Medical Claims

Introduction to Medical Claims

Medical Claims are basically bills (i.e charges for medical care) that a healthcare provider submits to a patient’s insurance company (payer) for the reimbursement after the patient receives medical care. It provides the insurance payers detailed information about the medical services provided to the patient. This will help them determine if the expenses patients are claiming for are covered under their insurance plan or not and make it easy for the insurance payer in the process of reimbursement. 

A Medical claim process is started when a patient checks in to an appointment for a medical service. It follows the entire journey of a health service until the patient receives and pays a final bill.In this event, the patient sees a doctor outside of their network, claims can be filed by the patient themselves. But in general, claims are automatically submitted to insurance payers via the healthcare provider after an appointment or other service.

Medical Billing Process

In the healthcare industry for reimbursement of the claim, various steps are carried out which is known as the medical billing process. It starts from the moment a patient checks in at a healthcare provider office to the moment they receive a bill from their insurance provider.After translating a healthcare service into a billing claim, the medical biller follows the claim to ensure the organization receives reimbursement for the work the provider performed.

It is basically a three-party system:

  • Patients who seek medical care.
  • The provider (Hospitals, physicians, physical therapists, or any other places where medical services are performed) who provides the medical service.
  • Insurance payer or company who reimburse for the service provided.

Patient Registration: Whenever a patient seeks for medical service through a healthcare provider they first take an appointment and check-in. Administrative staff at the provider's office ask and record the patient’s demographic information, information of the insurance payer, identify if the patient has multiple insurances, and the reason for the visit is registered to the provider’s system. 

Insurance Eligibility Verification: After the patient is registered, the provider's system checks for the Insurance eligibility verification by calling the insurance company or through their website. Providers will check if the patient insurance is active or not, their type of insurance, type of insurance plan, provider network (in-network or out-network), what benefits are covered by the insurance, if the patient has co-pay, deductible or out-of-pocket expenses etc. 

Medical coding: Medical coders review the provider information, extract the billable information and assign alphanumeric and numeric codes i.e procedure codes (CPT) and diagnosis codes(ICD) to the service provided to the patient. 

Charge Entry: Charge Entry process includes filling the details of the patient, assigning the correct amount of $ value for the assigned medical codes. The reimbursements for the healthcare provider's services are dependent on the charges entered for the medical services performed.

Claim Creation: For creating a claim, a provider needs to gather all the necessary information of the patient and fill up a claim form. The most common forms are CMS-1500 and UB-04.

  • CMS 1500: CMS-1500 claim is used to submit non-institutional claims for healthcare services provided by physicians, other providers and suppliers. CMS-1500 form is used for claim reimbursement for several government insurance plans such as Medicaid, Tricare, and Medicare to patients who are covered under Medicare Part B. There are 33 fields(boxes) in CMS-1500 form. The non-institutional providers and suppliers who can use the CMS-1500 form to bill medical claims includes Ambulance services, Clinical social workers, Physicians and their assistants, Nurses including clinical nurse specialists and practitioners, Psychologists, etc. The form is usually not hospital-focused
  • UB-04 form: The UB-04 uniform medical billing form is the standard claim form that any institutional provider can use for the billing of inpatient or outpatient medical and mental health claims. The UB-04 is the claim form for institutional providers to bill claims, and includes the following:
    1. Hospitals
    2. Rehab facilities, e.g. physical therapy, occupational therapy and speech therapy
    3. General health centers, federal health centers and rural clinics
    4. Specialized health centers, e.g. mental health, renal health and rehabilitation clinics
    5. Hospices

    The form would be used for surgery, radiology, laboratory, or other facility services. This form is used to submit charges under Medicare Part-A. There are 81 fields or form locators in a UB-04 form.

    Claim Transmission: Claim is then transferred from healthcare provider to clearinghouse to check errors and to convert claim into standard format. The clean claim is then submitted to payers. Clean claims are the submitted claim without any errors or other issues (inaccurate and missing information, including patient name, subscriber information, diagnosis codes, CPT codes etc)

    Adjudication process: Adjudication process starts when the insurance payer receives the medical claim and starts the review process. Insurance payers determine their financial responsibilities in this process. Claim adjudication process includes following steps:

    • Insurance companies evaluate the claim and decide if the claim is valid and how much they need to reimburse the provider. 
    • The claims can be either accepted, denied or rejected by the insurance payers. 

    Patient Statement: Once the claim is accepted, the insurance payer has agreed to pay the provider for a portion of the services on the claim, EOB is mailed to the patient by the provider explaining which services the insurance company will cover under their plan and why certain procedures are not covered. EOB is useful in explaining to the patient why certain procedures were covered and in Case of denied claim, it will explain what is wrong with the claim. Insurer’s system send the detail bill of the payment of the claim electronically, including the following information:

    • What charges were paid, reduced, or denied
    • Whether there was a deductible, co-insurance, co-pay, etc.
    • How the payment was made via EFT(Electronic Fund Transfer)