Medical billing and payment collection are complex tasks, where providers are under pressure to maximize efficiency, ensure compliance, and maintain a healthy revenue cycle. Such tasks also include complete revenue cycle management from patient documentation, and eligibility verification to submitting clean claims, and financial recovery from the insurance payers and in some cases patient collection as well. One of the most important decisions a practice can make in such a situation is whether to handle billing in-house or outsource to a trusted medical billing company.

Additionally, these activities are extremely time consuming and require a massive documentation process. That’s the core reason why outsourcing medical billing services can save time, reduce errors, and is rapidly growing in the healthcare industry. That’s why it’s important to have the right medical billing and coding support. To help you make the right choice, we’ve outlined the 10 essential criteria to consider when evaluating a medical billing company for your practices needs.

What to Look for in a Medical Billing Company?

Here are our top 10 criteria for choosing a medical billing service for your practice:

1. Experience and Industry Knowledge

Medical billing is not one-size-fits-all. With complex rules and regulations and staying compliant with laws, medical billing for healthcare services is difficult. When you choose an experienced medical billing company, you can rest assured that you have an expert for handling your billing process. A company that understands the requirements of your specialty whether it’s general medicine, orthopedics, or mental health will be better equipped to code accurately, reduce denials, and ensure faster reimbursements. Their experience in working with various payers allows them to efficiently resolve payer-specific issues. Always make sure to partner with a company that has proven expertise in your specialty. What to look for:

• At least 5 years of experience in the medical billing industry.
• Industry certifications, such as AAPC or AHIMA.
• Trained staff with specialty-specific billing and coding expertise.
• Familiarity with both private payers and government programs like Medicare, Medicaid, and TRICARE.

2. Compliance and Regulatory Knowledge

Adhering to laws and compliance regulations in healthcare organizations such as HIPAA, False Claims Act (FCA), Anti- Kickback Status (AKA), Stark Law, No Surprise Act, and Medicare and Medicaid Billing Regulations are mandatory in the billing process. Failure to comply with these laws and regulations can lead to audits, costly-penalties, or even legal action. Choose a qualified medical billing company that ensures patient health information (PHI) is properly and securely maintained. They must also stay up to date with annual coding changes and specific payer requirements. What matters most:

• Regular staff training on new regulations and laws.
• Up-to-date medical billing software features. 
• Internal audits and reporting processes
• Trained and knowledgeable team for federal and state laws.

3. Technology and Software Integration

The software your billing company uses must be secure, scalable, and must be easily integrated with your current systems. Manual processes increase the likelihood of human error, so automation and integration are key. Finding a partner that is proficient in using the latest AI and cloud-based technologies can be extremely helpful in eliminating the chances of human errors, claims denial, and increasing financial stability. What to ask:

• Is the software cloud-based?
  
• Does it integrate with my current EHR/EMR or any other medical system?
• How often is data backed up?
• Is it accessible to your team for real-time status updates?

4. Transparency and Reporting

You should never feel in the dark about your own finances. A trustworthy medical billing company provides detailed reports and performance analytics that help you understand where your revenue is coming from and how it’s being managed. Also, determine what reports they provide and how frequently they deliver them. Assess their ability to analyze data to identify root causes and error trends related to claim denials, as well as how they plan to improve these issues over time. Checklist for choosing:

• Weekly or monthly financial summaries or reports.
• Real-time dashboards access for reviewing.
• Metrics like Days in A/R, Clean Claim Rate, Denial Rate, and Net Collection Rate
• Customized reporting options

Example report insights you should receive, or you can asked for:

• Claims submitted vs. claims paid
• Aging reports (30/60/90/120+ days)
• Denial reasons and rework status
• Payment collection and financial reports

5. Coding Proficiency:

Coding errors are among the leading causes of claim denials and delayed reimbursements. It’s essential to choose a medical billing company that employs AAPC-certified professionals with in-depth expertise in ICD-10, CPT, and HCPCS coding systems. Skilled coders not only have the technical knowledge to assign accurate codes, but they also possess the ability to carefully review and interpret complex medical records. Their attention to detail ensures compliance and maximizes claim accuracy. Additionally, experienced coders are proactive in communicating with healthcare providers when clarification is needed, helping to prevent coding discrepancies and support timely, proper reimbursement.

6. Claims Management and Follow-Up Process

Submitting claims is only the beginning. Denials and underpayments are inevitable in the complex world of medical billing, but how your billing company handles follow-ups can significantly impact your revenue cycle is what matters most. A reliable medical billing partner should have an expert billers team to track every unpaid or denied claim, investigate the reasons behind denials, and resubmit corrected claims promptly. Timely and persistent follow-up helps minimize revenue leakage, ensures faster reimbursements, and maintains healthy cash flow for your practice.

7. Data Security and Confidentiality

Patient health data is among the most sensitive and heavily regulated types of information and a prime target for cybercriminals. A breach can lead to serious legal, financial, and reputational consequences for your practice. That’s why your medical billing partner must go above and beyond to protect this data. They should comply fully with HIPAA regulations, implement strong encryption protocols, conduct regular security audits, and have strict access controls in place. In addition, they should use secure servers, maintain detailed data backup procedures, and provide staff training on data privacy and cybersecurity best practices. Security essentials:

• End-to-end encryption
• Role-based access controls
• Two-factor authentication process
• Regular audit scans and backups

8. Pricing Structure

Understanding how a medical billing company charges is essential for forecasting costs, budgeting effectively, and avoiding unexpected fees. Billing companies may use different pricing models such as a percentage of collections, flat monthly fees, per-claim charges, or hybrid models. Each structure has its pros and cons depending on your practice size, specialty, and volume of claims. It’s important to ensure that all fees are clearly outlined in the contract, including any hidden costs for setup, software, reporting, or follow-up services. A reputable medical billing company will provide a transparent pricing model and explain exactly what services are included, helping you make an informed financial decision.

Things to clarify before with your outsource medical billing company:

• Are denied claims reworked for free?
• Is there an onboarding or setup fee?
• Any extra charges for coding?
• Are software costs included?

