Clean claims are the key to getting paid by insurance companies. Yet processing them can be time consuming.
A clear understanding of the medical billing process and insurance payer expectations can help you streamline this essential component of practice management, boost your clean claims rate, and ultimately improve your accounts receivable.
Here’s what you need to know about insurance claims, including submission, appeals, and how to improve your medical billing today.
What is a medical insurance claim?
A medical insurance claim is an invoice that a medical practice sends to a patient’s insurance company to receive reimbursement for services and treatment.
If you decide to accept insurance, this process is an essential part of your monthly cash flow.
If you decide to not accept insurance, claims processing isn’t relevant. However, accepting insurance can allow you to work with more patients, which can help you grow your business.
What is the role of claims processing?
For practices, medical claims are a big part of accounts receivable, with patient payments forming the rest. If you accept insurance, claims are how you get paid. An efficient claims process can also provide data on what services or treatments are most common.
For insurance companies, medical claims provide the information needed to verify whether medical services are covered under a patient’s insurance plan and meet any necessary criteria.
Ideally, a practice submits a clean claim, or one that’s on time with no errors or omissions, and the insurance company reviews it, approves it if it meets all criteria, and sends payment. If the claim is not timely, has errors, or is missing something, the insurance company may deny it.
Denied claims are challenging for practices because they create payment delays. They’re also challenging for patients, especially those who received care in-network and expect to only be responsible for their co-pay. This is why it’s important to ensure you have a clear and streamlined claims process.
What do you need to include in a medical claim?
A complete medical claim requires a claim header and a claim detail.
The claim header includes data about the patient, including their name, date of birth, ZIP, and gender. It also includes the facility national provider identifier (NPI), primary diagnosis, diagnosis-related group (DRG), inpatient procedure if relevant, insurance company name, and total claim charge.
The claim detail includes supplementary information about the treatment, including the date of service, procedure code, corresponding diagnosis code, national drug code (NDC), the provider’s NPI, and the service charge.
7 steps for processing insurance claims
Step 1: Register your patients
While patient intake is still possible through manual paperwork, this approach is time-consuming, is prone to error, and requires ample office space for physical documentation. Streamlining patient intake with an online onboarding process can reduce errors and save everyone time.
Step 2: Verify insurance eligibility
Next, verify your patient’s insurance coverage. The last thing you want is for the patient to assume they are covered when they are not.
Insurance eligibility verification includes whether the:
- Patient’s benefits cover the services and medical codes
- Patient has met their deductible
- Insurance carrier requires prior authorization
- Co-pay calculation is accurate
As important as this step is, dealing with insurance companies can take time. Having a standardized process can clear up potential confusion. It also makes it easier to communicate clearly and transparently with patients.
Step 3: Complete your medical coding
At the end of the patient’s appointment or treatment, determine the appropriate medical codes. These codes can describe an array of factors, such as a diagnosis, procedure, prescriptions, supplies, and technology.
There are 2 main coding systems:
- International Classification of Disease (ICD): A global system used to classify diseases and assign resources appropriately. There are over 68,000 codes in the most recent version, ICD-10. These codes include both numbers and letters. For example, the destruction of the gallbladder is coded as 0F540ZZ.
- Current Procedural Technology (CPT): These five-digit codes are used to define medical, radiological, surgical, and diagnostic services. There are about 10,000 CPT codes. A gallbladder removal surgery, or a cholecystectomy, is coded as 47560.
It’s important to note that there are additional coding systems that you may need to draft a medical claim. Some of these coding standards are:
- Diagnosis-related group (DRG): This system classifies the types of patients a practice treats and is used to determine costs. It is more commonly used in hospitals.
- Healthcare common procedure coding system (HCPCS): If you accept Medicare and Medicaid Services, you will need to use these codes. The HCPCS collection represents medical procedures, products, services, and supplies. Level I codes, labeled the HCPT codes, are similar to regular CPT codes. Level II codes define products, supplies, and services that are not included in the CPT system.
- National drug code (NDC): This coding system identifies drugs with a 10-digit code. All prescriptions in the United States carry this number. If you administer any kind of drug during an outpatient appointment, use the NDC to define it.
Step 4: Calculate the charge
List your charges for patient care. This will be sent to the health insurance company. However, the company may or may not pay the entire amount. This depends on the insurance carrier and plan.
Step 5: Send your claim
Before it reaches an insurance company, or payor, a medical claim goes through a clearinghouse. The clearinghouse standardizes, screens, and transmits the claim to the payor. It reviews the claim to ensure there are no mistakes or anything missing from the medical codes or the formatting requirements. This review makes it easier to get paid faster and reduce the likelihood of rejected claims.
