The Path To Payment: Medical Billing, Its Process and Goal, Getting Paid

At PracticeSuite, we define the Revenue Cycle as everything before, during, and after a patient’s visit affecting a practice’s ability to get paid.

Revenue Cycle Management is the optimization of the revenue cycle, be it payment for a consultation, a test, treatment, or a procedure. The revenue cycle begins when a patient calls for a medical appointment, and it ends when the final bill is paid.

The goal of revenue cycle optimization is to streamline and speed up the patient-to-payment process, eliminate errors, and reduce overall time-to-pay in order to keep cash flow steady and keep the medical practice on the profitable side of the ledger. To fully understand medical billing, we must appreciate its central role in the bigger mission of keeping the revenue cycle managed.

What is Medical Billing?

Medical billing is the cornerstone of Revenue Cycle Management, focusing on the collection of payments from patients and health benefit payers, including private insurers like Blue Cross and Aetna, as well as government programs such as Medicare and Medicaid. It involves navigating payer regulations, collecting co-pays, managing deductibles and co-insurance, and coordinating primary, secondary, and tertiary insurances, along with handling guarantors, employers, health savings accounts, and self-pay options.

Distinct from medical coding, which aims to ensure accurate coding of patient encounters, medical billing focuses on properly preparing medical claims so they get paid with the fewest possible delays. This process involves passing internal inspections, successfully navigating the clearinghouse, and ultimately ensuring that claims are not denied by payers. The goal is to secure prompt payment, allowing the practice to maintain financial stability, grow, and continue providing quality care to patients.

The medical billing process involves the entire practice, with each person in the office playing a different role along a critical path – the path to payment. It begins at the front desk where patient eligibility is checked, authorizations are obtained, and co-pays are collected; after the patient encounter, charges are then captured by a coder—accurately and to the highest level of specificity.

Next, a biller prepares a medical claim that includes all the relevant patient and provider information, uses the correct diagnosis codes, pointers, and modifiers, and conforms to any specific payer rules.

After passing internal validation through claim scrubbing and CCI edits, the claim is transmitted to a clearinghouse where it is accepted or rejected. If accepted, it is passed on to the payer where it is reviewed and either accepted and paid or rejected and returned for further information or documentation. Upon resubmission, it may be accepted or denied, and a second billing cycle begins.

Medical billing is the most complex and challenging part of the revenue cycle as each health benefit payer defines its own rules and requirements for reimbursement. Additionally each payer can change its rules without prior notification, making a medical biller’s chief skill staying on top of payer requirements, and there are thousands of insurance payers – as many as 3,500 – each with its own rules for payment.

There are a lot of moving parts in the billing process—there are encounters to code, payer rules to learn, claims to prepare, submittals to follow up on, claims to be reworked after rejection, and claims to be investigated after denial. But with experienced front-office staff, coders, and billers in place, along with tools to help them be more efficient and productive (meaning software, not spreadsheets!), billing is the fuel for a robust RCM engine.

What is Medical Billing Software?

For decades, medical billing was done entirely on paper, where HCFA claim forms were filled in by hand or typed, preferably on an IBM Selectric, which had the striking power to produce clean 3-layer carbon copies.

The first widely adopted electronic software programs were Medisoft, Lytec, and Medical Manager.

They miraculously stored patient demographics, insurance information, diagnosis and procedural codes, along with all the practice details, which no longer had to be retyped on every bill, and they then magically printed the claim information on the HCFA claim form, vastly speeding up claim processing, making it faster, less tedious, and more accurate.

More importantly, these systems supported the ASC X12 837 (ANSI) electronic file format for medical claims and electronic reimbursements. Transmitting medical claims electronically shortened the revenue cycle by months, but it also marked the beginning of the modern era of electronic medical billing and medical billing software.

So, if medical coding is all about getting the clinical and patient details right and coding to the highest level of specificity, the software side of things is all about automating manual processes in order to improve claim validation, electronic submission, tracking claim progress, quickly revising returned claims, and digging into encounters to get denied claims approved for payment—all electronically and with better efficiency through software automation.

The best systems today are flexible and let billers drill down into the billing details. They’re also time-saving, filling in patient information on appeal letters, bills, and many other documents. Sophisticated tracking features ensure claims don’t fall through the cracks while letting billers easily organize their processes to match the way they prefer to work.

