More about billing


While coders are busy translating medical records, the front-end billing process has already started.


Medical billing begins when a patient registers at the office or hospital and schedules an appointment.

“From a revenue cycle perspective, getting the most accurate information up front starts with patient scheduling and patient registration,” explained Gary Marlow, Vice President of Finance for Beverly Hospital and Addison Gilbert Hospital. “That provides the groundwork by which claims can be billed and collected in the most efficient and effective manner possible.”

At check-in, billers and patient financial services staff ensure patients complete required forms and they confirm patient information, including home address and current insurance coverage.

At check-in or check-out, billers or other staff should also collect copayments, when applicable. Provider organizations should collect copayments while a patient is in the office or hospital to ensure timely collection of patient financial responsibility.

Part of the front-end medical billing process also involves confirming patient financial responsibility. Medical billers and patient financial services staff verify requested services are covered by a patient’s health plan and submit prior authorizations when necessary.

Once a patient checks out, medical coders obtain the medical records and begin to turn the information into billable codes.


Together, medical coders and back-end medical billers use codes and patient information to create a “superbill,” AAPC explains.

The superbill is an itemized form that providers use to create claims. The form typically includes:

  • Provider information: rendering provider name, location, and signature, as well as name and National Provider Identifier (NPI) of ordering, referring, and attending physicians
  • Patient information: name, date of birth, insurance information, date of first symptom, and other patient data
  • Visit information: date of service(s), procedure codes, diagnosis codes, code modifiers, time, units, quantity of items used, and authorization information

Provider notes and comments may also be included on the superbill to justify medically necessary care.

Pulling information from the superbill, either manually or electronically, allows medical billers to prepare claims.

CMS 1500 form
CMS 1500 form

Source: CMS

Billers tend to deal with two types of claim forms. Medicare created the CMS-1500 form for non-institutional healthcare facilities (e.g., physician practices) to submit claims. The federal program also uses the CMS-1450, or UB-04, form for claims from institutional facilities, such as hospitals.

Private payers, Medicaid, and other third-party payers may use different claim forms based on their specific requirements for claim reimbursement. Some payers have adopted the CMS-generated forms, while others have based their unique forms on the CMS format.

During claim preparation, billers also “scrub” claims to ensure that procedure, diagnosis, and modifier codes are present and accurate, and that necessary patient, provider, and visit information is complete and correct.

Then, back-end medical billers transmit claims to payers. Under HIPAA, providers must submit their Medicare Part A and B claims electronically using the ASC X12 standard transmission format, commonly known as HIPAA 5010.

Other payers have followed in Medicare’s footsteps by requiring electronic transmission of claims.

As a result, adoption of electronic claim submission is currently up to 95 percent, while just 5 percent of health plans and providers reported being fully manual, CAQH recently reported.

CMS 1450 form
CMS 1450 form

Source: CMS

Medical billers either submit claims directly to the payer or use a third-party organization, such as a clearinghouse. A clearinghouse forwards claims from providers to payers. These companies also scrub claims and verify information to ensure reimbursement.

Clearinghouses can be valuable partners for providers who may not have access to a comprehensive practice management system to edit and submit claims electronically. The companies understand varying payer requirements for claim submission and can help to reduce potential errors stemming from manual processes.

Once a claim makes it way to the payer, adjudication begins. During adjudication, the payer will assess a provider’s claim and determine if and how much it will pay the provider. Claims can be accepted, denied, or rejected.

Payers send Electronic Remittance Advice (ERA) forms back to the provider organization explaining what services were paid, if additional information is needed, and why a claim was denied or rejected.

Correcting denied and rejected claims is a major component of back-end medical billing. Medical billers should understand why payers will not pay claims and edit the claims for resubmission.

When claims are paid correctly, medical billers create statements for patients. Providers will typically charge patients the difference between the rate on their chargemaster and what the payer reimbursed.

The final phase of medical billing is patient collections. Medical billers collect patient payments and submit the revenue to accounts receivable (A/R) management, where payments are tracked and posted.

Some patients accounts may land in “aging A/R,” which indicates that a patient has failed to pay their patient financial responsibility typically after 30 days. Medical billers should follow up with patient accounts in aging A/R batches to remind patients to pay their bills and ensure the organization receives the revenue.

Collecting patient financial responsibility has become an increasingly important task for billing departments.

Out-of-pocket financial responsibility rose by 11 percent between 2016 and 2017 due to high-deductible health plans, and consumers are unable to handle the rise in out-of-pocket healthcare costs, a recent TransUnion Healthcare analysis showed.

About one half (53 percent) of patients did not fully pay their medical bills to providers in 2015, the study found.

