You have done everything correctly and but the payment still has not come in. Why?

This is a common issue among healthcare providers. Once the patient walks out the door, care is over, but the payment for that care requires a series of steps called the medical billing cycle or revenue cycle management (RCM).

If you have smooth operations then you have a consistent cash flow. If the wrong step is taken, claims are denied, payments are delayed and revenue is lost. Each step is explained in simple language to help you know where your money is going.

What is the Medical Billing Cycle?

The medical billing cycle is the complete sequence of tracking a patient’s solutions from the initial appointment to the ultimate payment. It includes anything from patient data collection and filing claims with insurance providers to posting payments and chasing outstanding amounts.

Step 1: Patient Registration and Scheduling

The cycle starts prior to patient entry. At the time of your appointment, your team will take:

• Patient’s complete name, date of birth and contact information.
• The name of the insurance company and insurance policy number.
• Any referral or prior authorization information

Why it’s important: A claim may be rejected weeks after a wrong digit is entered into a policy number. With accurate information, many problems will be avoided at a later stage.

Step 2: Insurance Eligibility Verification

Prior to the visit, verify patient’s insurance is in effect and inquire:

• Whether the policy is currently valid
• The copay, deductibles and coinsurance amounts
• Whether the planned service is covered

Tip: Patient eligibility checks 24 to 48 hours prior to the appointment allow you to communicate with patients what they will be charged, reducing the risk of surprise billing and unhappy patients.

Step 3: Collecting Payments at Check-In

It is much easier to pick up copays and old balances on check-in than to follow up later. Patients are much more inclined to pay when they are standing at your front desk than when it comes in the mail.

Step 4: Medical Coding

Once the visit is over, the provider’s notes are converted to familiar insurance company code:

• ICD-10 codes: provide a description of the patient’s diagnosis.
• CPT codes: describe the procedures and provide services.
• HCPCS codes: code Supplies, equipment and some other services. 

Coding is a crucial stage in the process. If you are under-coding, you are not being compensated properly, and if you are over-coding, it may lead to an audit. You need to be protected both from a financial perspective and a compliance standpoint, which is where skilled, up to date coders come in.

Step 5: Charge Entry

The coded services are then added to your billing system, including the provider information, dates of service and fees. This is simple data entry, but some of the most frustrating claim denials are caused by minor errors here.

Step 6: Claim Submission

This claim is submitted to the insurance company, typically via a clearing house. The clearinghouse corrects the claim before it is sent to the insurance company.

The aim is a clean claim: accurate, complete and accepted on first occurrence. One of the most obvious indicators of a positive billing process is a high clean claim rate.

Step 7: Insurance Review 

The insurance company analyzes the claim and determines to:

• Sign and cover entirely
• Pay a portion of it and make up the balance.
• Refute it and provide a justification

This generally takes between several days and several weeks, depending on the insurance company.

Step 8: Payment Posting

The insurer will issue an Explanation of Benefits (EOB) or an Electronic Remittance Advice (ERA) when the insurer pays. Your team documents the payment to the right patient account and the amount that was paid, adjusted, and the remaining amount that is still owed by the patient.

Step 9: Denial Management and Appeals

Claim denials happen frequently, however most claim denials can be addressed if you act promptly enough. The common causes are:

• Patient information not collected or correct.
• No prior authorization
• Coding mistakes
• Failure to file with the insurer on time

With a good denial process, if there is a denial, the reason for the denial is identified, the claim is corrected, it is resent or appealed, and the underlying problem is fixed so it does not occur again. When you deny that no one follows up, you are wasting money.

Step 10: Patient Billing and Collections.

After insurance pays the policyholder will be responsible for the remaining amount. Clear, easy-to-understand statements and simple online payment options enable patients to be happy and to pay faster.

Common Ways Practices Lose Revenue in the Billing Cycle

• Claims are rejected due to lack of patient information.
• Failing to perform eligibility checks results in unforeseen denials
• Errors of coding results in under-payment or auditing
• Late claim submission affects your payments
• If “no follow-up on denials” exists, the funds are not recovered.

Whether to manage billing in-house or outsource it?

A full billing cycle requires qualified personnel, a solid system and ongoing monitoring of evolving insurance requirements. This consumes valuable time for many practices.

Working with a medical billing expert service will enable you to:

• Provide more clean claims and minimize denials.
• Get paid faster
• Reduce your staff’s workload and enable them to concentrate on patients.
• Monitor with detailed reports on your practice’s finances.

We aim to help healthcare providers streamline their billing process and boost their revenue in order to devote more time to their patients.

Final Thoughts

The medical billing cycle is a series of interdependent processes; failing to take care of any process could frustrate your payments. Once you know how each conversion works you’ll be able to uncover where your practice is going wrong and make things right.

Looking for answers on how to increase revenue in your practice? Call MedBillingAxis today to have your billing reviewed for free.