Lastly, modern cloud-based medical billing software is able to integrate with the other systems used in your practice, from EMR and coding to practice management and revenue cycle management.

In addition to full integration, make sure the software you choose offers coding validation; reports that show you key performance indicators like accounts receivable levels and the percentage of denied claims being resubmitted; prior authorization tracking; and the ability to send e-statements to patients and receive payments electronically.

Part 2: Mapping The Billing Process A-Z:

The Revenue Cycle Begins with Eligibility, Benefits and Authorizations

Patient eligibility is incredibly important to preparing claims that will get paid. For example, Medical Economics says the number 2 reason for a denial is that a patient isn’t eligible for services because his/her health plan coverage ended, and the patient hasn’t shown proof of new insurance.

The good news is that nothing about checking demographics and verifying eligibility is particularly hard. In fact, most of it is common sense.

1. Make sure your front-office staff understands the importance of these tasks and has access to any education they need on the process of gathering patient data.
2. Choose software that makes it simple to verify current insurance and patient ID before every visit. The software should simplify the process of comparing returning patients’ insurance against what’s already in your system.
3. If necessary, tie front-office bonuses to staffers’ consistency in double checking patient demographic and insurance information at each office or telehealth visit.

Prior authorization is a different matter, significantly more complex than eligibility and not always common sense. The Council for Affordable Quality Healthcare estimates prior authorization administration cost providers a total of $528 million in 2019.

One reason for the complexity is step therapy, where a patient must try one or more less expensive medications before a more expensive one will be approved. Other reasons include the multiple forms of documentation needed to obtain authorization and changing payer rules.

A few things can help, including software that makes obtaining documentation from physicians easier (via the EMR rather than on the phone or by email), adjusting workflows to include prior authorization for certain prescriptions and procedures, and double-checking CPT codes before claim submission.

If prior authorization is becoming a major drain on your personal and affecting your profitability, consider outsourcing your billing to a company that has prior authorization specialists. Be sure to choose one that that guarantees its service levels and that does prior authorization for labs and diagnostics as well as prescriptions.

Coding:

Hiring Coders, Their Credentials, and Clinical Documentation Improvement Programs

Without good coding, medical claims don’t go quickly and smoothly though the system. Strong coding, of course, starts with good coders, so make sure anyone your practice hires has not only received top-notch training on the codes themselves, but also has several years experience with your type of practice and (if possible) the software you’re using.

There are a number of excellent institutions offering coding certification courses. Look for coders with certification from one with a strong reputation such as the American Academy of Professional Coders (AAPC), which is recommended by the Medical Group Management Association (MGMA). Then, make sure he or she is well-versed in the codes and coding combinations most used by your practice.

Even experienced coders must be fully trained on your office’s best practices to ensure that the coding they’re doing

1. Is done to the right degree of specificity
2. Doesn’t stray into upcoding, including unbundling codes
3. Has documentation to support the medical necessity of a visit or procedure

It’s also important to give your coders the tools they need. That includes:

1. Information on all changes/updates affecting codes.
2. Software that maintains coding edits from a variety of sources such as CMS 1500 and UB04 rules, medically unlikely edits (MUE), National Correct Code Initiative (NCCI), CPT edits, and modifier edits.
3. A list of the top codes being denied on your practice’s bills so they can pay close attention to encounters that include them. Finally, consider a clinical documentation improvement (CDI) project. CDI programs began in hospitals around 2007 when CMS implemented Medicare Severity Diagnosis Related Groups (MS-DRGs). Since then, many outpatient providers have successfully implemented them to increase their clinical documentation and code accuracy.

By preventing unsupported diagnoses from being used on claims, these programs can improve coding accuracy, increase reimbursement levels, and help prevent unfavorable audits that result in fines. They can also provide the data needed to participate in programs such as the Merit-based Incentive Payment System (MIPS). On the patient side, CDI programs can improve outcomes by boosting the quality of patient records, thus facilitating better communication with other physicians and family caregivers.

Billing:

Hiring a Biller, Their Credentials, and the Consideration of Outsourcing

You can have the best software on the market, a dashboard showing your billing stats, and even reports showing your revenue cycle from beginning to end. But if you don’t have the right people in place to do the daily work and suggest ways it could be done better, none of the other things matter.

In a way, the hiring process starts with salary. Obviously, experienced billers command high salaries. You can hire someone with less experience at a lower salary, but it may end up costing you much more in the end in the form of lost revenue.

