Ultimate Guide to Patient Billing

Jamie Frew
Jamie Frew

What is patient billing?

Patient billing is one of the most complex aspects of working in the healthcare industry. At its core, medical billing is the process related to how healthcare providers get paid. Unlike most other industries, payment is not as easy as a one-on-one transaction. Rather, providers are required to create and submit claims to insurance companies, which are responsible for reimbursement. 

The process begins with what is known as medical coding. We will dive deeper into what exactly this entails, but for now, it is just important to know that medical codes are generated from different forms of clinical documentation. Once these codes have been created, they are used to create claims, which are then transmitted to third-party payers including insurance companies. 

Whilst this process is fairly complicated, we’re going to try and break it down for you. Regardless of what field of healthcare you work in, you must have a sound understanding of how these processes work. In order for the healthcare industry to keep operating, it needs to be profitable. And what is the best way to ensure this happens? 

Getting paid...

Why does the healthcare industry use a billing method?

Before we get into the details of medical billing, you might be wondering why exactly the healthcare industry has to have such a complicated payment system, particularly when you consider the simple one-on-one transactions that occur when you procure other services. The reason why the healthcare industry requires a billing system is simply that the industry itself is so complex. 

The types of services that are offered vary considerably, as do the different insurance policies that patients have. Because the amount that a patient is required to pay will depend on the terms of their insurance policy, there can be no cut-and-dry payments linked to different services. Instead, healthcare providers are required to maintain accurate and extensive clinical documents that detail the services they offered, which translate into codes that are used in the payment process. 

It is also important to consider the fact that medical treatment involves more than just the patient and the provider. It may help to think about it as a three-party system; involving the patient, the provider, and the insurance company. Each of these three parties has a responsibility when it comes to the payment process. The medical billing system is a method that allows each of these entities to negotiate payment with the eventual goal of the healthcare provider receiving reimbursement for their services. 

How exactly does the billing process work? 

It can take a little while to properly wrap your head around how this process works, so we’ve broken it down as simply as we could: 

  1. A patient sees a physician and receives treatment and/or services. The physician accurately records the details of the session. 
  2. The clinical documentation provided by the physician is translated into diagnosis and treatment codes that are documented on the superbill. 
  3. The superbill and the patient’s insurance information are used to create a medical claim. Lots of healthcare businesses use practice management software during this step to ensure that the claim is accurate.
  4. Once the claim has been created, it is sent to either the insurance company or a clearinghouse.
  5. If there are issues with the claim (e.g. it is either rejected or denied), then a medical billing specialist will fix the claim and resubmit it.
  6. The insurance company will reimburse the healthcare practice. If the patient’s insurance policy requires copayments or coinsurance, then a statement will be drafted to send to them.

Billing versus coding 

One of the biggest mistakes that people make when they are trying to understand the mechanisms of medical billing is assuming it is the same as medical coding. And whilst both of these systems are essential for the provider to receive payment, it is important to understand their differences. 

Medical coding 

Medical coding is the first step in the payment process, and refers to the generation of codes relating to the services and treatment that a patient has received. One of the reasons why clinical documentation is so important is the role it plays in generating codes. 

You might be wondering why exactly coding is necessary. Wouldn’t it be easier to simply give a copy of the clinical documentation to the insurance provider and let them decide what gets reimbursed? And whilst yes, this would be easier, it isn’t a viable system. The amount of data that the healthcare industry processes is immense. Even the most simple doctor’s visit will entail various services and discussion points that need to be documented. As the visits get more complicated, and a greater number of treatments, diagnoses, and conditions are involved, the amount of data processed by the insurance companies grow ten-fold. By coding this information, the billable aspects (mostly referring to treatment and diagnosis) are extracted, meaning that the amount of data sent between the provider and the insurer is as compact as possible.

As such, whilst the medical coding process can be complicated, its end goal is to reduce the amount of information that is involved in the billing process and ensure that provider-insurer communication is accurate and effective. 

