A Step-by-Step Hospital Medical Billing

Hospitals and patients deal with hundreds of insurers, each with its own set of plans, requirements, and regulations for hospital billing. If we talk about Medicare only, it has issued 130,000 pages of rules, which can only be followed by expert billers and coders possessing the skill set of maintaining compliance, accuracy, pressure, and time handling while following all the requirements. This makes accurate hospital billing more challenging with time. However, the good news is that MedsIT Nexus medical billing company understands these challenges and offers high-quality services across the USA.

Hospital medical billing workflow process

The hospital billing process combines various professional steps to submit a clean claim and get appropriate reimbursement. let's take a comprehensive look at these steps in hospital medical billing services.

Step 1: Patient check-in and verification of patient’s information

The billing process commences when the patient checks in because the patient's personal information, such as full name, date of birth, complete address, and contact number, is recorded accurately. After verifying patients' demographics, getting insurance information and verifying it is obligatory, including the insurer's name, insurance policy number, primary and secondary insurers, etc.

Step 2: Determining the patient's financial responsibility

This step determines the amount the patient is obliged to pay for the services. It entails verifying pre-authorization because each insurance plan has different coverage criteria and requirements.

Step 3: Coding of medical services

The need to appropriately apply billing codes for rendered medical services is essential today; more than ever, to the healthcare organization's financial health. After the patient's check-out, the patient's report will be generated and analyzed, and services such as diagnosis, medical necessity for treatment, supplies or services given, and treatment will be accurately translated into the latest CPT, ICD-10, and HCPCS codes while adhering to coding compliance rules.

Step 4: Claim auditing

Before submission of a claim to the payor, it is necessary to verify the accuracy to escape claim denials

• Documentation verification is mandatory because a study result shows that poor documentation is the leading cause of claim denial
• Verification of accurate and complete information (e.g., social security number, plan code, demographics, modifier correctness, etc.) because MGMA says it is a cause of denial.
• Recheck if the claim is not a duplicate
• Reviewing patient plan or calling the payor before claim submission
• Reverifying patient’s coordination of benefits
• Reassuring that there is no bundling
• Make sure that the time limit does not exceed

Step 5: Claim filing

After checking the accuracy of the claim with the help of real-time technology, IT members, and relevant Staff, the claim will be submitted to the payer using the CMS-1500 or UB-04 claim form, and their digital version will also be used

Step 6: Claim adjudication

This is a decision-making step/process in which insurers compare data to check the correctness and determine their responsibility in reimbursing for services provided by medical practices. Hence, it could take time (up to 2 weeks). Claim adjudication is the decision-making process because this step decides whether the insurance company accepts or denies the submitted claim.

1. It begins with "initial processing," in which the claim is reviewed for information given by the patient, such as name, diagnosis, status, etc.
2. Next, "validation" occurs when payment policy, coverage, coverage date, disease covered by their plan, and submission time are reviewed manually or using claim adjudication software.
3. The next step is for the payer to make the "decision" whether the claim will be denied, paid, or partially paid.
4. "Payment processing" is done using the client's preferred method if the claim is accepted. If the claim is denied, they will issue an explanation.

Step 7: Denial management and Payment collection

If a claim is accepted, payment is collected from the insurer. If there is any deductible, a patient statement is sent to the patient explaining all the services, their cost, and why they are still responsible for paying. However, the claim is resubmitted in case of denial, and if you think that there is no issue in the claim, an appeal is made.

Complications and challenges of hospital medical billing

Challenges	Solution
Claim denials and rejections	Ensure the accuracy of patient records, documentation, coding, and coverage criteria.
Exceeding time limit	Establish clear procedures, prioritize claims according to their time limit and importance, and integrate technology for efficiency.
Coding errors	Stay updated with the latest codes and their guidelines, and conduct regular audits.
Denial management	Find out the root cause, the reason for denial mentioned by the payer, appeal procedures, and training.
Adherence to compliance standards	Follow HIPAA guidelines, implement safe procedures for sharing PHI, and implement safe strategies for disposing of records when no longer required.
Verification of patient eligibility	Collect accurate patient insurance information and implement real-time verification tools.
Staying updated on the latest technology	Stay informed about healthcare billing field trends, explore markets, analyze competitors, attend seminars, and train staff about the latest technology.

Types of Billing in the Hospitals

Key aspects	Inpatient billing	Outpatient billing	Institutional billing	Professional billing
Description	In inpatient billing, claims are submitted for the patient who stays in the hospital overnight or longer.	In outpatient billing, claims are submitted for services provided without admitting to the hospital, such as same-day treatment.	It is also called facility billing because it involves submitting claims for using healthcare facilities, clinics, or hospitals, including rooms, medicines, and hospital supplies.	It means submission of claims for the services provided by healthcare practitioners, physicians, therapists, etc.
Coding	ICD-10-PCS manual	ICD-10-CM manual, as it includes CPT HCPCS	HCPCS DRGs	CPT ICD
Medicare coverage	Under Medicare Part A	Under Medicare Part B	Under Medicare Part B	Under Medicare Part A
Claim form	UB-04 (CMS-1450)	UB-04 (CMS-1450)	CMS 1450: UB-04 (Uniform bill) or 837-I (digital version)	CMS 1500 (Health insurance claim form) or 837-P (digital version)

Hospital Billing Charges

Kaiser Family Foundation (KFF) survey showed that the average price of a hospital stay per day is $2883 in the US; however, hospital charges vary depending on various factors, and a hospital bill lists all the services given to patients, including:

• Type of service
• Procedures and tests
• Medicines
• Equipment and supplies
• State
• Type of insurance plan and contractual adjustment

