciling posting activities with deposits.

Paper billing is not the first option for billing medical claims, but it is sometimes a necessary task. Of course, the electronic claims process is much simpler and faster compared to the manual paper billing process.

Most of the larger insurance payers offer electronic claim filing. You can choose between direct billing or set up an account with a clearing house.

A clearinghouse is a company that will accept all of your claims and electronically forward them to insurance payers for processing. They also have edits in place to check for errors on your claim to help avoid billing delays.

The main benefit of electronic invoicing, whether you use clearinghouse or direct invoice, is that it will speed up the processing of your claims. Paper billing can take up to 45 days to process.

You’ll want to familiarize yourself with these terms related to health insurance, medical billing, medical coding, payment technology, and health information technology.

Medical claims processing
You will need to understand electronic claim billing with electronic versions of forms, which are accepted by Medicare, Medicaid, and most insurance companies. However, paper billing claims still exist and you will need to be familiar to process them.

Medical billing to Medicare, Medicaid and Tricare
These government payers are an important part of medical billing. You will need to fully familiarize yourself with its processes. Explore each one in depth, as well as some of the top private insurance companies.


Published by 1healthcare

Medical Billing, Medical Coding, Hospital Revenue Cycle management.

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