There are an extensive number of different code systems that are each important for varying reasons. The two most commonly used by healthcare providers are the International Classification of Diseases (ICD-10) and Current Procedure Terminology (CPT). ICD-10 is a set of codes that describe the causes of sickness, injury, and disease. ICD codes are used to describe the patient’s condition and the provider’s diagnosis. They determine medical necessity, meaning whether or not the provider’s services were actually required to treat the patient.

CPT codes are procedural codes that are separated into three subsections; the field of healthcare, performance measurement, and medical technology. The healthcare provider is required to document every procedure that their patient receives, which is turned into CPT codes during the coding process. 

Medical coding can be confusing, and most of the time healthcare practices will either use sophisticated technology or have a professionally qualified team of medical coders. This ensures that the right information is extracted from the clinical documentation, and the practice has the greatest chances of receiving fast reimbursement. 

Medical billing 

Following the creation of medical codes, the medical billing process properly begins. The first step of the billing process is definitely the aspect during which coding and billing overlap the most. The biller takes the relevant medical codes and combines them with a patient’s personal information and insurance policy to create what is known as a claim. The biller is responsible for ensuring that the claim is accurate and factual; if it is not, then the provider risks being denied reimbursement. Once the claim has been checked, it is sent to the insurance company or a clearinghouse. The clearinghouse is responsible for verifying the information within a claim and forwarding it to the payer. After the claim has been accepted by the insurance company, they will decide how much to reimburse the healthcare provider and how much the patient needs to pay. When these payments are made, the revenue cycle is complete.

As you can see, medical billing and coding are both fundamental aspects of generating revenue for a healthcare practice, but they serve different purposes. Whilst medical coding refers to compacting important information into relevant codes, billing refers to the submitting and tracking of claims. Together, these processes allow healthcare providers to receive payment for their services. 

Patient billing feedback

Common patient billing terms

If you have already completed some research into the nature of patient billing, you may have come across various unfamiliar terms. In order to truly understand how the payment process works, you must familiarize yourself with certain words. 

Accounts Receivable: The amount of money that a provider is owed following the delivery of services. Generally, it is in the provider’s best interest to keep accounts receivable low.

Advance Beneficiary Notice of Noncoverage: A legal document that informs the patient that they may be liable to cover the cost of services received if the insurance company rejects the claim. This document must be received and signed by the patient before receiving any healthcare.

Allowed Amount: This refers to the maximum amount of money that an insurance company will allow a practice to charge for a specific service.

Claim Scrubbing: The process of checking a claim for errors or mistakes before it is submitted to the insurance company. 

Clearinghouse: A third-party entity that both receives and submits electronic claims between the healthcare provider and the insurance company.

Charge Entry: The process of combining personal information and medical codes into a complete claim. 

Coordination of Benefits: This occurs when a patient is covered by multiple insurance plans.

Copayment: The fixed fee that a patient is required to pay the healthcare provider for a specific treatment or service.

Explanation of Benefits: A statement generated by the insurance company and sent to the healthcare provider after a claim has been processed. The EOB contains all details regarding reimbursement. 

Third-Party Payer: A third-party entity that pays for the services on behalf of an insured patient, including employers, government agencies, and insurance companies.

Healthcare insurance 

Now that we have covered the basics of medical billing and summarized the process of a healthcare practice receiving payment, it is time to look at how healthcare insurance works.

Although insurance falls under its own umbrella, it plays too big of a role in the payment process to be completely ignored. At its most basic, healthcare insurance involves individuals paying a certain amount of money so that certain medical services can be covered. There are many different types of insurance, just as there are many different ways that an individual is required to pay for their insurance.

Most insurance companies will have a selection of different policies that their clients can choose from. These policies will have a ‘premium’, which is a fee that the patient is required to pay, either monthly or annually. Insurance plans may also include copayments and coinsurance. A copayment is a fixed sum that the patient is required to pay the healthcare provider for the service that they receive. Coinsurance is an established payment plan based on percentages. If the patient’s coinsurance policy was decided to be 30-70, then the patient would be required to pay 30% of the bill, and the insurance company would pay the rest. 

Types of insurance plans

Insurance plans are separated into two main types: indemnity and managed care. Indemnity plans require a premium to be paid by the patient, who is then covered for most medical services. Indemnity plans allow patients to be seen by any insurance provider, making them extremely flexible, however, they are generally much more expensive. Alternatively, managed care plans are more affordable, but have different limits regarding the providers that a patient can see.