It probably goes without saying that you should only consider candidates with at least a few years of experience. Those candidates should be evaluated on their familiarity with (1) your type of practice, (2) the software you’re using, and (3) their potential to take on a larger role as your practice grows.

States and the federal government don’t currently require medical billers to be certified. Nevertheless, it makes sense to require a basic certification such as AAPC’s Certified Professional Biller certification course. AAPC also offers a basic course that covers anatomy, pathophysiology, and medical terminology so billers can more easily verify the accuracy of claims.

If good medical billers are difficult to find in your area, tend to leave quickly for a better-paying position, or are simply out of reach financially, you should consider outsourcing.

In the past, many practices were reluctant to outsource this function, mainly because they feared loss of financial control. Today’s technology makes this much less of a concern—cloud-based systems let you securely turn over billing to a firm filled with experienced billers while letting you quickly view any claim or status report you desire from your phone or laptop.

Look for an outsourcer that can connect directly with your EMR and other systems—they need to access all available clinical notes to ensure claims are correct. Make sure the firm you hire has plenty of experienced billers, guarantees that bills will be submitted with a certain period and followed up on, and is willing to answer patient questions rapidly and graciously. Make sure to check multiple references about the firm (including  some current customers), and speak to the person who will be the lead biller on your account.

Reports on key performance indicators (KPIs) are important to any billing department head, and they’re even more critical in an outsourcing situation. Be sure to ask detailed questions about what reports you’ll be receiving, how often you’ll be receiving them, and what options you’ll have for customizing them. Ask for sample reports and check with all the stakeholders in your practice, including the practice manager and CFO, to see if they provide all the necessary information.

Finally, make sure all service levels are clearly spelled out in your contract. Some large billing services advertise high first-pass claim acceptance levels and low fees, but some don’t provide claim follow-up. That omission leaves around 6% of your claims unpaid, and suddenly those low fees don’t seem like such a good deal.

Part 3: Five Ways to Improve Your Medical Billing Process

There are a few rough spots in the billing process that are highly addressable. They look at different segments of the process and involve diverse solutions, but they can all help streamline the process and improve your bottom line.

1. Use software with a claim validation engine that automatically checks against CCI edits (correct coding initiative) and other coding edits to ensure your claims are not rejected for mundane reasons. In the best software, this validation process is automated, as is the updating of the edits themselves, as there are thousands and they can change without notice.
2. Use right-day billing best practices. Now that high-deductible insurance is prevalent, getting a bill out as soon as possible is not always the best course of action. Instead, use deductible monitoring to time submissions so your services are less likely to be consumed by the deductible. When you time the bill to go out after deductibles have been met, you help reduce patient anxiety and smooth the way for a quick payment.
3. Take a deep dive into efficiency. Every practice tracks key numbers such as overall payments and number of claims denied. To truly understand where the inefficiencies are, you must go What steps can be simplified or eliminated? What technology or process change would truly make a difference? If you understand the big picture along with the nuances, you won’t end up spending $2X to save $X.
4. Double down on eligibility checks. According to AAPC, incorrect insurance information and non-covered services are the leading cause of easily avoided denials. Of course, eligibility is a front-office function, so you’ll need a cross-team effort to get eligibility processes functioning at the highest possible level. Benchmarks from industry groups like AMA can help here: knowing what your competitors are achieving is a great motivator. On a related topic, prior authorization is often handled by the front office, and that process, too, must function smoothly and efficiently to ensure clean claims.
5. Look for denial trends, and keep looking. You’ll need software for this, but it’s critical to catching and correcting the issues causing denials. Those involved with the billing process know how frequently payer rules change, but you can stay on top of this by making sure you see the first few related denials come in. Tracking denial trends will also point you directly to where your billers need additional training.

Part 4: RCM Technology, at its Best:

The Billing Dashboard

If there’s one thing technology is good at, it’s helping people keep track of multiple tasks or items like the ones discussed above. This is certainly the case for billers, replacing convoluted, hard-to-decipher spreadsheets with a system that makes tracking bill status extremely easy while dramatically cutting time spent creating reports.

Here are some ways a well-integrated, state-of-the-art billing dashboard can help your billing department become more efficient, have happier employees, and increase your practice’s revenue.

