What Exactly Is The Medical Billing Cycle, And How Does It Work?

The medical billing cycle is the process of submitting and following up on healthcare claims to get payment for the services given by healthcare providers. It begins with patient registration and concludes with payment posting and collection. It involves multiple stages and participants, including patients, healthcare professionals, coders, billers, and payers. Each stage demands precise and comprehensive information and documentation to ensure the claim is processed appropriately and on time.

The duration and complexity of the medical billing cycle vary based on the type and quantity of services provided, payer rules, and claim accuracy. A properly managed and efficient medical billing cycle may increase the provider’s cash flow, revenue, and patient happiness. The medical billing cycle is critical for the healthcare industry because it guarantees that physicians receive payment for their hard work and that patients are correctly paid for their care.

Guide To Medical Billing Cycle For Providers And Patients

We will walk you through the medical billing cycle from start to finish, explaining how it works for providers and patients. We will also review some typical issues and best practices in the medical billing process, as well as some suggestions and methods to assist you in managing and improving your medical billing cycle. Whether you are a healthcare professional or a patient, this guide will assist you in understanding the medical billing cycle and how it impacts you. 

Here are the essential steps in the medical billing cycle.

Patient Registration

The patient gives the practitioner their personal and insurance information before or during the appointment. This information is critical for confirming the patient’s identification, eligibility, and coverage for their required services.

Insurance Verification

The provider confirms the patient’s insurance coverage and eligibility for their required treatments. It helps to avoid claim denials or rejections due to incomplete or incorrect information. The healthcare provider also advises patients about their financial obligations, including copays, deductibles, coinsurance, and uninsured expenses.

Encounter

The practitioner records the patient’s diagnosis and treatment in a medical chart or record. This documentation is used to code and bill the services supplied to the patient. The provider also receives the patient’s consent and authorization for the services and submits the claim.

Medical Coding

The coder converts the medical chart into standardized codes that indicate the diagnosis and procedures performed by the clinician. These codes express the medical necessity and service level to the payer. The coder assigns the proper codes to the claim using various coding systems, including CPT, ICD, and HCPCS.

Charge Entry

The biller adds the codes and other information into a claim form and sends it to the payer or insurance company. The claim form contains the patient’s demographics, insurance information, diagnosis and treatment codes, modifiers, units, charges, and dates of service. Before submitting a claim to a payer, the biller ensures it is accurate and complete.

Claim Submission

The biller raises the claim to the payer for payment, either electronically or by mail. The claim must follow the payer’s policies and regulations and HIPAA guidelines. The biller also monitors the claim status and contacts the payer as needed.

Payment Posting

The payer processes the claim and sends payment advice to the biller, which includes the amount paid, denied, or modified. The biller posts the payment to the patient’s account and reconciles the charges and expenses. The biller additionally checks the remittance advice for errors, discrepancies, or denials and takes the appropriate steps to correct them.

Patient Billing

The biller creates a bill for the patient that includes the amount payable after deducting the insurance payment, copay, deductible, and coinsurance. The biller also explains the charges and payment choices to the patient and addresses any questions or concerns they may have. The biller also sends the bill to the patient by mail or electronically and receives payment from them.

Follow-up and Collections

The biller follows up with the payer or the patient to address any concerns or disagreements and then collects the patient’s outstanding balance. The biller also notifies the payment status and collection efforts to the provider and keeps track of the transactions. The biller also uses best practices and methods to increase collection rates and eliminate bad debt.

Manage And Optimize Your Medical Billing Cycle

Healthcare providers must manage and optimize their medical billing cycle to ensure timely and accurate payment, eliminate errors and denials, and increase cash flow and patient satisfaction. Let’s discuss some steps to manage and optimize the medical billing cycle. 

Before providing services, verify the patient’s eligibility and benefits. It can help to avoid claim denials and delays caused by incorrect or insufficient information.

Use electronic health records (EHRs) and practice management software to help with service documentation and coding. It can help to eliminate errors, increase efficiency, and ensure compliance with coding standards and regulations.

Send claims to insurance carriers online as soon as possible after providing services. It can assist in speeding up claim processing and payment while reducing the possibility of missing deadlines or losing documentation.

Track and follow up on claims regularly to ensure their status and handle any difficulties or disagreements. It helps identify and correct problems, appeal denials, and collect outstanding amounts from insurance companies or patients.

Analyze and evaluate medical billing cycle performance using key metrics and indicators. It can assist in identifying and addressing any issues or areas for improvement, such as lowering average days in accounts receivable, raising collection rates, and lowering rejection rates.

Common Medical Billing Challenges

Medical billing is a complex and dynamic procedure that involves several stakeholders, rules, and standards. It is not uncommon for healthcare providers to experience plenty of obstacles during the medical billing cycle, such as

Claim denials: Claim denials occur when insurance companies reject or refuse to pay a claim, either partially or whole, for various reasons, including coding problems, missing information, policy coverage, or authorization concerns. Claims denials can lead to income loss, higher administrative expenses, and payment delays.

Patient collections: Patient collection is the process of recovering outstanding bills from patients following insurance payments. High deductibles, copayments, coinsurance, and a lack of financial awareness can all make it challenging to collect on patient accounts. Patient collections can impact cash flow, happiness, and the healthcare provider’s reputation.

Compliance risks: Compliance risks include the possible legal and financial penalties for breaking the laws and regulations governing the healthcare business, such as HIPAA, the False Claims Act (FCA), and the Medicare and Medicaid programs. Compliance issues can lead to audits, fines, penalties, litigation, and reputational harm for healthcare providers.

Conclusion 

The medical billing cycle is critical for healthcare providers to get paid for their services and be financially stable. However, the medical billing cycle presents several obstacles, including claim denials, patient collections, and compliance issues, which can impact the healthcare provider’s revenue, cash flow, and reputation. Healthcare providers may enhance billing performance, minimize mistakes and expenses, and boost patient happiness and loyalty.