Within each of these types of insurance, there are several specific plans that an individual can choose from. To help consolidate your understanding of the differences in insurance plans and how they impact the billing process, we have provided a brief outline of three of the most common managed care organizations.

Preferred Provider Organization (PPO): Currently, PPOs are the most common type of insurance plan. They have a higher premium, but are more flexible than an HMO. Patients are covered by the insurance plan regardless of what provider they go to, but they will receive a greater discount if they attend one of the providers in the PPOs network. 

Health Management Organization (HMO): HMOs are typically considered the most affordable healthcare insurance plan. They have a low premium and subscription rate but have a strict network of providers that a patient can see. If the patient is treated by a provider out of this network, they may be required to cover all costs themselves

Point of Service (POS): These plans are fairly similar to HMOs, and patients receive greater coverage if they go to a provider within the POS’s network. They are still covered if they go to an external provider, but will have to pay a greater fee. It may be the case that the POS requires a patient to get a referral from an in-network provider in order to see a specialist. 

This is only a brief insight into three of the most common insurance plans, and should by no means be considered a comprehensive overview. Regardless, it is important to have at least a basic understanding of the different types of insurance plans and how these impact the billing process. If a patient with an HMO plan has received services from an out-of-network provider, then the provider needs to know to send the bill directly to the patient, as their insurance plan won’t cover them. 

Types of insurance payers

Insurance payers refer to the organization or person that is responsible for covering the payment rendered by services delivered to a patient. In healthcare, there are three types of insurance payers: private, commercial, and government.

Private: Private insurance refers to any insurance plan that is covered by a private, non-governmental organization or entity.

Commercial: The majority of commercial insurance operates through employment. An individual’s employer will include an insurance plan within their contracts, and agree to pay a portion of the premium. Commercial healthcare insurance may be with either public or private insurance companies. 

Government: There are federal insurance options, including Medicare and Medicaid that will help patients cover their healthcare fees. The main difference between government insurance plans and private/commercial is eligibility; there are a certain age and income restrictions on who can use these plans. 

Medicare and Medicaid 

Medicare and Medicaid are two types of government funding that allow certain individuals to receive healthcare coverage. Although the majority of US citizens use employment-based insurance, Medicare and Medicaid are the second most common insurance payers. Given that they are government-funded, they have a slight impact on the reimbursement process, so it is best to have a good understanding of how they work. 

What is Medicare? 

Medicare is a government-funded insurance plan that requires individuals to be United States citizens who are 65 years+ in order to qualify. Medicare may make exceptions for younger individuals who have certain disabilities or illnesses. The scheme is separated into four sections; inpatient care, outpatient care, prescription drug coverage, and an alternative way of receiving Medicare benefits.

If a patient is subscribed to Medicare, then the healthcare practice sends their claims directly, without the need to go through a clearinghouse. When Medicare receives the claim, it is reviewed and processed by a Medication Administrative Contractor (MAC), which may take up to 30 days.

If the patient’s claim falls under either section A or section B, then the billing process is the same as when it is sent to any kind of insurance company. On the other hand, sections C and D require certain alterations. For example, the biller is not allowed to bill Medicare for services given to a patient receiving section C coverage. Further, section D coverage can only work for licensed section D providers, otherwise, the patient (or the patient’s secondary insurance) needs to be billed. 

There are several other complications related to how the Medicare billing system works that are too detailed to go into right now, and we recommend doing some more research into how these processes work. 

What is Medicaid? 

Medicaid is another system of government-funded health insurance that is targeted at low-income individuals who may not be able to afford certain healthcare services. Medicaid is much more subjective than Medicare, and eligibility is based on medical necessity, income, disability, and life circumstances. Whilst Medicare is a federal initiative, Medicaid is a joint federal-state program, meaning that its regulations vary depending on where you live. 

We won’t go into too much detail regarding each of the different policies associated with Medicaid plans, but it is important to understand that the biller is responsible for knowing the specific regulations of the state they work in. 