9. Customization and Scalability

Your current needs may evolve as your practice grows, expands services, or enters new specialties. That’s why it’s important to choose a billing company that offers scalable solutions and the flexibility to adapt to your changing requirements. Whether you’re adding new providers, increasing patient volume, or expanding into multiple locations, your billing partner should be able to customize their services accordingly. A truly supportive RCM partner will not only handle your current operations efficiently but also be proactive in helping you plan for future growth without compromising billing accuracy or compliance.

10. Customer Support and Communication

Your billing partner functions as an extension of your practice, making clear and timely communication essential. If you can’t reach them when issues arise or if their team is slow to respond, your operations, cash flow, and patient satisfaction can all be negatively affected. A reliable billing company should offer dedicated account management, responsive support channels, and regular updates on claim statuses and performance metrics. Strong communication ensures that problems are resolved quickly, questions are answered promptly, and your practice stays informed and in control of its revenue cycle.

Final Thought: Choose Wisely, Your Revenue Depends on It

A good medical billing company does more than just file claims, it becomes a partner that helps you grow your practice and protect your revenue. By evaluating these 10 key factors, you’ll be well-positioned to choose a partner that understands your business, meets your needs, and helps you thrive in an ever-changing healthcare environment.

Outsource your medical billing with the experts at Nexus iO and take the first step toward smarter revenue management today.

The medical billing cycle plays an important role in maintaining the financial health of healthcare organizations. It ensures healthcare providers are timely and accurately reimbursed for the services they provide to patients. The entire revenue cycle involves a series of well-defined steps, from patient registration to payment collection, to streamline the financial operations of a healthcare practice. Understanding each step is crucial to ensuring steady and predictable cash flow and minimizing claim denials. 

Whether you’re an independent practice, a large healthcare institute, a physician, or a mental health professional, you must know the medical billing process and all its ins and outs to make sure you’re getting properly reimbursed for your hard work. In this guide, we’ll outline the basic process of medical billing, break down each step in detail, and explain the correct order to help you manage billing effectively. Additionally, we will also highlight best practices and common challenges that professionals face throughout the medical billing process. 

What is the Medical Billing Process? 

The medical billing process involves translating healthcare services into a format that insurance companies or other payers can process for reimbursement. It begins with patient registration and insurance verification, followed by medical coding, where diagnoses and procedures are assigned standardized codes. These codes are then used to create a claim, which is submitted to the insurance company for processing. 

The insurer reviews the claim, determines payment amounts, and sends an Explanation of Benefits (EOB). If the insurance doesn’t cover the full amount, the patient is billed for the remaining balance. Once payment is collected from either the insurance or the patient, the account is closed, and any disputes are addressed. Efficient medical billing ensures timely payments and reduces errors, requiring attention to detail and compliance with regulations.

From Start to Finish: 10 Steps to Success in Medical Billing

Efficient medical billing is key to the financial health of any practice. By following these steps practices can reduce claim rejections, minimize claim delays, improve revenue cycle, and streamline your overall administrative workload. Whether you’re new to billing or looking to refine your processes, these 10 steps will help you to improve your billing efficiency. 

Step 1: Patient Registration

The patient registration process is the first step and most crucial step in the healthcare revenue cycle management (RCM) process. It involves collecting essential information related to patients like previous medical records and demographics, when they first seek healthcare services at a healthcare facility. This information is then used by healthcare providers, insurance companies, and billing departments to ensure accurate and efficient billing. 

Steps in the Patient Registration Process 

• Accurate Patient Information: The accuracy of the information collected at the time of registration is important for avoiding billing issues later in the process. The healthcare provider must ensure the patient’s name, date of birth, address, and insurance coverage details for specific services with ID number. This step is crucial to prevent identity theft, insurance fraud, and billing errors. 
• Medical History and Allergies: Patient registration gathers essential details for previous medical records and pre-existing allergies. This information is vital for healthcare providers to deliver safe and effective care, as it helps them identify any pre-existing conditions, allergies, or medications that could influence the current patient’s treatment plan.
• Updating Insurance Details: Ensure the patient insurance coverage policy is active, and verify the details like the type of insurance plan, policyholder, and insurance company. Additionally, this helps healthcare providers to get know about the patient’s financial responsibilities as well like, copayments, deductibles, and coverage limitations to avoid any delays in reimbursement.
• Consent and HIPAA Authorization: Patients must consent to share their health and personal information. They also need to understand how this information will be used and protected under HIPAA patient data laws and regulations.
• Clear Communication: Patient registration serves as an opportunity for healthcare providers to share important information with patients. This may involve explaining insurance coverage, financial obligations, privacy policies and obtaining required consent. Clear and effective communication during this process helps establish trust and ensures patients are fully informed about their healthcare experience.
• Medical Record Creation: After all required information is gathered, a unique medical record or patient identifier is generated. This record acts as a central repository for all relevant medical and administrative details related to the patient. It contains clinical notes, test results, treatment plans, and other essential documentation throughout the patient’s healthcare journey.

Step 2: Prior Authorization

Prior authorization or pre-authorization is the process where doctors or medical providers are required to obtain approval from the insurance company before certain services, medications, or treatments are provided. Insurance companies use prior authorization (precertification, pre-approval, predetermination) to determine if the specific service or procedure will be fully-covered or whether it will be paid partially by them. This is a must step for the providers to get approval from insurers for which their clients have subscribed before any treatment plan starts. 

When is Prior Authorization Required?

To following healthcare services and items, prior authorization is required: 

Is Prior Authorization Required in an Emergency Situation?

No, prior authorization is not required for emergency care. However, coverage for urgent medical expenses is still subject to the terms and conditions of your health insurance plan.

Process for Obtaining Prior Authorization

It is always important to remember that prior authorization varies depending on the insurance company, so it’s best to learn about their guidelines and needs. Here are some following steps you can keep in mind to request prior authorization:

• Check Patient Eligibility:The provider must reach out to the insurance company to ensure if the patient is eligible for the proposed medical treatment or medicine, while providing all the necessary documents. 