You may be able to bypass the clearinghouse if you work with Medicare and Medicaid. The benefit of this is that you may get reimbursed faster. The downside is that if you make a mistake, you may need to start over.
Step 6: Wait for evaluation
Once the payor receives the claim, they evaluate it. This is also called adjudication. If they accept the claim, they will send the reimbursement, which can take up to 30 days. Any remaining amount will be billed to the patient.
The insurance company can also reject the claim for multiple reasons. Erroneous patient information, incorrect formatting, medical coding errors, out-of-network services, or lack of pre-authorization could all lead to a denied claim. In some cases, you will be able to correct the errors or missing information and resubmit the claim. In others, patients may appeal the decision.
Step 7: Bill the patient for remaining amount
Finally, bill the patient for the remaining cost. Traditionally, these statements have been sent in the mail. But now patients may receive them via email or the practice’s healthcare portal. Electronic statements often provide the most benefits to both parties, as patients can pay easily, and the billing team can process payments quicker.
What happens after the claim is processed?
Once a claim is fully processed, the only thing left to do is wait on your patient to pay the remainder. It’s a best practice to have a follow-up strategy to ensure you get paid in a timely manner. You can use text messaging, emails, and phone calls to remind patients of their outstanding balances.
For most practices, texts and emails provide the most efficient way to communicate. Since these processes can be automated, it allows billers to focus on challenging accounts.
Why do insurance claims take so long to process?
Insurance claims can take up to 30 days to process. The insurance carrier needs to review each claim and ensure that the treatment is valid and covered under the patient’s plan. Often an individual agent is responsible for investigating several claims, which can slow down the process.
A clearinghouse can add processing time. But this intermediary also reduces errors and therefore rejected claims which can save you time in the long run.
How can I follow up on a claim?
In some cases, you may want to resolve a claim quicker. Following up on your claim within one to two weeks can help reduce long wait times. A customer service representative should be able to describe your claim’s status. If they are unable to do so clearly, it’s best to speak with a manager.
This process gets easier over time. You or your medical biller will often end up building rapport with the insurance company over time.
What are claim appeals?
The insurance company has a right to reject a claim. But you or the patient may also appeal the decision. In many cases, claim denials are rooted in technical issues: wrong medical codes, lack of documentation, incorrect patient demographic information, and similar issues are common.
Often, these claims can be clarified over the phone with the insurance company. Then, you would send an appeal letter, which you can download from the insurance carrier’s website. In addition, you should include as much documentation as possible to prove your case or rectify an error.
Your billing team will be asked to resubmit the claim if the claim was rejected due to insufficient documentation or coding errors. You will need to include the following documents in your resubmission:
- Original and updated copies of the claims
- The receipt, also called remittance advice, for the rejected claim
- Additional documentation as required
- Identifiers on each document with the word “resubmission”
Appeals are common, and they take a lot of time. It’s best to decide which type of appeals are worth pursuing. Additionally, you may decide to hire a medical biller or outsource the entire process to a professional billing company.
Improve your clean claims rate
Clean claims process faster, and a good clean claims rate is part of good accounts receivable.
To calculate your clean claims rate, divide the number of existing clean claims by the total number of claims submitted and multiply the result by 100.
The ideal clean claims rate is 95%, according to Diane Allison, a customer training specialist for Kareo, a Tebra company. Even with perfectly submitted claims, you may still get rejections based on other factors. But you are likely losing revenue if your clean claims rate is below 95%.
So, how can you submit clean claims and capture more reimbursements? Following these best practices can help:
- Use robotic process automation (RPA) to rapidly handle insurance claims
- Send all claims in a timely manner
- Update patient information regularly
- Verify insurance benefits
- Review referral requirements
- Use specific codes
- Check for medical necessity
- Document everything
- Screen claims before submission
- Track denials
- Train staff
- Integrate your billing system with your EHR
- Stay on top of updated coverage requirements
Getting started with medical billing
You started a medical practice to help patients, not follow up on insurance reimbursements. A complete platform for practice management that includes billing can help you streamline your claims submissions and get back to providing quality patient care.
As your practice grows, your needs will evolve. At some point, you will need to decide between hiring an in-house medical coder or outsourcing to a medical billing services company.
There are benefits to each approach. However, outsourcing often gives you access to a range of specialized services in addition to basic claims management. For example, many medical billing companies also provide support for:
- Patient support, such as answering billing and insurance questions
- Medical coding
- Accounts receivable
- Benefit verification
- Technology support
- Payor contract negotiations
- Marketing and compliance consulting
No matter how you choose to grow, medical billing should be at the forefront of your practice business strategy.