Wrapping your head around how these government-funded insurance policies work is extremely complicated, but it is definitely worth familiarizing yourself with. Given their complexity, there are numerous resources available online that go into more detail about Medicare and Medicaid, which we highly recommend you check out.  

Patient financial responsibilities

The last thing we are going to talk about in regards to healthcare insurance is patient financial responsibilities. Currently, the most common type of insurance plan is employment-coverage. Whilst this is generally advantageous for patients as their employers pay part of their premium, it isn’t uncommon for individuals to not read their contract in-depth. This means that when a patient requires medical treatment, they are often unaware of their own insurance plan. 

To combat this, healthcare providers must talk to patients about their insurance before delivering any type of service. If some treatments or services aren’t covered by the insurance plan, then the patient needs to be informed that they are responsible for covering these costs. Different healthcare practices and institutions will have their own payment plans in place that can be used to help patients cover the cost of services. These details, although sometimes awkward, are essential to a healthcare provider receiving reimbursement. 

Typically, a patient’s financial responsibilities dictated by their insurance plan will relate to the following. 

Co-pay: The fixed amount that a patient is required to directly pay for a specific service at the time of visit. 

Deductible: The amount that a patient pays each year before the insurance company starts paying. 

Coinsurance: The amount that a patient is required to pay once the deductible has been met. 

Problems with claims

Unfortunately, one of the current biggest trends in the healthcare industry relates to issues with claims being processed by insurance companies. At the moment, research suggests that over half of medical claims that are submitted are either rejected or denied. Not only does this make the reimbursement process lengthy and complicated, but it poses significant financial issues for healthcare practices. 

Whilst it is important to recognize that mistakes, either made manually or electronically, are inevitable, it is the responsibility of the medical biller to minimize the risk of mistakes occurring. 

Rejections versus denials 

A claim rejection refers to the detection of error/s in a claim prior to it being processed. When it reaches the insurance company, they will flag the error and the claim will be sent back to the biller to be fixed and resubmitted. Alternatively, a claim denial occurs when the claim has been processed by the insurance company, which decides it is unpayable. The insurance company will send the denied claim back to the provider with an explanation, and it can be fixed and resubmitted, however, this process often takes a lot of time. 

We mentioned previously that a clearinghouse is a middle-man between the provider and the insurance company who “scrub” claims. The process of scrubbing aims to identify and fix any potential errors to ensure that the claim is clean and will be processed successfully. For healthcare providers to receive timely reimbursement for their services, it is important that they actively work to reduce the rate of rejected and denied claims by focusing on accuracy and efficiency. 

Common mistakes within claims 

Although the errors that occur within claims will vary, we have compiled a list of some of the most common. As a biller, it is your job to watch out for these mistakes and ensure they are resolved as efficiently as possible. 

Incorrect patient or provider information: This is one of the most avoidable yet common errors that occur with claims. Every document in the healthcare system needs to be accompanied by the relevant patient and provider details, including name, address, date of birth, and insurance details.  

Incorrect codes: The codes attached to a claim should be straightforward and clearly indicate the procedures and diagnoses of a patient. Occasionally, claims will fail to include relevant codes, and the information provided won’t match the clinical documentation. Another issue with coding is whether or not the most recent coding book is being used. Currently, the ICD-10 is the version being accepted, and it has differences from the ICD-9, which can contribute to denials.

Not filing on time: There is a time limit dictating when a claim can be submitted following the delivery of services. If the claim is processed after this time limit has elapsed, it may be denied.

Poor documentation: This is a slightly different issue, but one that still has a heavy impact on the coding and billing process. After a provider has seen and treated a patient, they are required to complete clinical documentation explaining what happened at the session. Poor clinical documentation makes the coder's and billers' jobs much more difficult, and it can lead to denied and rejected claims. In actuality, the payment process begins with the production of clinical notes, and every healthcare practice should be constantly looking at ways to improve their documentation and record-keeping. 