• Complete Insurance Form: Most insurance companies have some specific forms that must need to be filled out and submitted as a part of the process. You can find these forms through insurance companies’ websites or by contacting them directly. Usually, they asked for the patient information, details related to the requested procedure or medicine, and some other clinical data or lab reports. 
• Submit a PA Request: Once the form is complete, it must be submitted to the insurance providers with all the attached required documents and medical reports. One can submit the form through an online platform, by fax, or by Email. 
• Check Status and Follow-up: After submitting a prior authorization request, it’s crucial to keep a follow-up for the status. Depending on the workload and request form, the insurance company PA’s decision can sometimes take a few days to several weeks also. 

Challenges in Prior Authorization

Following are some common challenges in the prior authorization process that healthcare providers often face:

• Ever-changing Payer Rules: Frequent updates to payer rules and regulations can disrupt the overall prior authorization process, leading to request delays and denials. 
• Workload and Burnout: With increased prior authorization requests in particular make it difficult for insurer staff to keep up with on time. 
• Delays in Authorization: Insurers may take time to process the request, which can cause delays in treatment procedures or medicine.
• Denials: Some prior authorization requests are denied, requiring additional clinical documentation or changes to the treatment plan.

Step 3: Charge Entry

Charge entry or charge capture is the process of entering all the medical services, medication, tools, and procedures performed on a patient while ensuring that the correct medical codes are used. Minor errors and small mistakes like missing any code entity, additional modifiers, and repetitive errors while preparing and submitting claims can affect the practice financially and cause problems for the payer and patient. This requires a thorough understanding of the medical code system as follows:

• CPT Codes (Current Procedural Terminology) are a standardized set of codes used by healthcare providers and payers to document and report medical services, routine check-ups, surgical procedures, and diagnostic tests. 
• ICD Codes (International Classification of Diseases) are used to classify and code diseases, conditions, and other health-related problems. 
• HCPCS Codes (Healthcare Common Procedure Coding System) is a set of codes used primarily for medical services and supplies not covered under the CPT code system, such as durable medical equipment (like wheelchairs, crutches, prosthetics), ambulance services, and certain drugs and medical-surgical supplies. 

What is the Process of Charge Entry in Medical Billing? 

The charge entry process makes sure physicians and doctors receive accurate and timely payments from payers. Attention to each procedure and diagnosis must be assigned an appropriate code based on the service provided. All charges must be entered precisely, with attention to these details:

• Date of service (DOS) 
• Place of service (POS)
• Rendering provider details
• Date of admission
• Prior or pre-authorization details
• Diagnosis and procedure codes and number of units provided
• Modifiers 

By following a series of steps, healthcare organizations can ensure that charges are properly recorded and submitted for reimbursement. 

Common Errors in Charge Entry

As it is an important process, errors still occur. So, it’s important to be aware of common errors during the process, and it’s better to prevent them. Some common errors are as follows:

• Incorrect or Missing Codes: Misassigned or incomplete codes can lead to denials or delays.
• Incomplete Documentation: Lack of proper documentation can lead to inaccuracies during charge entry.
• Failure to Capture all Charges: Healthcare organizations may lose revenue and face financial instability by failing to capture all billable services due to oversight or lack of awareness.

Step 4: Claim Submission:

Claim submission is the process where the completed claim form, which includes all charges and patient service details, is sent to the insurance company or payers for payment consideration. It contains all the detailed information about the patient seeking medical treatment by a healthcare provider to ensure accurate reimbursement. Moreover, it’s an important step in medical billing, as it helps healthcare providers to receive timely payment for their services. Accurate claim submissions are important because:

• Ensures timely reimbursement for providers to get paid faster for the services they deliver.
• Proper claim submission minimizes the risk of denied or rejected claims while protecting the provider’s revenue. 
• Accurate claim submissions reduce errors, ensuring compliance with payer guidelines and reducing audit risks.
• Consistent and correct claim submission supports steady revenue and financial stability for healthcare practices.
• Incomplete or late submissions can delay payments; clean claims submission speeds up processing.
• Fewer rejections mean fewer follow-ups and appeals, saving staff time and resources.
• High clean claim rates (claims approved on the first submission) are a key performance indicator ineffective medical billing.

Claim Submission Workflow

The following are key steps that every medical biller should follow to ensure accuracy in claim submission:

What Information Does a Claim File Contain?

The claim must be correctly completed, typically using a CMS-1500 (for professional services) or UB-04 (for hospital or facility services) form. A medical claims file contains detailed information about each patient and their healthcare encounter. Additionally, the file is divided into two main sections: the claim header and the claim detail.

• Claim Header:

This section provides a summary of key information, including the patient’s personal details (such as date of birth, gender, and zip code), the National Provider Identifier (NPI) for both the attending physician and the service facility, and the primary diagnosis code. It also includes details like any inpatient procedures performed, the diagnosis-related group (DRG), the patient’s insurance provider, and the total charge for the claim.

• Claim Detail:

The claim detail outlines additional diagnoses or procedures provided during an inpatient stay. Each individual service record includes the date of service, the procedure code, the related diagnosis code, the National Drug Code (NDC), if applicable, the attending physician’s NPI, and the charge for that specific service.

Types of Claim Submissions

Claim submission can be broadly categorized into the following types, each having distinct advantages and disadvantages:

Tools for Claim Submission:

Medical claims are complex and vary depending on the type of service, provider, payer, and patient. To manage this complexity and ensure accurate, timely reimbursement, healthcare providers rely on a variety of tools, such as:

1- EDI (Electronic Data Interchange)

• Allows healthcare providers to submit claims directly to payers through a secure network or platform.

• Reduces manual data entry human errors and speeds up the reimbursement process.
• Supports various healthcare transactions, including eligibility checks, claim status inquiries, and remittance advice.

2- Clearinghouses

• Act as intermediaries between healthcare providers and insurance payers.
• Scrub claims for formatting or coding errors before submission to reduce rejections.
• Provide reports and real-time feedback on claim status.
• Help manage multiple payers through a single platform.

3- Practice Management Software (PMS)

• Used to schedule appointments, manage patient records, and create claims.
• Integrates with EHR systems for accurate documentation and coding.
• Automates the claim creation and submission process.
• Tracks claim statuses and rejections, improving workflow efficiency.

