Medical Billing

How Does Medical Billing Work? A 7 Step Process

How Does Medical Billing Work

Medical billing is the process of collecting portions of payments from insurance providers against rendered services by a healthcare provider. The process can be complex and time-consuming but is essential to the financial health of any medical practice.

In order to understand how does medical billing work, it is important to first understand the medical billing basics and types of medical billing services that are available. Each type of plan has its own rules and regulations regarding what services are covered and how claims are processed.

Next, you will need to understand the medical billing cycle. This includes everything from submitting a claim to the insurance company to following up on unpaid claims. Finally, you will need to know how to appeal denials from insurance companies. Keep reading to learn more about how medical billing works!

Medical Insurance Billing and Claim Submission

Medical insurance billing is the practice of submitting claims to insurance companies for reimbursement of medical services. The medical billing process can be complex, with many steps involved from the time a patient receives care until the time the provider receives payment.

Providers must follow insurance company guidelines and regulations in order to get paid. This process can be time-consuming and requires knowledge of the insurance system and how it works.

If you are a provider who bills insurance companies for reimbursement, it is important to understand the medical insurance billing process. This will help you submit accurate claims and get paid in a timely manner.

What is the Medical Insurance Billing Process?

medical insurance billing

The medical insurance billing process is a vital part of the healthcare system. It ensures that patients receive the care they need and that providers are paid for their services. But what exactly is the medical insurance billing process?

In short, the medical insurance billing process is the process of submitting invoices to insurance companies for reimbursement. This process can be quite complex, as there are a lot of different rules and regulations that providers must follow. Particularly, the process of medical billing insurance covers the following steps;

  • Registration
  • Creating financial responsibility for patient
  • Patient check-in and check-out overview
  • Monitoring compliance with billing and coding
  • Preparing claims to transfer
  • Overviewing payer adjudication
  • Creation of service bills and statements
  • Assigning bills to patients and connecting for revenue collection

Let’s have a complete discussion on them in detail;

  • Registration

The registration process starts with an appointment call when a patient shows an inclination to book a healthcare visit. If a patient is visiting the doctor for the first time, basic credentials such as name, date of birth, address, and insurance information are asked. They will also be asked about their insurance policy. This information then goes to medical billers to clarify and verify, and then the name is added to the patient’s setup. If the patient is a regular customer of the practice, there would be no need of making all the effort again.

  • Creating Financial Responsibility for Patient

Different insurance companies follow different insurance and reimbursement policies and medical claiming processes. Confirming or creating financial liability for patients identifies that the service is covered under a policy. With this, patients would know what their insurance policy covers and what they have to pay for after their insurance portion. Thus, they would decide if they want to avail of the services.

  • Patient Check-in and Check-out Overview

Patient check-in and check-out are straightforward practices and are not so challenging to manage. When patients visit a practice, they have to fill out some forms regarding the reasons for the visit. If a patient is visiting for the first time,, they might need to fill out some additional forms.

When the patient is discharged or checked out, a medical biller or coder translates all the documentation, history, and medical information into the software in a usable format to use for the next medical billing process.

  • Monitoring Compliance with Billing and Coding

In healthcare insurance billing, the Office of the Inspector General (OIG) and Health Insurance Portability and Accountability Act (HIPAA) compliance is followed. Once the information is installed in the software, the biller will further check it for compliance standards ensuring that the bill is appropriately crafted.

  • Preparing Claims to Transfer

Claims and transactions should be HIPAA compliant as said earlier, but they must be prepared and transferred electronically for further processing. However, manual claims are also acceptable and possible but having manually filled forms would be error-prone. Practices usually get help from medical billing services providers for prompt and accurate claim submissions and to manage workload efficiently.

  • Overviewing Payer Adjudication

The process where a payer evaluates the claims, codes, compliance, and charges against the services to accept or reject them is referred as payer adjudication. The process is pre-decided and to get reimbursed, clean claims should be submitted by the healthcare facilities to insurance payers. The most common reason for claim denials is the coding errors that normally billers and coders are found with. This happens because of the continuous changes in the rules and regulations announced by CMS each year for almost every healthcare facility, practice, and insurance provider. Most of the time, insurance providers have their own set of rules that patients and medical facilities have to follow.

  • Creation of Service Bills and Statements

When the claim is accepted and approved, the biller (practice or hospital) receives a report of the approved claim where they listed the services they have paid for. The biller will then inform the patient about their agreed-upon payment from the insurer and the remaining amount will then be paid by the patient (if any).

  • Assigning Bills to Patients and Connecting for Revenue Collection

The last step in the billing process resides in collecting payments from patients. Billers have to monitor payments receivable from patients. If the payments are not made or delayed, then billers would be held responsible for taking follow-ups and reminding patients through text, phone calls, and emails for bill payments. In such cases, payment collecting agencies also help healthcare providers to collect payments.

Responsibilities of a Medical Billing Specialist

Medical billing specialists are responsible for a wide range of tasks, from ensuring that medical bills are properly processed to handling patient inquiries.

First and foremost, medical billing specialists are responsible for ensuring that medical bills are accurate and processed in a timely manner. They may review medical records to verify that the services billed were actually provided, and they may work with insurance companies to ensure that claims are paid correctly.

In addition to billing, medical billing specialists may also be responsible for handling patient inquiries. Patients may call with questions about their bills, and it will be the medical billing specialist’s job to provide them with the answers they need. Medical billing specialists must have excellent customer service skills and be able to diffuse difficult situations.

In other words, medical billing specialists are responsible for;

  • Perform synopsis for the charges involved in the procedure and correlating processes
  • Establishing the correct code list for billing the insurance providers
  • Entering claims in the software
  • Taking follow-ups for unpaid claims and reviewing the paid ones
  • Maintain compliance with the insurance provider regulations

Medical billing specialists are responsible for the billing and coding of medical claims. They review patient records to ensure that all procedures and diagnoses are correctly coded, and they also work with insurance companies to ensure that claims are filed correctly and in a timely manner. In addition to their day-to-day responsibilities, medical billing specialists also typically work on special projects, such as developing new billing procedures or implementing new coding systems.

How Medical Claims are Processed?

The medical billing process has to be straightforward. Once a provider sends a claim to your health insurance company, the insurance company will then review the claim to determine if the services are covered under your policy. If the services are covered, the insurance company will pay the provider for the full cost or the portion of the services. The provider will then bill you for any remaining balance.

The process of submitting and paying claims can vary depending on your health insurance policy. In some cases, you may need to submit a claim form to your insurance company. In other cases, the provider may submit the claim on your behalf. Either way, it is important to keep track of all of your medical expenses so that you can be sure you are getting the coverage you are entitled to.

There is medical billing software that processes the claims but they can’t still be relied on for the compliance of HIPAA transactions and Code set Rules (TCS).

Sammy Mack for NPR says, “The listed charges are almost fiction. Instead, each insurer negotiates for lower prices with each hospital and doctor on every plan. The negotiated prices even can vary within an insurance company depending on which plan a patient has.”

Therefore, getting full and timely reimbursement if challenging for even experienced medical healthcare providers.


Medical and insurance billing is a process that can be confusing for patients and providers alike. Medical billing starts with the patient’s visit to a provider, during which the provider will document the services rendered and the diagnosis.

The provider will then submit a claim to the patient’s insurance company. The insurance company will then evaluate the claim and decide how much they will compensate the provider. The provider will then send a bill to the patient for the remaining balance.

The whole process can be complicated, but understanding how it works can help you ensure that you are getting the care you need and that your provider is getting fairly compensated.

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