How to improve your rate of clean claims  

Given that the number of rejections and denials is skyrocketing, coders and billers must be focusing on ways to produce clean claims before they are first submitted. Fortunately, the majority of errors within claims are avoidable, and we have compiled a list of simple tactics you can employ to improve the rate of processed claims:

Communication: The billing process includes several different people and departments, and effective communication within the healthcare practice is essential to creating clean claims. The biller should be communicating with the healthcare provider that treated the patient, especially if there are issues within the clinical documentation. It might sound obvious, but communication truly is one of the best ways to reduce denials and rejections. 

Stay up to date: One of the biggest issues experienced by coders and billers is how frequently the coding manuals are updated. It is your responsibility to ensure you know the current coding book that is being used, and are familiar with how it differs from the previous one. 

Track the claims: After a claim has been submitted, your job is not over. As you now know, various issues may arise following submission, including rejections and denials. By diligently tracking the progress of a claim, you will be in the best position to fix any potential errors and resubmit the claim as quickly as possible. The billing process is lengthy enough as it is, without having to worry about losing track of a returned claim. 

Privacy, abuse, and fraud 

Unfortunately, claim rejections and denials aren’t the only challenges that you need to be aware of. Because the billing process is fundamentally concerned with money, there are certain regulations in place to prevent intentional and unintentional abuse and fraud. 


HIPAA stands for the Health Insurance Portability and Accountability Act, and is a federal law that governs how healthcare providers and insurance companies must treat patient information. It is a well-known fact that the healthcare industry handles private and confidential information pertaining to patients, and as such, there need to be regulations in place so it is protected. 

The policies that HIPAA has introduced have a significant impact on the processes of medical billing. If these regulations are not abided by, the healthcare or insurance provider will face serious legal consequences. Specifically, in relation to medical billing, HIPAA introduced the following:

  • Mandated ICD-10 codes
  • Defined an electronic standard for medical billing 
  • Introduced provider and payer identification standards
  • Introduced fines and penalties for fraud and abuse
  • Introduced specific standards for protecting patient information and privacy

When HIPAA was passed in 1996, the healthcare industry was seeing a greater number of claims being transferred electronically. Whilst this process was faster and more cost-effective, it posed certain risks in relation to the security of patient information. In order to combat these risks, HIPAA dictated an electronic standard that all healthcare providers, insurance companies, and clearinghouses had to abide by.

HIPAA dictates that all electronic transactions need to be a type of Electronic Data Exchange that has been approved by the Accredited Standards Committee (ASC X12). Additionally, all transactions have format requirements also approved by the ASC X12. There are too many different formatting requirements depending on the specific transaction taking place for us to describe here, but it is important to understand that these regulations need to be abided by. 

Fraud and abuse 

In addition to establishing policies for how electronic transactions must take place, HIPAA also outlined the specific penalties that entities will face if they commit either fraud or abuse. 

But what exactly are fraud and abuse? 

Fraud refers to any intentional attempt to defraud a healthcare scheme in an effort to receive unauthorized payment. It especially concerns itself with attempts to change the record of medical services performed in order to receive increased payment. Abuse is generally considered less serious, and relates to any actions that are inappropriate, improper, or unprofessional. Often, cases of abuse result from ignorance of the appropriate coding and billing processes. 

Examples of fraud

  • Altering medical records to change payment.
  • Receiving bribes in return for referrals.
  • Omitting relevant information from a medical record.
  • Misrepresenting dates and descriptions of services.
  • Billing for services at a higher rate than necessary. 

Examples of abuse

  • Failing to manage documentation and medical records.
  • Delivering services is not medically necessary. 
  • Billing Medicare patients (and other patients on funded schemes) at a higher rate.

The consequences for both fraud and abuse vary, depending on the nature of the specific issue. Fraud can result in a criminal conviction and up to 10 years in prison, as well as fines of up to $250,000. The penalties for abuse tend to be less severe, but can still have significant financial and reputation-related consequences for a healthcare practice. 

When you enter the field of healthcare, regardless of whether you are a practitioner, medical coder, or biller, it is vital that you have a complete understanding of HIPAA regulations and what impact they have on your work. In addition to the financial and legal repercussions we mentioned, breaching HIPAA can cause long-term issues for healthcare practices. Businesses work hard to create and maintain a positive reputation so that they can grow their clientele. Even a single breach of HIPAA guidelines is enough for this hard work to simply disappear, and you may find your clients moving practices. In order to stay competitive in the healthcare industry and ensure that your patients are protected, you need to follow HIPAA guidelines and avoid any possibility of committing fraud or abuse. 