4- Electronic Health Records (EHR) Systems

• Provide clinical documentation needed to support claim submission.
• Ensure CPT, ICD-10, and HCPCS codes are accurate and tied to patient visits.
• Some EHRs have built-in billing modules or integrate directly with billing platforms.

5- Claim Scrubbing Tools

• Analyze claims for coding accuracy and policy compliance before submission.
• Identify missing modifiers, incorrect codes, or documentation issues.
• Increase the clean claim rate and reduce denials.

6- Insurance Portals (Direct Payer Portals)

• Many insurance companies offer direct online portals for claim submission.
• Useful for small practices or providers with fewer payers.
• Allows for direct communication, tracking, and uploading of supporting documents.

7- Audit & Reporting Tools

• Provide insight into claim acceptance rates, denial trends, and payment patterns.
• Help identify recurring issues in the submission process.
• Useful for compliance, internal QA, and process improvement.

8- Real-Time Eligibility Verification Tools

• Check a patient’s insurance coverage and benefits before services are rendered.
• Prevents claim denials due to inactive policies or non-covered services.
• Often integrated with PMS or EHR systems.

Challenges in Claim Submission

Some of the common challenges while submitting any claim that may affect your practice are as follows:

• Claim Denials and Rejections: Errors in coding, missing information, or policy violations can lead to claim denials or rejections from payers.
•  Incomplete or Inaccurate Documentation: Missing patient details, incorrect CPT/ICD codes, or lack of supporting medical documentation can delay or prevent reimbursement.
• Frequent Changes in Payer Policies:  Insurance companies regularly update their billing rules and coverage guidelines, making it difficult to stay compliant.
• Delayed Submissions: Failing to submit claims within the payer’s timeframe can result in non-payment or reduced reimbursement.
• Complex Billing Requirements:  Each payer may have unique rules regarding how claims should be formatted or submitted, requiring careful attention.
• Eligibility Verification Issues: Submitting claims for patients with inactive or out-of-network insurance leads to denials and revenue loss.
• Lack of Integration Between Systems: Poor coordination between EHR, billing software, and clearinghouses can result in data mismatches or technical errors.
• Manual Processes and Human Errors: Entering data manually increases the chances of typos, missed fields, and incorrect coding.
• Difficulty in Tracking Claim Status:  Without proper tracking tools, it’s hard to monitor claim progress, identify delays, or follow up on unpaid claims.

To overcome the challenges in claim submission, healthcare providers should adopt a combination of technology, training, and streamlined workflows. Implementing integrated systems like EHR, PMS helps ensure accurate coding and documentation while reducing manual errors and continuously improving the submission process for faster, more accurate reimbursements.

Step 5: Claim Adjudication Process

Claim adjudication is the process by which the insurer reviews a claim to determine how much they will pay based on the patient’s benefits and coverage. During this process, the payer determines whether to approve the claim in full, issue a partial payment, or deny it entirely. If additional information is required, the claim may be rejected and placed in a ‘pending’ status until resolved.

Through the adjudication process insurance companies evaluate the validity, accuracy, and eligibility of submitted claims based on the rules and regulations. During this process, payers carefully review the documentation provided by healthcare providers, to assess the type of services rendered, coverage limits, and applicable deductibles. Additionally, claims adjudication can be a time consuming process, and often take several weeks to complete. This evaluation process also contributes to significant delays in reimbursement, claim denials, corrections, and resubmissions.

Why is Adjudication Necessary?

Claims adjudication plays an important role in ensuring that healthcare claims are accurate, legitimate, and medically necessary. As healthcare billing the cost of a medical service or procedure is influenced by multiple factors such as provider’s qualifications, the clinical reasoning behind the chosen treatment, and the specific terms outlined in the patient’s insurance policy.

So basically, adjudication helps evaluate these variables to determine the appropriate reimbursement amount. It protects practices against insurance fraud, promotes fair payment, and ensures that insurance payouts align with the policy holder’s coverage and medical necessity.

Steps in the Adjudication Process

Following are some steps in adjudication, that must be follow: 

Most Common Challenges in Adjudication

Reducing claim denials is one of the most effective strategies to shorten your revenue cycle. Below are some common reasons for claims being rejected during adjudication process: 

• Missing or Incorrect Information

To prevent errors, invest in automated billing tools that pre-populate basic claim fields and flag any missing or incorrect information before submission.

• Payer Deems the Service Medically Unnecessary

Disagreements between the payer and physician can occur regarding what constitutes necessary treatment. Healthcare providers can strengthen their claims by maintaining detailed records in the patient’s EHR and attaching supporting documentation when submitting claims.

• Procedure Not Covered by Payer

Ensure that the patient’s insurance information is accurate in your system. Automated tools can compare proposed treatments with the patient’s insurance coverage to avoid submitting claims for non-covered services.

• Out of Network Provider

Inform patients beforehand if your practice is outside their insurance network to avoid confusion and potential claim denials.

• Duplicate Claims for the same Procedure

This often results from coding errors. Ensure proper coding, especially when multiple procedures occur in a single visit or a short period. Automated billing tools can help minimize these mistakes.

• Payment Adjustment for a Prior Service

Payment adjustments can occur if the insurer determines that the benefit for a treatment was already paid in a previous claim. It’s important to track previous claims and payments to avoid confusion.

• Claim exceeded the Timely Filing Limit

Timely submission is critical in medical billing. Automating the billing process ensures claims are submitted before deadlines, reducing the risk of late filings and denials.

Step 6: Patient Billing and Statement

Patient billing involves creating and sending bills to patients for any remaining balance after insurance has paid its portion. As it is an important component of healthcare financial management, providing a clear summary of the medical services rendered, associated charges, payments received, insurance adjustments, and the remaining balance owed by the patient.

After healthcare services are provided, the billing department generates a statement that typically includes the date of service, description of procedures or treatments, the total cost, any insurance payments or denials, co-pays, deductibles, and the amount the patient is responsible for. These statements help patients understand what they are being charged for and facilitate timely payment. Accurate and transparent billing not only ensures compliance with healthcare regulations but also enhances patient trust and satisfaction by minimizing confusion and potential disputes over charges.

