Think about the life cycle of a medical bill as a journey. Just like when you take a trip on a winding road, the life cycle of a medical bill can experience significant detours, back tracks, route changes, accidents, and delays on its journey toward getting paid.
The best way to avoid possible delays, detours, and accidents that could ultimately prevent the full payment of a bill is to track your medical bill’s progress through the steps of its life cycle.
The Life Cycle of a Medical Bill
When patients call and set up an appointment with a healthcare provider, they effectively pre-register for their doctor’s visit and pre-register for their medical bill. If the patient has visited the provider before, then their information will already be on file with the provider.
While you should always confirm that each patient’s insurance and personal information has not changed since their last visit, for patients whose information is already on file (and hasn’t changed), you can save time associated with re-entering that patient’s medical information. However, if the patient is new, then they must provide personal information and insurance details to confirm that they’re eligible to receive services from that provider.
Patient Responsibility Confirmation
Patient responsibility is paramount.
Patients make up approximately one-third of the pool of insurance payers. Basically, patient financial responsibility is a fancy term to describe who owes what in regards to a particular doctor’s visit.
Companies that offer services for Patient Responsibility Estimation can greatly assist in increasing the possibility that a bill will get paid by setting expectations up-front. Once the employee in charge of registration has the pertinent information from the patient, then the biller can determine which services should be covered under the patient’s insurance plan.
Insurance coverage in the United States is complicated due largely to the fact that insurance coverage differs dramatically between companies, individuals, and plans. Each biller must verify each patient’s coverage in order to assign the bill correctly and code it accordingly (to avoid denials).
For example: some insurance plans don’t cover certain services or prescription medications unless there’s a pre-existing note. If that’s the case — that the patient’s insurance doesn’t cover the procedure or service to be rendered — then the doctor’s office must make the patient aware that they may be responsible for the entirety of the bill.
Once the patient checks out, then the doctor’s office will send out the medical report from that visit to the medical coder. That coder will then work to abstract and translate the information in the report into accurate, useable medical code. The report that the coder generates, which also includes demographic information on the patient and relevant medical history, is often referred to as the “superbill.”
The superbill contains necessary information about medical service or services provided, such as:
- Name of the patient
- Codes for the diagnosis and procedure
- Name of the provider
- Name of the Physician
- The procedures performed
- Any other medical information that pertains to the medical service provided
This information is vital, not only for the creation of the claim, but to improve the probability that a medical claim will be paid.
Data Entry & Claims Editing
Billers are ultimately responsible for the creation of a medical bill or claim. After the creation of a claim, billers will need to ensure that the medical claim meets the necessary standards of coding and format compliance.
Whether or not a procedure will be considered billable depends on the patient’s insurance plan and the regulations laid out by the payer.
Coders check for accuracy — in terms of both demographic and insurance information — while working to transform the diagnosis, medical services, and equipment from the claim data into a special language of codes.
While claims may vary in format, they typically contain the same basic information. Each claim contains patient information (their demographic information and medical history) and information about the procedures performed (in CPT or HCPCS codes) along with the pricing associated with each of these procedures. Each of these procedures is paired with a diagnosis code (an ICD code) that demonstrates the medical necessity for that procedure or service. The International Classification of Diseases, Tenth Revision (ICD-10) has over 68,000 possible codes to select from.
Electronic Health Records (EHRs) that assist with medical coding can help to minimize the number of errors that lead to denials caused by improper coding.
Billers may still use manual claims, but manual claims have a higher rate of errors, low levels of efficiency, and take a long time to get from providers to payers. Billing electronically saves time, effort, and money, while significantly reducing human or administrative error in the billing process.
In the case of high-volume or third-party payers, billers can go through a clearinghouse.