Medical billing and coding software 

At this stage, I wouldn’t be surprised if you were ready to give up the notion of ever fully grasping how medical billing works. And whilst it is exceptionally complicated, and I sympathize with you, some tools have been developed for exactly this purpose. 

After electronic transactions became more popular and HIPAA introduced certain guidelines, the technology just kept on advancing. Now, the majority of healthcare practices have a medical billing software in place that is designed to ease the reimbursement process. 

How exactly does medical billing software work? 

Medical billing software has been developed with the sole aim to improve the efficiency and accuracy of the billing process for healthcare practices. The specific features that are included in billing systems can differ, and what works for a small business may be different from what works for a massive institution. 

Basically, medical billing software is integrated with a variety of features. One of the most common of these is claims processing, which refers to the system evaluating and assessing claims before they are sent out. If code or other errors are identified, the system will alert the practice so they can fix the mistake before submission. 

Often, medical billing software will also have capabilities that allow it to evaluate and verify the insurance plan of each patient, to ensure that the practice has up-to-date information. By obtaining this data prior to treating a patient, the actual process of treatment will be smoother as all parties involved are aware of what payments will be required. 

Finally, after a claim has been submitted, the software can help track its progress. This allows practices to stay on top of any mistakes or errors that need to be fixed, claims that require resubmission, and a general idea of when they can expect to receive reimbursement. 

What you need to consider when choosing billing software

Perhaps your healthcare practice has reached a point where you are seeing an increase in the number of claim rejections and denials and you aren’t noticing any solid improvement. In an effort to improve the billing at your business, you have begun researching the advantages of introducing software, but are stuck on what to look for. Luckily, that’s where we can help. Although the specific requirements of each healthcare practice will differ depending on size, clientele, and services offered, there are key considerations you should be made aware of before selecting a system.

Integration: The majority of healthcare clinics currently operating will already have some sort of electronic system in place. This may be EHR, EMR, or an entire practice management software. Regardless, any new billing software you introduce must be able to be integrated into the systems already in use. 

Cloud versus local technology: There are typically two options to choose from in regards to the type of technology that billing systems use. Local technology refers to a system that is installed into the devices at your clinic. This type of software generally has quite a costly upfront fee, but the monthly subscription price is low. Alternatively, cloud technology uses remote servers on the internet to store data and process information. Cloud technology doesn’t require any type of installation into the computers at your clinic, and instead, you will be required to pay a monthly or annual fee. 

Security: We have gone into fairly extensive detail about the issues relating to medical billing and the consequences that can result from breaching HIPAA. When you are deciding on billing software, it is absolutely vital that the system is HIPAA-compliant and has stringent security protocols in place. Additionally, physical security measures should be deployed to protect the data held by the service. You are responsible for the protection of your patients’ information, and you may be liable for any data leakages or unauthorized access. 

Business Associate Agreement: When you use any external provider or entity to handle PHI (patient health information), you are required by law to enter into a BAA (business associate agreement). Basically, a BAA is a contract between the BA and the covered entity (healthcare provider) that outlines the responsibility of the BA in handling PHI. HIPAA dictates that Covered Entities can only use Business Associates who guarantee the complete protection of patient health information. These contracts may vary slightly, but they help to make sure that both parties are fairly responsible for a breach in security. If patient health information is violated, the Covered Entity must take necessary steps to reintroduce protection. When these situations occur, a BAA ensures that the BA is liable under HIPAA guidelines. 

Benefits of medical billing software 

As healthcare technology advances, we are seeing a greater number of businesses implementing medical billing software and reporting various benefits. Some of the advantages of utilizing these systems include:

Increased efficiency: Medical billing software allows practices to elevate their efficiency by streamlining the payment process. The software verifies insurance policies, scans claims to guarantee the accuracy, and alerts users to any issues with bills. Without software, these processes need to be completed manually, which can be highly time-consuming. As I’m sure you are aware, healthcare professionals are required to complete numerous tasks in addition to treating patients. Pressure on the healthcare industry can lead to practitioners feeling overworked and stressed, so taking advantage of systems that will boost efficiency is in everyone’s best interest. 