What Should be Included in Patient Billing?

A patient-friendly billing statement should contain the following key components to ensure clarity and transparency:

• Practice Information: Include the name of the medical practice, its address, phone number, and other contact details. Also, list the name of the healthcare provider who delivered the services.
• Patient Information: Accurately add the patient’s full name, address, date of birth, and any other relevant identifying details.
• Detailed Service Breakdown: List all the healthcare services provided with their corresponding dates and medical codes. This helps patients understand exactly what they’re being billed for.
• Itemized Charges: Provide a clear breakdown of costs for each service, including any applicable deductibles, co-pays, or co-insurance amounts.
• Payment Instructions: Clearly state the total amount due and the payment deadline. Include step-by-step instructions for how to pay, and provide a phone number or email for any billing-related questions or support.

Steps to Follow in Patient Billing and Statement

From verifying insurance to sending out clear, accurate statements, each step ensures timely payments and fewer billing issues. Some steps to follow in patient and statement are: 

• Preparing the Statement: Include all charges, insurance payments, adjustments, and patient responsibility (co-pays, co-insurance, or deductible).
• Sending the Bill: After that statements are sent to the patient via mail or patient portal, depending on patient preferences and available systems.
• Inquiries and Customer Service: Staff may field questions from patients about their bills, helping them understand the charges and resolve any disputes or concerns.
• Payment Collection: Accept and process payments made by the patient through various channels (online, by phone, in person, mail).
• Follow-Up and Collections: If a balance remains unpaid after a certain time, follow-up reminders are sent. Additionally, accounts may be turned over to collections based on the healthcare provider’s policies.
• Account Reconciliation and Reporting: Regular audits and reconciliations ensure all payments are accounted for accurately and help generate reports for financial management and compliance.

Step 7: Payment Posting

Payment posting is the step where payments made by insurance providers, patients, third parties, or any government programs (like Medicare and Medicaid) are recorded in the billing system. It involves the process of correctly identifying received payments, aligning them with the patient accounts, and updating the financial records accordingly. A well-organized payment posting improves practice’s overall performance, increases revenue, minimizes inconvenience, and improves overall patient satisfaction. 

Step-by-Step Payment Posting Process

• Receiving Payment Information: The process begins by collecting payment information from insurance companies and patients, including Explanation of Benefits (EOBs) and Electronic Remittance Advices (ERAs). This information must be reviewed carefully to confirm that payments correspond to submitted claims in a timely manner.
• Reviewing the Details: At this point, each payment is checked to ensure that the amount paid, denial codes (if any), and covered services match the original claim. It’s important to verify whether the payment is full, partial, or denied. Additionally, discrepancies, such as underpayments or missing services, are identified for follow-up.
• Resolve discrepancies: Billing specialists investigate claim denials, short payments, or coordination of benefits issues. They contact insurance providers or patients when necessary to resolve payment discrepancies. Corrections, resubmissions, or appeals are filed to ensure proper reimbursement.
• Reconciling Accounts: After that, payments recorded in the billing software are reconciled with bank deposits and insurance remittances. The final step is to ensure all payments are accounted for and correctly posted to patient accounts. Any inconsistencies are addressed to maintain accurate financial and patient records.

Methods of Payment Posting

Depending on a patient’s financial situation and the extent of their insurance coverage, payment posting in medical billing is typically carried out in one of two ways:

Benefits of Payment Posting in Medical Billing:

• Allows timely posting and reconciliation of both EOBs and ERAs.
• Facilitates processing of adjustments and write-offs in accordance with contractual agreements with payers.
• Helps identify issues such as non-covered services, claim denials, missing prior authorizations, and collection concerns for prompt resolution.
• Supports effective denial management by quickly spotting rejected claims, enabling timely rework and resubmission.
• Enables the correct application of patient copays and transfers any remaining balances to the patient’s account for follow-up.
• Integrates with patient payment plans and collection agency workflows to streamline outstanding balance recovery.
• Enhances the overall efficiency and effectiveness of the revenue cycle management process.

Common Issues with Payment Posting

Even with efficient systems and processes in place, challenges in payment posting can still arise. Some of the most frequent issues include:

• Misapplied Payments: Payments may be incorrectly posted to the wrong patient account or service date, leading to billing discrepancies and time-consuming corrections.
• Duplicate Payments: Entering the same payment more than once can disrupt financial accuracy and result in unnecessary reconciliation efforts.
• Denied Claims: When claim denials aren’t promptly addressed, it can result in lost revenue. A significant number of denied claims are never resubmitted, leading to avoidable financial losses.
• Incorrect Adjustments: Errors in applying write-offs or adjustments can misrepresent the financial health of the practice and create inaccurate financial reports.

Step 8: Denial Management

Denial management is the process of dealing with claims that have been denied by insurance companies. Denials in healthcare can be full or partial and are categorized as either hard (irreversible) or soft (appealable). This process focuses not only on correcting current denials but also on preventing future ones by analyzing root causes and implementing corrective strategies. Denial management is most effective when handled by an experienced medical billing team or uses AI-powered tools to automate tracking, prioritization, appeals, and prevention workflows.

Types of Denials in Medical Billing

Not all claim denials are created equal; they generally fall into two primary categories with some other sub-categories as follows:

• Soft Denials: These are temporary and typically correctable issues, such as missing information, coding errors, or documentation gaps. Once addressed, the claim can be resubmitted for payment.
• Hard Denials: These are final rejections that lead to a loss of revenue and cannot be appealed or corrected. Common causes include services rendered outside of coverage dates or claims submitted after the filing deadline.
• Preventable Denial: A hard denial caused by avoidable errors, such as incorrect coding, modifiers, or insurance eligibility issues.  
• Clinical Denial: A denial in which a claim is not paid due to medical necessity.
• Administrative Denial: A soft denial in which a healthcare organization is informed by the payer side why the claim was denied. 

Understanding the difference between soft and hard denials allows billing teams to prioritize effectively, streamline resolution efforts, and reduce delays in reimbursement.

