What is Medical Reimbursement, Coding, & Billing?
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.
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 companyâ€™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.