Medical insurance claims can be complex in healthcare organizations, especially when it comes to understanding how to process them accurately and timely. Whether you’re a patient trying to make sense of your doctor visiting medical bills or a healthcare provider aiming for faster reimbursements for the service provided, knowing how a claim moves through the system is important for both.
In this blog post, we’ll explore the complete workflow of a medical insurance claim; how it proceeds, from the moment a patient visits a doctor to the final payment or denial.
What is a Medical Insurance Claim?
A medical insurance claim is an invoice (bill) that is submitted to an insurance company asking for payment for services provided by a healthcare professional. These claims are usually submitted by the medical provider on behalf of the patient, although patients can submit them directly in some cases (such as out-of-network services). Each claim has a list of unique codes that describe the care the patient received and help insurance payers process and pay them faster. The medical codes describe the following set of services:
- Medical diagnosis or procedure
- Medical supplies
- Medical devices
- Lab test reports
- Pharmaceuticals
- Medical transportation
Once submitted the claims, the insurance company reviews, determines what portion of the bill it will cover based on the patient’s policy, and sends payment to the provider. The rest payment if any pending becomes the patient’s responsibility to clear.
How Medical Insurance Claims are Processed
Let’s see how the process of a medical insurance claim works for the healthcare providers to get paid fast and accordingly.
Step 1: Patient Registered and Receives Medical Services
The insurance billing process workflow begins when a patient visits a healthcare provider, this could be a doctor, clinic, specialist, or hospital. During the patient visit:
- The provider collects the patient’s insurance details along with other mandatory personal information.
- The provider ensures the insurance covers the patient’s plan to avoid future misunderstandings or payment delays.
- The patient may pay a co-pay up front, depending on their plan.
- The provider records the details of the services delivered, including diagnoses, procedures, and any tests or treatments performed.
Step 2: Provider Prepares the Claim
Once the patient visit is complete, the provider or medical billing administrative staff copied the doctors or physician notes into standardized medical codes. These set of codes are as under follow:
- ICD (International Classification of Diseases) codes to indicate diagnoses.
- CPT (Current Procedural Terminology) codes are used to identify specific medical procedures or services performed by the healthcare providers.
- HCPCS (Healthcare Common Procedure Coding System) codes to indicate the medical procedures, equipment, or medical supplies used by the provider.
The accuracy of claim coding is important along with the use of extra modifiers to ensure accurate payments, proper billing, and reduce the chances of claim denials or underpayments. Also, the claim form includes:
- Patient information (name, date of birth, policy number).
- Provider information (NPI number, contact details).
- Itemized list of services and charges.
- Date(s) of service.
- Applicable codes for diagnosis and procedures.
- Extra procedural or service modifiers that are not undercover the CPT, ICD, HCPCS.
Step 3: Claim Submission to Insurance Company
The completed claim is then submitted to the patient’s insurance company. This is typically done electronically through a clearinghouse, or any outsource medical billing companies which acts as a middleman:
- Clearing houses check the claim for basic errors like formatting, incomplete information, invalid codes.
- Outsourcing medical billing takes care of both the front-end and back-end tasks involved in the claims process.
- After that they forward claims to the appropriate insurance payer for the reimbursement process.
Many providers send the claims on a daily basis, some send them weekly or even monthly. Claims like for physician therapy appointments are usually sent into batches as per depending on the patient visit times. It all depends on when and how your claims are submitted, as this affects how quickly they will be reimbursed.
| Tip: Outsource Medical Claims and Billing is the Best Option! If you’re looking for a cost-effective way to ensure accurate and efficient claims processing, consider outsourcing your medical billing to industry experts like Nexus io, who offer faster reimbursement and a 30% claim acceptance improvement. |
Step 4: Claim Review and Adjudication
Once the insurance company receives the claim, it goes through a process called adjudication, which includes:
- Initial Review: Checking for patient eligibility and coverage.
- Verify Medical Necessity: Verifying whether the services are covered and appropriate under the healthcare plan.
- Verify Member Benefits: Deciding how much of the cost will be paid by the insurer as per the insurance policies.
- Error Checks: Looking for duplicate claims, incorrect codes, or missing information, or required documentations.
If everything is in order, the insurer processes the claim. If not, they may:
- Reject the claim due to missing info or formatting errors.
- Deny the claim due to policy limitations or insurance coverage issues.
Step 5: Payment and Explanation of Benefits (EOB)
Once the claim is processed, the insurance company issues payment either to the healthcare provider or, in some cases, directly to the patient. Additionally, they send an Explanation of Benefits (EOB) to the patient, detailing what was covered, what was paid, and any remaining balance. The EOB outlines include:
- Services billed by the provider.
- Amount paid by insurance.
- Patient’s share of the cost (deductible, co-insurance, or non-covered services).
- Reason codes for any denied or reduced payments.
| Note: The EOB is not a bill, but it helps the patient understand what they owe and why. |
Step 6: Patient Billing and Responsibility
After insurance has paid its portion, the healthcare provider sends a bill to the patient for any remaining or outstanding balance. This may include:
- Deductibles.
- Co-insurance.
- Services not covered under the patient’s healthcare plan.
Patients are encouraged to review both the provider’s bill and the EOB carefully to ensure consistency. If there’s a discrepancy or a denial they disagree with, they have the right to appeal the decision.
Key Parties Involved in the Medical Claims Process
The medical claims process involves several key persons, each contributing to the accuracy, efficiency, and success of claim submissions and reimbursements. The main participants include:
- Healthcare Providers: Doctors, nurses, and specialists who deliver healthcare to patients. They are responsible for documenting services accurately, assigning the right codes, and submitting claims.
- Insurance Companies: These entities offer coverage for medical services and are in charge of reviewing, processing, and reimbursing claims in accordance with policy terms.
- Medical Coders: Trained professionals who convert medical services and diagnoses into standardized codes, ensuring proper billing and facilitating reimbursement.
- Claims Adjusters: Employees of insurance companies who evaluate and process claims to confirm they meet policy requirements and are eligible for payment.
Common Challenges and Issues in the Claims Processing
The claims process isn’t always smooth or straightforward. Common issues can arise if they aren’t properly monitored, such as:
- Claim Denials: Often due to coding errors, lack of prior authorization, or non-covered services.
- Claim Delays: Claims may get stuck in review, returned for corrections, or delayed due to the insurance company’s workload
- Duplicate Claims: Resubmitting without fixing the original error can result in duplicate submissions.
- Coordination of Benefits: Complications arise when a patient has multiple insurance policies.
| Tips for a Smoother Claims ProcessVerify coverage and eligibility before treatment.Use accurate, up-to-date coding.Submit claims electronically for faster processing.Keep detailed records of all communications, bills, and EOBs.Follow up on pending or denied claims promptly. |
Final Thoughts
The journey of a medical insurance claim from a doctor’s visit to final payment is complex but structured. Understanding the complete workflow will be beneficial for both patients and providers to ensure accurate, timely reimbursements and avoid billing surprises.
Whether you’re managing your own healthcare expenses or running a medical practice, knowing this process inside and out is valuable in today’s complicated healthcare world. Alternatively, you can outsource your medical billing and revenue management services to Nexus io, freeing yourself from the hassle of claim denials and allowing you to focus on what matters most—patient care.