Medical Claim Denials Common Reasons

• Missing Information: The claims are denied due to incomplete or missing required patient data. Always double check to ensure all patient, provider, and service details are correctly filled in.
• Lack of Authorization: The procedure or service was performed without prior approval from the payer. Prior authorization is often mandatory for specific treatments and surgical procedures.
• Patient Eligibility: The patient was not eligible for coverage on the date of service. This could be due to lapsed insurance or coverage restrictions.
• Medical Necessity: The payer deemed the service not medically necessary based on their rules and guidelines. Make sure to attach all the supporting documentation that may be needed for justification.
• Duplicate Claim or Service: The claim was already submitted and processed for the same service and date. Avoid resubmissions unless correcting an error.
• Limit for Filing Expired: The claim was filed after the payer’s submission deadline. Timely filing limits vary by payer and plan.
• Service not covered by Payer: The insurance plan does not cover the service provided. Review the patient’s benefits or consider alternate billing options.

Steps in Denial Management

1. Identifying Denied Claims
   • Review Explanation of Benefits (EOB) and Electronic Remittance Advice (ERA) reports.
   • Categorize the denials (e.g., eligibility issues, coding errors, missing documentation).
2. Analyzing Denial Reasons
   • Determine the root cause of the denial.
   • Use denial codes to understand payer-specific guidelines.
   • Group and track recurring denial trends for improvement.
3. Prioritizing Denials
   • Prioritize high-value or time-sensitive denials.
   • Focus on denials nearing the timely filing limit.
4. Correcting and Resubmitting Claims
   • Make necessary corrections such as updating patient information, adding documentation, or modifying procedure codes.
   • Resubmit claims electronically or manually, depending on payer requirements.
5. Appealing Denials
   • Prepare appeal letters with supporting medical records and documents.
   • Follow payer-specific appeal procedures and timelines.
6. Tracking and Monitoring Appeals
   • Keep detailed records of appealed claims.
   • Monitor the status and outcomes of appeals for resolution or further action.
7. Preventive Measures
   • Conduct regular training for staff on coding and billing accuracy.
   • Update internal processes based on denial trends.
   • Use software or tools to flag potential errors before claim submission.
8. Reporting and Analytics
   • Generate reports on denial rates, types, and resolution timelines.
   • Share insights with leadership and revenue cycle teams to drive process improvement.
9. Communication with Payers and Patient
   • Engage with insurance companies for clarification on denials.
   • Establish strong payer relationships for smoother resolution processes.
   • Inform patients about claim denials if necessary.
   • Assist with understanding their insurance responsibilities or gathering required documents.

Step 9: Appeal Process

The appeal process allows providers to challenge a denied claim and request a review for reconsideration. This process is used when a healthcare provider disagrees with a payer’s decision to withhold payment due to reasons like coding error, misinformation, medical necessity, and lack of additional documentation. 

An appeal is then prepared, which includes a written letter explaining why the claim should be reconsidered, along with any supporting medical records or corrected information. This appeal is submitted to the insurance company, either as a first-level (internal) or second-level (external) review. The ultimate goal is to have the insurer review the case again and approve or adjust the payment. It’s important to submit appeals within the insurer’s deadline and follow up regularly to track the status of the review.

5 Steps in the Appeal Process

• Review the Denial Notice: Understand why the claim was denied and note important deadlines and appeal instructions for the resubmission process.
• Gather Supporting Documents: Collect medical records, billing statements, letters of medical necessity, and any other relevant evidence that may be required by the insurance company.
• Contact the Insurance Provider: Clarify the reason for denial and confirm any details or corrections that may help your case before submitting a new appeal.
• Write and Submit the Appeal Letter: Clearly explain why the denial should be overturned, include supporting documents, and submit everything by the deadline.
• Follow Up and Monitor the Appeal: Confirm receipt of your appeal, track the review process, and be ready to respond or escalate if needed.
• Await a Decision: The insurance company typically has a set timeframe (30-60 days) to review and respond to an appeal. Monitor the status and be prepared to follow up.

Step 10: Payment Reconciliation

In medical billing, payment reconciliation is an essential step in the revenue cycle management process that ensures accurate tracking of payments received from insurance companies and patients. Payment reconciliation involves entering the details of payments such as the amount paid, date of payment, payer information, and adjustments into the healthcare provider’s billing system. These payments may come through Electronic Remittance Advice (ERA) or Explanation of Benefits (EOB), and are matched to the corresponding patient accounts and claims. 

Adjustments like contractual write-offs, co-pays, and deductibles are also recorded during this process. Reconciliation follows by verifying that all posted payments align with actual deposits reflected in the bank account and remittance reports. This step helps identify discrepancies such as denials, short payments, or misapplied funds, allowing billing teams to correct errors promptly. Accurate payment posting and reconciliation are crucial in medical billing as they directly impact cash flow, reduce claim rework, and ensure the financial health of the healthcare practice.

Accurate Payment Posting Process:

• Verify Payment Amounts: Confirm that payments align with what was agreed upon in the contract.
• Reconcile Payments Regularly: Perform regular reconciliations to catch discrepancies early.
• Track Denials and Underpayments: Monitor and document any claim denials or underpayments to address issues promptly and follow up for corrections or appeals.
• Apply Adjustments Accurately: Ensure all contractual adjustments, write-offs, and discounts are posted correctly to reflect true account balances.
• Utilize ERA/EOB Reports Efficiently: Use Electronic Remittance Advice (ERA) or Explanation of Benefits (EOB) to match payments to claims and streamline the posting process.
• Maintain Clear Documentation: Keep detailed records of all payment transactions, communications, and reconciliations to support audits and resolve disputes quickly.

Final Thoughts 

The medical billing process is a complex workflow involving numerous steps, each of which plays an important role in ensuring that healthcare providers receive timely and accurate reimbursement for their services. By following the best practices and overcoming the challenges described in this guide, medical billers can streamline the process, reduce claim denials, and improve revenue cycle management.