User-friendly: Medical billing software has been developed with healthcare workers in mind, and most systems take into consideration every level of technological skill. Regardless of whether healthcare practitioners are beginners or experts at using technology, they should find medical billing software intuitive and highly user-friendly. 

Innovative technology: We are living in a digital age, and making the most of developments in technology will greatly benefit your practice. Medical billing software utilizes innovative ways of achieving the same goals as manual work, and allows practices to embrace the various forms of healthcare technology. 

Popular medical billing software

The positive impact that medical billing software has had on improving the payment processes for healthcare clinics has led to a massive surge in the development of these systems. Although we highly recommend you complete your own research into the different types of software, we have compiled a list of some of the most popular and effective medical billing systems:

Carepatron: Carepatron provides HIPAA compliant medical billing and coding software that is integrated with various features designed to streamline the administrative tasks of a healthcare clinic. The system analyzes patient insurance, evaluates electronic claims before submission, and tracks the process of payment. By using cloud-based technology, the system allows healthcare practices to generate automatic invoice reminders and receipts and encourages providers to stay on top of their workload, even when they are on the go. 

Simple Practice: Simple Practice is an integrated practice management system that uses cloud-based technology. Amongst other features, it has medical billing tools that help to streamline this process and increase the accuracy of claims submitted by healthcare clinics. Simple Practice utilizes a client portal and online payments, helping patients stay on top of their invoices at any time, from anywhere. 

NextGen Healthcare: NextGen’s software is integrated with advanced medical billing features that allow a healthcare clinic to analyze a patient’s insurance plan prior to treatment. NextGen Healthcare also includes an internal clearinghouse that scrubs claims, guaranteeing they are clean and will be processed quickly through the payer. 

Healthcare app

Outsourcing medical billing 

Whilst implementing medical billing software is an effective way of improving the accuracy and efficiency of the billing process, some healthcare practices will still choose to outsource to an external company. Outsourcing simply means that the medical billing process is completed by a team of professionals outside of the healthcare clinic. For complicated, busy, or large businesses, this is often the best way to elevate efficiency and accuracy. 

Advantages of outsourcing 

Time: Arguably the greatest advantage of utilizing an external company to manage your billing is the time that it saves. Even with sophisticated billing software, your team will be required to upload and organize data onto the system, tasks that are managed by others if you outsource. Everyone knows that the healthcare system often experiences massive strain, caused by too many patients requiring care and not enough practitioners to treat them. It is in the best interest of everyone to find methods of increasing productivity, and outsourcing billing may just be the perfect solution for this.

Professional billers: Another advantage of outsourcing billing is that the claims will now be processed by a team of professionals who manage bills all day. Although a healthcare clinic will typically employ staff that have experience with billing, they usually have a range of additional responsibilities as well. By using dedicated billing experts, there is a greater chance your practice will see fewer claim errors and will be more likely to receive timely payments. 

Patient engagement: One of the aspects of operating a healthcare business that you should constantly be aware of is patient engagement and satisfaction. And whilst outsourcing billing may not look like it has a direct impact on these areas, it can actually be a very helpful tool. The resources and time that your clinic saves by outsourcing billing can instead be redirected into caring for patients and consequently elevating their satisfaction with your services. 

Disadvantages of outsourcing 

Cost: Perhaps the most obvious disadvantage of utilizing any type of third-party or external provider is the cost. Whilst this is unfortunate, it is a very real drawback that should be seriously considered. 

Control and security: Given that the outsourced company will be dealing with finances and patient information, it is unsurprising that some healthcare practices feel uncomfortable with the diminished sense of control they have. Additionally, you may not want to rely on the security protocols of an external provider and feel more at ease with your data being stored locally.

At the end of the day, there are always going to be both advantages and disadvantages to any change within your practice. It is up to you to complete a cost-benefit analysis and determine whether or not outsourcing the billing process is to your benefit. If you have decided that you want to try outsourcing, there are certain steps you should take next. A fair amount of research is required to assess the different options out there and find a company that best suits your business needs. Although only you can properly come to this conclusion, we have formulated a guide of things to look out for when making your decision. 

