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The process begins when a patient schedules an appointment or visits the healthcare facility. At this point, the physician’s office collects important patient information, including personal details, insurance information, and medical history.
This information is typically entered into the Practice Management System (PMS) or Electronic Health Record (EHR) system.
The physician's office verifies the patient’s insurance coverage, ensuring that their health insurance is active and understanding the details of their benefits (e.g., co-pays, deductibles, covered services).
Insurance eligibility verification can be done manually by calling the insurer, or automatically through an electronic verification system that connects to the insurer’s database.
Medical coders translate the physician’s documentation (from the Electronic Health Record (EHR) or paper chart) into specific codes used by insurers to define medical procedures, diagnoses, and services.
The main coding systems used are:
ICD-10 (International Classification of Diseases): Used for diagnosis codes.
CPT (Current Procedural Terminology): Used for procedure codes (services provided by the physician).
HCPCS (Healthcare Common Procedure Coding System): Used for non-physician services, supplies, and equipment.
The coder selects the appropriate codes based on the physician’s notes, ensuring that all relevant diagnoses and treatments are included.
After coding, the physician’s office enters the charges (i.e., the fees associated with the services rendered) into the system. The charges are based on the coded services and the provider’s fee schedule.
This step ensures that the physician is compensated appropriately for the work done.
The completed claim, which includes the patient's information, the codes for services provided, and the charges, is then submitted to the insurance company.
Claims can be submitted electronically (via EDI - Electronic Data Interchange) through the practice’s billing software or manually using paper forms such as the CMS-1500 form for Medicare and most private insurance payers.
Key points for successful claim submission: Ensure the claim is accurate, complete, and adheres to payer guidelines.
Avoid errors in coding, patient information, and service descriptions to reduce denials.
Include all necessary documentation, such as clinical notes or lab reports, if required by the payer.
After submission, the insurance company processes the claim through a process called claim adjudication, where they decide how much of the claim will be reimbursed based on the patient’s benefits and the payer’s policies.
The payer sends an Explanation of Benefits (EOB) or Remittance Advice (RA) to the physician’s office, explaining how the claim was processed and what amount is covered.
The physician or their billing team should carefully review the EOB to ensure that payments are accurate and align with the services provided.
Once the payment is received from the insurance company or patient, it is posted to the patient’s account. The payment posting includes:
The amount paid by the insurance company.
Any amount owed by the patient (e.g., co-pays, co-insurance, or deductibles).
This step allows the physician’s office to update their financial records and the patient’s balance.
After insurance payment, the remaining balance is sent to the patient. This could include the patient’s share of the cost, such as co-pays, deductibles, or non-covered services.
The patient is sent a statement outlining the charges, payments, and their remaining balance.
Payment arrangements may be made if the patient cannot pay the full balance immediately.
If a claim is denied, the billing team must investigate the reason for denial. Denial codes and explanations (found in the EOB/RA) provide insight into why the claim was rejected.
Common denial reasons include: Incorrect coding. Missing or incomplete documentation. Services not covered by the insurance plan. Issues with patient eligibility.
The physician’s office must then appeal the denied claims by correcting errors, providing additional documentation, or explaining the medical necessity of services.
Improved Cash Flow: Timely and accurate billing and claims submission result in faster payment.
Fewer Denials: Effective RCM processes reduce claims denials and delays, improving overall revenue collection.
Better Patient Experience: Clear communication regarding costs and efficient billing practices contribute to a positive patient experience.
Overall, RCM ensures that healthcare providers are paid accurately and promptly for their services, thereby maintaining the financial health and operational efficiency of their practices or organizations.
The final step involves following up on unpaid claims. This may include:
Checking with the insurance company to verify claim status. Communicating with the patient to arrange payments if the balance is their responsibility. Managing overdue accounts or setting up payment plans. Key Challenges in Physician Billing
Inaccurate or incomplete coding can lead to claim denials or underpayments. It is essential for coders to stay up-to-date with coding changes and ensure that the codes match the services rendered.
Different insurance plans may have varying requirements, coverage limits, and reimbursement rates. Understanding each payer’s guidelines is essential to avoid denials and ensure proper reimbursement.
Denied claims can slow down cash flow. Appeals are necessary when claims are incorrectly denied. Resolving denied claims often requires careful documentation, follow-up, and knowledge of payer rules
For specialized physicians (e.g., cardiologists, orthopedists), billing can be more complex due to the use of specific codes and insurance requirements. These specialties often have higher reimbursement rates, but also increased scrutiny from payers.
Late claim submissions, especially past the payer’s filing deadline, can result in claims being rejected outright. Timely submission and follow-up are crucial for maintaining a steady revenue stream.
Billing Software: Practice management and billing software systems (e.g., Kareo, AdvancedMD, eClinicalWorks) help streamline the billing process by automating claim submissions, payment posting, and patient statements.
Clearinghouses: Clearinghouses (e.g., Trizetto, Availity) act as intermediaries between healthcare providers and payers, ensuring that claims are properly formatted and transmitted. They help reduce rejections and denials.
Electronic Health Records (EHR): EHR systems (e.g., Epic, Cerner) facilitate the documentation of patient encounters and provide accurate data for coding and billing.
Automated Eligibility Verification: Some billing systems have features to verify patient eligibility and benefits automatically, reducing the need for manual verification and minimizing errors.
Physician billing is a vital part of the healthcare revenue cycle, ensuring that physicians are paid for the services they provide. The process involves multiple steps, including patient registration, coding, claim submission, payment posting, and handling denials. Success in physician billing requires accuracy, attention to detail, and a deep understanding of insurance policies, coding systems, and payer guidelines. By utilizing the right technology and staying up-to-date with changes in regulations and insurance requirements, physicians can streamline their billing processes, reduce denials, and optimize revenue collection.