INTRODUCTION TO MEDICAL BILLING
By now you have a good idea about the practice of medical coding. But we still don’t know much about what those codes are used for.
While it’s true that we can use diagnosis and procedure codes to track the spread of disease or the effectiveness of a particular procedure, their main use in the United States is in the reimbursement process. In other words, codes help us bill accurately and efficiently.
Let’s take a closer look at why we bill.
Going to the doctor may seem like a one-to-one interaction, but in reality it’s part of a large, complex system of information and payment. While the insured patient may only have direct interaction with one person or healthcare provider, that check-up is actually part of a three-party system.
The first party is the patient. The second party is the healthcare provider. The term ‘provider’ includes hospital, physicians, physical therapists, emergency rooms, outpatient facilities, and any other place where medical services are performed. The third and final party is the insurance company, or payer.
It’s the medical biller’s job to negotiate and arrange for payment between these three parties. Specifically, the biller ensures that the healthcare provider is compensated for their services by billing both patients and payers. We bill because healthcare providers need to be compensated for the services they perform.
In order to do this, the biller collects all of the information (found in a “superbill”) about the patient and the patient’s procedure, and compiles that into a bill for the insurance company. This bill is called a claim, and it contains a patient’s demographic information, medical history, and insurance coverage, in addition to a report on what procedures were performed and why.
Let’s take a quick step back to talk briefly about the insurance process. Health insurance is insurance against medical expenses. Put simply, people with health insurance, sometimes called ‘the insured’ or ‘subscribers,’ pay a certain amount in order to have a degree of protection against medical costs.
Health insurance comes in a number of forms, including:
With each of these types of insurance, there are procedures and services that are covered, and some that are not. It’s the medical biller’s job to interpret a patient’s insurance plan (or plans) and use this information to create an accurate claim.
The creation of the claim is where medical billing most directly overlaps with medical coding. Medical billers take the procedure and diagnosis codes used by medical coders and use them to create claims.
Procedure codes, whether Current Procedure Terminology (CPT) or Healthcare Common Procedure Coding System (HCPCS), tell the payer what service the healthcare provider performed. Diagnosis codes, documented using ICD codes, demonstrate medical necessity. In other words, procedure codes tell the what of a patient’s visit, and the diagnosis codes tell the why.
The biller adds information about the patient and the patient’s visit, along with the cost of the procedure or procedures performed, to the claim. So the claim now has a what, a why, a who, a when, and a how much.
At this point, the biller also checks to make sure a claim is compliant. That is, the claim is factually and formally correct. This is a complicated process, as the biller must know what the claim allows so that the payer can fully evaluate the procedure and decide how much they will reimburse the provider. If the claim is approved, it’s sent back to the biller with the amount the payer is going to pay. The biller then takes the amount, called the balance, and sends it on to the patient.
Now that you’ve got a little more information about the overall process, here’s a quick look at the day-to-day activities of a professional medical biller.
In the courses that follow, we’ll learn more about the steps of the medical billing process, the insurance claims process, Medicare and Medicaid, and HIPPA.