What to look for in medical billing companies

Experience with your field: Although every healthcare profession utilizes billing methods, the exact process can vary between fields. For example, billing for general practitioners is typically simpler than billing for highly specialized providers. As such, it is important to ascertain whether your prospective outsourcing company has past experience with the field that you work in. A good way to determine whether you are looking at an appropriate company is by reading reviews and talking to colleagues who work in the same discipline but at a different practice. 

How long does the set-up process take? Most billing companies will be able to start processing your claims within 30-60 days, however, this timeline can change. If the electronic systems you already have in place can be integrated with the outsource company’s system, the time it takes to set up will be reduced significantly. On the other hand, if you are required to change practice management systems and alter other processes, you should expect it to take quite a bit longer. 

Features: We mentioned previously the different features that are often available within billing software, and it is often the case that these are the same features offered by outsourcing companies. If you have decided to outsource billing, then it is likely your practice is experiencing some internal issues. As such, you need to confirm whether the company you are considering has features that will resolve your issues and improve billing. 

How to improve the billing process at your healthcare clinic

We have almost covered every basic element relating to medical billing. Before we wrap this guide off, we wanted to touch on a couple more things. The importance of billing in the healthcare industry should not be underestimated; it is the process that allows providers to get paid, and businesses to keep operating. Without effective billing, we would see clinics in financial ruin, and patients unable to be treated for serious concerns. However, despite the importance of successfully managing billing, the healthcare industry is reporting the highest ever rates of rejections and denials. To help ensure that your business receives timely payments and avoids the costly effects of errors in your claims, we have composed a list of some key strategies to help improve your billing process:

Patient information: It is a good idea to collect patient information prior to the time of the appointment. This is because healthcare practices need to know the details of the patient’s insurance plan so they can bill the services correctly. Receiving information before the appointment will reduce the check-in wait time, and ensure that payment details are already within your system. 

Handling rejections and denials: Despite your best efforts, the chances are your business will experience claim rejections and denials. When this does happen, you must be quick to fix the mistake and resubmit the claim. Staying on top of rejections and denials will help guarantee that the billing process is as seamless as possible and that your practice receives reimbursement for its services. If you habitually fix and resubmit cleaning house rejected claims on the day that you receive them, you will be reimbursed at a much faster rate.

Billing dashboard: A billing dashboard is a centralized visual display that contains the information regarding your claims and their progress through the system. With a billing dashboard, you will be alerted to various complications, including no response claims. If you are aware of claims that have had no response in 14 days, a staff member can contact the insurance company and check the status of the claim. Billing dashboards are highly useful tools that help keep everyone in the loop and ensure the billing process is transparent. 

Lag time: Lag time refers to the time between the date of service and the first billed date, and you must try and keep it as small as possible. Ideally, practitioners should be submitting their claims on the same day as the appointment but we understand that this isn’t possible all the time. 

Encourage copays: If patients are paying their copayments at the time of their appointment, not only is half of the complicated billing process eliminated, but your practice will be receiving faster reimbursement. To help encourage copays, it is a good idea to set up online payment options and invoice reminders that patients are alerted to in their client portal. 

Billing software: Whilst introducing new software into your clinic can be daunting, we cannot underestimate the various advantages that billing systems have, for both small and large practices. With the right software, your clinic will be able to streamline the billing process, reduce its rate of errors, and ultimately save significant amounts of both time and resources. 

Final Thoughts 

We have now covered most of the basic concepts related to medical billing, and you should (hopefully) feel a bit more confident with your knowledge! The mechanisms of billing within the healthcare industry are complex and multifaceted and it is going to take a lot more than reading through a guide to becoming an actual expert. 

Nevertheless, hopefully, you are equipped with a more rounded understanding of how billing works, and with this information, you can take the necessary steps to improve the billing process at your healthcare practice! 

One patient billing app to replace them all: Try Carepatron for free today

If you are interested in furthering your understanding of how medical billing works, we suggest having a look at the following resources: 

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