1. Fewer timed-out claims. If billers are focused on large claims, they may inadvertently set aside smaller ones for later in the week. This practice can lead to timely-filing issues, and a pile of small claims can add up to real money.
2. Higher resubmission rates. Determining the reason a claim was denied and revising it is harder than submitting a new claim. Dashboards can help billers keep track of bills needing to be resubmitted, and financial incentives can help keep them motivated to do so.
3. Higher rate of successful appeals. Billers can set up their dashboard to notify them when an appeal should have been accepted or denied so they can stay on top of appeals and increase your success rate.
4. Increased patient collections. Higher patient co-pays and more self-pay patients mean practices can’t afford to leave that money on the table. Dashboards help billers keep track of outstanding amounts so they can alert front-desk staff the day before patients arrive for an appointment (for collection purposes).
5. More organized employees. Advanced claims management software lets employees and managers create custom lists of the projects they need to work on that day/week. Claims can be sorted by data, last filed date, legal entity, insurer, and more to make finding a claim or other document easier. Billing staff can quickly create a follow-up task, specifying the number of days out, assigning the follow-up to themselves or someone else, and changing the sub-status to reflect the current state of the claim. That reminder automatically turns up on the right person’s to-do list on the specified morning.

Easing the Pain of Denials Management

Human beings love a challenge, including rooting out the causes for a denial in an effort to get it paid. Still, weeks and months and years of those types of challenges tend to wear on people. Here are some thoughts on keeping denials management, well, manageable.

Keep a running list of top reasons for denials. You can’t slay a dragon you don’t know exists, so make sure there’s a process in place to update your top denial factors regularly. If you’re experiencing burnout, at least you know you’re focused on the right issues.

Get specific. Your appeals should be based on the most up-to-date claim-processing regulations and be tailored as much as possible to payer-specific claims guidelines.

Use software that auto fills information. Audit trails are the key to ensuring denials don’t get lost in the shuffle, and advanced systems help by automatically filling in patient demographic information, insurer information, denied amount, when the claim was created, and notes from team members who worked on the claim.

Use software that generates appeal letters. Look for a system that creates the right document based on the type of denial and automatically inserts all necessary patient information.

Integrated Systems Create End-to-End Processing
The better your systems work together, the more successful your billing efforts will be. The Healthcare Financial Management Association says disparate systems and processes promote inefficiencies that lead to many billing issues, including claims denials.

Commonly called end-to-end processing, your front-office systems, specialty coding lookups and validations, billing systems, and EMR should work together seamlessly to ensure your practice is getting paid for the work your providers are performing.

Resources

• Lutton, Logan. “Top 13 Reasons for Claim Denials.” Medical Economics, 9 July 2020. https://www.medicaleconomics.com/view/top-13-reasons-claim-denials?page=3
• Daley, Rich. “Prior-Authorization Cost and Time Burdens Increase for Providers, Report Finds.” HFMA, 22 January 2020. https://www.hfma.org/topics/news/2020/01/prior-authorization-cost-and-time-burdens-increase-for-providers.html
• O’Reilly, Kevin. “8 Medical Coding Mistakes That Could Cost You.” AMA, 14 July 2021. https://www.ama-assn.org/practice-management/cpt/8-medical-coding-mistakes-could-cost-you
• AAPC. “What is Clinical Documentation?” Accessed 28 June 2022. https://www.aapc.com/clinical-documentation-improvement/
• “Participation Options Overview.” CMA Quality Payment Program, accessed 5 July 2022. https://qpp.cms.gov/mips/overview
• Wirth, Steve and Juli Forde Smith. “5 Simple Steps to Help Medical Groups Avoid Costly Billing Mistakes, Improve Revenue Capture, and Reduce Patient Anxiety.” MGMA, 7 February 2022. https://www.mgma.com/resources/revenue-cycle/5-simple-steps-to-help-medical-groups-avoid-costly
• Fernandes, Paula. “Billing and Collection Tips From the Pros.” Business News Daily, 14 January 2022. https://www.businessnewsdaily.com/8989-medical-billing-tips.html
• Khabinskay, Olga. “Tips for Successful Billing.” AAPC Knowledge Center, 1 August 2014. https://www.aapc.com/blog/27922-27922/
• Reiner, Glen. “Success in Proactive Denials Management and Prevention.” HFMA, 18 May 2021. https://www.hfma.org/topics/hfm/2018/september/61778.html