Alternatively, you can outsource your medical billing services to a trusted provider like Nexus io. Outsourcing can help ensure accuracy, improve efficiency, and reduce administrative burdens on your in-house staff. In the end, delivering a smooth and transparent billing experience not only enhances revenue cycle performance but also improves your relationship with patients.

In the world of healthcare, accurate medical billing is essential for financial management in healthcare organizations across the United States. It ensures that providers, from small private practices to larger hospitals, receive all the necessary reimbursements for their services correctly and timely. Accuracy in medical billing means you get paid on time and avoid legal headaches, with a complete patient satisfaction level. But when mistakes or errors occur in the billing process, it can lead to lost revenue, delayed payments, claim rejections, and sometimes even serious legal penalties. 

In this blog, we will explore how accurate medical billing  can help to keep your practice running smooth with a steady cash flow. Also, with some research based examples, we will see how accuracy in the billing process has improved cash flow, reduced claim denials, and led to better financial outcomes. 

Why Accurate Medical Billing Matters for Your Practice?

The accuracy of medical billing plays an important role in achieving financial stability in healthcare settings. An error in the billing and claim process, whether from incorrect coding, missing documentation, or data entry mistakes, can lead to claim rejections, delayed payments, and potential compliance issues. These errors not only delay revenue but can also damage the provider’s reputation and lead to financial instability. Additionally, inaccurate billing also results in significant administrative costs as time and resources are spent correcting errors, resubmitting claims, and dealing with insurance disputes and discrepancies.

Key Benefits of Accurate Medical Billing

Accurate medical billing isn’t about just getting paid. It also benefits providers and insurance companies by ensuring timely reimbursement, reducing claim rejections, and improving financial transparency. Additionally, it enhances patient satisfaction and fosters a more efficient healthcare system overall. Some of the key benefits of accurate medical billing are as follow: 

1. Reduced Claim Denials

Preventing denials and ensuring compliance can severely disrupt the revenue cycle of healthcare organizations. Common reasons for denials include incorrect coding, missing documentation, and non-compliance with payer policies. For instance, if a procedure is incorrectly coded or if a claim lacks the necessary supporting documentation, the payer may reject the claim outright. Inaccurate billing can occur due to human error, outdated billing software, or inadequate staff training.

By ensuring that claims are properly coded and that all necessary documentation (such as medical records, laboratory reports, or diagnostic test results) is included, billing specialists can significantly reduce the risk of denials. It’s essential that medical billing professionals stay updated on ever-changing payer guidelines and requirements to avoid errors. When claims are submitted correctly the first time, healthcare providers avoid the delays caused by denied claims that need to be resubmitted, which can delay reimbursements by weeks or even months. 

2. Faster Payments and Improved Cash Flow

Accurate medical coding and comprehensive claim documentation help speed up the reimbursement process, as there are fewer back-and-forth communications between the healthcare provider and insurance companies. When claims are submitted correctly on the first attempt, the time between submission and payment can be reduced significantly.

Cash flow benefits faster payments contribute directly to healthier cash flow for healthcare practices, which in turn allows for more predictable financial planning. As a steady cash flow means healthcare providers can meet operational expenses without delays, pay staff and vendors on time, and invest in new technologies, patient care initiatives, or facility improvements. Additionally, as healthcare providers minimize revenue leakage (money that is left uncollected due to billing inefficiencies), they can allocate more resources to improving patient care.

3. Compliance and Risk Management

Adherence to laws with accurate medical billing ensures compliance with the complicated set of regulations governing healthcare reimbursements. These regulations include federal laws (such as the Affordable Care Act), state regulations, and payer-specific rules. If a healthcare provider is found to be out of compliance with these rules whether through incorrect coding, overcharging, or fraudulent billing. Results can have serious consequences, including audits, costly penalties, and legal action.

Avoiding audits and penalties audits are a significant concern for healthcare providers, as they can be both costly and time-consuming. An inaccurate or non-compliant claim can trigger an audit, and failure to provide sufficient documentation to support the claim can result in penalties, repayment demands, or even legal charges for fraud. Healthcare providers can mitigate these risks by ensuring that they have the right processes in place, such as regular coding audits, staff training, and using up-to-date billing software that aligns with payer policies.

4. Better Patient Experience

Ensuring Transparency When healthcare providers use accurate billing practices, they help ensure that patients receive transparent, understandable statements. Billing errors can result in unexpected charges, which may lead to confusion, frustration, and a loss of trust in the provider. In some cases, inaccurate billing can also cause patients to feel that they’ve been overcharged, which can lead to disputes or even negative reviews.

Building trust through transparent billing is essential to have a strong relationship between healthcare providers and their patients. When patients are confident that their bills reflect the services they received, they are less likely to feel anxious about hidden costs or incorrect charges. Additionally, healthcare providers who invest in clear, patient-friendly billing systems can offer explanations of charges directly on their billing statements or through their customer service teams, further improving the patient experience.

Key Regulations and Guidelines for Billing and Coding Compliance

Real World Examples in Healthcare for Accurate Billing 

• Revolutionizing Billing for a Multi-Specialty Clinic

A multi-specialty clinic faced challenges with billing errors and claim denials, resulting in a revenue loss of approximately 15%. The issues arise due to outdated billing software, untrained billing staff, and inefficient documentation practices. To address these challenges, the clinic implemented advanced AI-driven billing software to improve their accuracy in the billing process. Additionally, they conducted comprehensive staff training sessions, and adopted electronic health records (EHRs) to streamline documentation and billing processes. These initiatives led to a 25% reduction in claim denials and a 30% increase in revenue within six months.

• Optimizing Billing for a Rural Hospital

A rural hospital struggled with limited resources and frequent underpayments from insurance providers due to manual billing processes, leading to delays and missed reimbursements. The hospital adopted a hybrid approach, combining outsourcing of complex claims with internal process enhancements. Their key initiatives for accuracy 

included outsourcing high-denial-prone claims, automating routine tasks like eligibility verification, and establishing a dedicated payer relationship team for proactive dispute resolution. Over a year, these efforts resulted in a 40% improvement in cash flow and 50% faster claim approval turnaround times.