Clearinghouses, such as eMEDIX, ease the burden of medical billers by taking the information necessary to create a claim and then reformats claims received from billers, scrubs them, and transmits them to payers. Each of the various claim types have requirements for acceptance within each payer’s adjudication system. Because of these requirements, claim scrubbing is vital to getting claims accepted.
eMEDIX provides claims scrubbing at 4 different levels:
- x12 formatting
- Validations (edits): These are created based on industry knowledge and past experience with monitoring claim rejections for our customers
- Custom validations (edits): These are written for specific customers upon request
- If a customer is contracted for Compliance, then we will run an additional pass through our compliance partner which checks claims for claim coding validations and requirements (such as those from the Correct Coding Initiatives)
Think of it this way:
AA practice may send out ten claims to ten different insurance payers, each with its own set of guidelines for claim submission. Instead of having to format each claim specifically, a biller can simply send the relevant information to a clearinghouse, which will then handle the burden of reformatting those ten different claims and eliminate the administrative burden from manually re-keying those claims.
Possible causes of denial at this stage in the life cycle of a medical bill include:
- Recipient ineligibility
- Provider ineligibility
- Wrong procedure or diagnosis codes
- Provider contract ineligibility
- Discordance with bill processing agency (BPA) rules
Once a claim reaches a payer, it undergoes a process called adjudication.
In adjudication, a payer evaluates a medical claim and decides whether the claim is valid/compliant and, if so, how much of the claim the payer will reimburse the provider for. It’s at this stage that a claim may be accepted, denied, or rejected.
If the claim is approved, payment and remittance advice (RA) are sent to the provider. An accepted claim is, obviously, one that has been found valid by the payer. Accepted does not necessarily mean that the payer will pay the entirety of the bill. Rather, they will process the claim within the rules of the arrangement they have with their subscriber (the patient).
Suspended or rejected claims undergo further review and are then either paid after data correction or denied. A rejected or suspended claim is one that the payer has found some error with. If a claim is missing important patient information, or if there is a miscoded procedure or diagnosis, the claim will be rejected and will be returned to the provider/biller.
In the case of rejected claims, the biller may correct the claim and resubmit it.
It should be noted that following data correction, a claim then must go through all of the processes of the claim life cycle again. Re-working suspended claims will cost practices valuable time and money.
However, if a claim is denied during the disposition phase, it is finalized and moved to the denied history record of the recipient. A denied claim is one for which the payer refuses to process payment for the medical services rendered. This may occur when a provider bills for a procedure that is not included in a patient’s insurance coverage. This might include a procedure for a pre-existing condition (if the insurance plan does not cover such a procedure).
Once the biller has received the report from the payer, it’s time to make the statement for the patient. The statement is the bill for the procedure or procedures the patient received from the provider. Once the payer has agreed to pay the provider for a portion of the services on the claim, the remaining amount is passed to the patient.
In certain cases, a biller may include an Explanation of Benefits (EOB) with the statement. An EOB describes what benefits, and therefore what kind of coverage, a patient receives under their plan. EOBs can be useful in explaining to patients why certain procedures were covered while others were not.
You will probably recognize this as the letter that has big, bold text stating: THIS IS NOT A BILL.
Collections & Follow-Up
The final phase of the billing process is ensuring those bills get, well… paid. Billers are in charge of mailing out timely, accurate medical bills, and then following up with patients whose bills are delinquent. Once a bill is paid, that information is stored in the patient’s file.
Your doctor’s office’s billing department will follow up with you if you still owe a balance. They usually include a due date for the payment.
If the patient is delinquent in their payment, or if they do not pay the full amount, it is the responsibility of the biller to ensure that the provider is properly reimbursed for their services. This may involve contacting the patient directly, sending follow-up bills, or, in worst-case scenarios, enlisting a collection agency.
Each provider has its own set of guidelines and timelines when it comes to bill payment, notifications, and collections, so you’ll have to refer to the provider’s billing standards before engaging in these activities.
Best Practices: Check patient information – clarify that they need to check patient information, but if patient information hasn’t changed, then it will save time.
Looking to take the next steps toward streamlining the life cycle of your medical claims? Contact us.