Medical billers should follow-up with delinquent accounts and implement convenient payment options to boost patient collections. Implementing credit card on file capabilities, payment plan options, and online payment methods can increase the amount of revenue collected directly from patients.

Once a medical biller receives the full balance of a patient’s financial responsibility and payer reimbursement for a claim, they can close the patient account and conclude the medical billing and coding cycle.


Manual medical billing is a top challenge for provider organizations of all sizes. HIPAA may require electronic claim transmission, but the act does not mandate automation for all claim management processes.

The 2017 CAQH Index found that only one of the seven common claims management processes – coordination of benefit claims – saw a significant increase in automation since 2016.

Claim submission, eligibility and benefit verification, claim status inquiry, and remittance advice experienced modest increases in automation, while claim payment and prior authorization processes actually became more manual compared to 2016.

Committing to full electronic adoption of these claims management processes could save providers $9.5 billion, CAQH estimated.

To earn the savings, provider organizations should first commit to electronic claims management adoption, then invest in electronic data interchange (EDI) systems. EDI systems, offered through a clearinghouse or a practice management vendor, automate a range of claim management processes.

Providers should seek an EDI system that offers a comprehensive range of automated transactions. Not all systems will include all common transactions. In fact, only 12 percent of available EDI systems automate prior authorizations and 74 percent automate remittance advice, CAQH found.

Neglecting to inform consumers about patient financial responsibility also results in inefficient medical billing.

Over one-third (36 percent) of providers in a recent West survey said they never discuss patient financial responsibility with patients, while just 23 percent always go over costs with their patients.

As high-deductible health plans push patient financial responsibility upwards, billing departments should align their practices with the new healthcare payment reality. Patients are becoming increasingly like payers, and provider organizations are relying on their patients for revenue.

Provider organizations should implement price transparency strategies to help patients understand their financial responsibility and encourage them to pay.

Developing a list of prices for low-priced, high demand services is key, the Healthcare Financial Management Association (HMFA) stated.

Investing in technology that offers consumers price estimates will also advance an organization’s healthcare price transparency efforts.

For example, Oklahoma-based INTEGRIS created a price estimate tool that provides about 240,000 prices for outpatient procedures each year. The Priceline tool gives consumers pricing information on outpatient services and links the data to information on financial planners for consumers to use before, during, or after their encounter.

The health system reported that the price quotes from the tool are accurate, with an average difference of between 3 and 5 percent of the actual charge.

The tool helped INTEGRIS to increase point-of-service patient collections by $17 million over seven years.

Healthcare price transparency tools and strategies, like Priceline at INTEGRIS, may also help hospitals respond to the government’s recent push for increased transparency. CMS recently proposed a rule that would require hospitals to post their standard charges online by January 1, 2019.

In an exclusive interview with, CMS Administrator Seema Verma also said that the proposed rule was “just the beginning” of healthcare price transparency efforts from CMS.

“When you go to receive a healthcare service, there are always going to be situations where you can’t know what the costs will be, especially around emergency situations and some acute situations,” she said.

“But for a lot of us, we’re going in for planned procedures. You should be able to know what it’s going to cost you.”

Additionally, provider organizations should also consider automated physician queries to overcome medical coding challenges.

Medical coders often communicate with providers to clarify clinical documentation and ensure the most accurate codes are going on a claim. This process is referred to as physician querying.

The traditional physician query process involves a medical coder sending a question or issue to a medical record specialist or a physician’s office staff. These staff members then print the queries for physicians and physicians respond to the documents during their administrative hours.

Manual physician queries delay medical coding and billing. At Western Maryland Health System, the whole process typically took anywhere from three days to sometimes three or four weeks, Tracey Davidson, RN, Director of Quality Initiatives recently explained to

Physician response rates to queries at the health system also hovered between 62 and 65 percent.

To close patient accounts sooner, Western Maryland Health System implemented a mobile physician query platform that allowed medical coders to send questions to physicians on their phones.

The mobile platform boosted physician response rates to 100 percent and streamlined the query process from four days to just four hours.

Armed with a transparent physician query process, Davidson intends to further improve coding productivity by identifying procedures that consistently challenge providers and coding staff.

“Our next steps will be to focus on physicians, CDIP staff, and coding staff that might need additional education,” she said. “We can now focus on patterns that we could not see before. This will help us see if there are inefficiencies and address them to enhance our productivity.”

Medical billing and coding are integral healthcare revenue cycle processes. Ensuring that the medical billing and coding cycle run smoothly ensures that providers get paid for services delivered and provider organizations remain open to deliver care to patients.