• Success with Pediatric Practice Billing

A pediatric practice faced challenges in capturing all billable services, leading to revenue leakage, compounded by the complexity of pediatric coding. The practice conducted thorough audits to identify billing gaps, developed custom billing templates to simplify coding, and established a follow-up system to ensure all claims were tracked until reimbursement. These measures led to a 20% increase in revenue due to better capture of billable services, greater compliance with coding standards, and reduced administrative stress.

Final Thought 

Accurate medical billing is more than just a financial necessity; it is mandatory for administrative operations, compliance regulations, and patient satisfaction. By implementing best practices such as investing in cloud – based PMS technologies, training staff, and outsourcing medical billing services when needed, healthcare providers can ensure their billing processes run smoothly, resulting in better financial health. 

If your healthcare practice is struggling with billing errors or inefficiencies, now is the time to take action. Implementing accurate billing practices or outsource your service with Nexus io, can have a transformative effect on your bottom line and set the stage for long-term success.

As the healthcare industry is so complex and the process of medical coding and medical billing both are important for making sure providers get paid timely and that patients’ records are properly maintained. These two processes are closely related to each other, but they fulfill very different functions within healthcare revenue cycle management. And if you’re new in the healthcare profession, it’s important that you understand the differences between these two and the distinct roles they play in healthcare provider finances. Although they might sound similar, medical coding and medical billing; but they aren’t the same in the healthcare system. So, what exactly sets them apart?

In this blog, we’ll break down the key differences between medical billing and medical coding to help you understand their unique roles in the healthcare organization.

What is Medical Billing?

Medical billing is the process of submitting and following up on claims with health insurance companies to ensure healthcare providers receive payment for their services. After a patient receives health care, a medical biller’s job begins. Basically, medical billing is divided into two categories: front-end and back-end. Front-end billing tasks include initial documentation and patient information collection before the services are provided like: patient demographics, insurance eligibility, and prior-authorization. 

Back-end billing occurs after the healthcare services are provided by the provider. Once billing teams receive the medical codes describing a patient visit, they generate an itemized claim , and submit it to insurance companies for reimbursement. After the claim is sent, medical billing specialists keep a track for all the unpaid claims and other unfulfilled invoices until the provider receives full-payment. Billers also finalize all details and send out final statements for remaining balances to the patient with proper invoices. 

Ideally, medical billers ensure providers are reimbursed with secure payments while minimizing the chances of claim being denied and also optimize revenue for medical practices. As these billing is usually performed by certified medical billing specialists under strict code of information, and confidentiality that must be observed between providers and those who process insurance claims. 

Key Responsibilities of a Medical Billers:

• Preparing and Submitting Claims: Specialist medical billers ensure that the claims for healthcare services are correctly filled out and timely sent to the appropriate insurance companies or government programs like Medicare and Medicaid.
• Verifying Insurance Information: Billers confirm that the patient’s insurance coverage is valid and active to prevent any delays in payment process.
• Claim Follow-Up, Dispute Resolution: Billers also monitor the claims after submission to ensure they’re processed accurately. With their strong knowledge of medical terminology, coding, and insurance guidelines. They can also easily resolve any issue or delay in the claim process, while communicating with the insurance company directly.
• Handling Patient Billing Inquiries: They also handle patient questions and queries regarding their bills, payments, and insurance claims.
  

What is Medical Coding?

While medical billing involves the financial side of healthcare administration, medical coding deals with the clinical and technical aspects. Medical coding is the process of translating diagnoses, procedures, medical services, and equipment used during patient care into standardized codes set. These alphanumeric codes are used to create accurate records for patient treatment and billing purposes. 

Accurate medical coding is important for healthcare providers to ensure a timely reimbursement process and can also impact the quality of patient care. This coding specialist must be trained and certified while having all the necessary knowledge of medical terminologies, annual updates and changes in the medical code system.

Classification of Medical Codes: 

Medical coding used three main types of standardized codes to ensure accurate billing and clean-claim submission process. Standardized medical billing codes are categorized as follow:

• CPT Codes (Current Procedural Terminology) used to describe medical procedures and services rendered by the healthcare provider. 
• ICD Codes (International Classification of Diseases) are used to classify diseases conditions, and other health-related problems.
• HCPCS Codes (Healthcare Common Procedure Coding System) are primarily for medical services, supplies, tools, and durable medical equipment that are not covered under CPT codes.  

Key Responsibilities of Medical Coders:

• Assigning Codes to Diagnoses and Procedures: Coders must accurately translate a physician’s notes and medical documentation into alphanumeric codes that represent diagnoses, treatments, surgeries, and other services provided to the patient.
• Ensuring Compliance: Coders need to ensure that the coding is accurate and compliant with both federal laws, regulations, and insurance requirements.
• Collaboration with Healthcare Providers: Coders often communicate with physicians and other healthcare providers to clarify document information if needed.
• Maintaining Records: Coders help maintain detailed, accurate patient records by using standardized codes for diagnosis and treatment.
  

What is the difference between Medical Billing and Coding?

Medical billing and coding both are two important aspects of the healthcare system that closely work together to ensure patients receive appropriate quality care and providers get paid faster for their services. But they still have some common differences as follow: 

How Billing and Coding Work Together

Although distinct, medical billing and coding are important for maintaining accurate patient records, ensuring smooth communication among healthcare providers, and managing overall healthcare financial costs. The process begins with medical coders, who review the patient’s treatment and assign codes based on the services provided. Once coding is complete, medical billers step in to use these codes to create and submit insurance claims for reimbursement, which helps to maintain financial stability.

Final Thoughts 

While medical billing and coding are often grouped together, they have distinct roles with different purposes to serve in the healthcare department. Medical billers are responsible for ensuring healthcare providers receive payment for their services, while medical coders are tasked with converting medical information into standardized codes. Both of these are important for maximizing healthcare revenue cycle, and understanding the differences between them is essential.

But if you find medical billing and coding challenging and time-consuming, outsourcing to a reliable and professional company like Nexus io can help minimize your administrative burden. Our medical billing services are handled by a team of highly trained and experienced billing and coding specialists who have a deep understanding of the latest coding systems, regulations, and industry best practices.