Hospitals implement a Chargemaster, or Charge Description Master (CDM), as a comprehensive charge list for medical procedures, lab tests, supplies, and medications, constituting the basis of the billed charges on every claim submitted. To elaborate, Hospital billing charges are negotiated by Group Purchasing Organizations (GPOs), Integrated Delivery Networks (IDNs), hospital systems, and individual hospitals to decrease charges, hence different charges. The discounts that healthcare insurers negotiate off the billed charges are called contractual adjustments (CA).
Hospital Billed Charges – Contractual Adjustments = Allowed Amount Allowed Amount = Paid Amount by Insurer + Patient Share (deductibles)

Types of medical codes used in hospital billing

International Classification of Diseases (ICD)

ICD-10, a medical coding system introduced by the World Health Organization, has comparatively greater granularity than ICD-9, with codes expanding from 17,000 to around 155,000, with up to 7 alphanumeric digits. It is a standardized coding vocabulary and the world's standard tool to capture mortality and morbidity rates. The National Centre for Health Statistics (NCHS) and CMS have created its version into 2 code sets:

1. ICD-10-CM reports diseases and conditions, health problems, injuries, abnormal findings, signs and symptoms, and external causes of injuries and diseases for all healthcare settings.
2. ICD-10-PCS will report only inpatient procedures in hospital settings.

Current Procedural Terminology (CPT)

CPT codes, which are a standardized system that was designed and maintained by the American Medical Association (AMA), serve as a universal language for describing medical, diagnostic, and surgical services, enabling healthcare practitioners to communicate with insurers and regulatory agencies in a streamlined way. In the context of hospital billing services codes, CPT codes directly influence the financial health of healthcare facilities and contribute to the development of healthcare invoices; hence, RCM can be optimized by investing in billing systems that integrate CPT codes, as stated by the American Medical Association.

Healthcare Common Procedure Coding System (HCPCS)

HCPCS, produced by the Centers for Medicare and Medicaid Services (CMS) is a standardized code representing medical procedures, supplies, products, and services. It is implemented to facilitate the processing of insurance claims by Medicare and other payers.

Diagnostic-Related Group (DRG)

Medicare and some other private insurers use the DRG system to pay; therefore, hospitals and other medical organizations implement DRGs to categorize patients into groups or sub-groups and finding out accurate reimbursement rate that hospitals will receive by evaluating the patient’s primary and secondary diagnosis, other medical conditions, gender, age, and medical procedures. DRG categorizes hospital visits depending on severity, risk of mortality, and treatment complications.

Compliance is a pre-requisite!

Compliance with privacy standards and payers' legal requirements is a non-negotiable need in the frequently shifting regulatory healthcare field. When it comes to coding for hospital billing services, coders must adhere to strict criteria to avoid penalties and legal consequences. Maintaining compliance rules requires the support of medical billing experts such as MedsIT Nexus, renowned for its HIPAA-compliant services across the USA.

Hospital claims processing

Filing a claim for hospital bills might seem easy, but when you delve into its core surface filing, a claim depends on the patient's health insurance plan and the type of services rendered. Filing an insurance claim for hospital billing requires following some steps given below.

1. Get a claim form: The patients' insurance company's claim form is on their website. Get a particular claim form according to the patient's health plan. Print the form and input all necessary information, such as:
   • Patient’s insurance policy number
   • Member number or group plan number
   • The correct name of the patient
   • If the patient has dual coverage or not
   • The cause/reason of treatment
2. Itemized bill and receipt: You also need a detailed bill that mentions every service rendered, such as examination, lab tests, radiological examination, cardiovascular tests, surgery, durable medical equipment (DME), etc. Each item must be mentioned in a separate line with the code of each written.
3. Make copies of everything: Always make a copy of every document and save it in a file.
4. File the claim: After all the items are itemized and organized, it is time to submit the claim manually or online, per the insurance company's requirements.

Best Hospital Billing Services

Best and suitable hospital billing services remove the burden of handling billing from hospital practitioners and staff, offering pre-authorization, documentation, coding, claim scrubbing, payment collection, etc., improving hospitals' productivity. Moreover, choosing the right hospital billing services is crucial to secure your hospital's financial health; therefore, while evaluating billing services, considering these features is a requirement to claim them as the best services for your hospital.

Compliance: Compliance is a HIPAA requirement and a way to follow the bioethics principle of maleficence. It is a great service that your billing systems adhere to updated data and insurer regulations, as well as HIPAA and OIG guidelines about compliance.

Updated technology: Billing without technology costs ten times more in effort and time; therefore, the best billing services include the integration of some important technology for accuracy and efficiency.

• EHR: Its integration assists in recording, organizing, and updating information and securely transferring PHI from one entity to another. National and international bodies spread this belief that electronic records automate and optimize reimbursement workflow. WHO also stated numerous perks of EHR in the 3rd global survey on eHealth reports, saying that it improves patient health information's accuracy, quality, and timeliness while providing insights into healthcare costs.
• Electronic payment system: A survey showed that traditional billing has become a major issue, with 68% of patients saying they prefer to pay due charges with an electronic payment.
• EMR: Research states that up-to-date healthcare cannot be obtained without EMR, while another research states that widespread EMR integration influences the quality of clinical records in surgical settings, hence improving efficiency and productivity and fostering communication between healthcare providers and patients.
• PM: Practice management software assists in managing the hospital's everyday activities and is used mainly for administrative and financial matters.

Comprehensive RCM: A robust RCM system streamlines every step of hospital medical billing, from patient check-in to payment collection; hence, the integration of reliable revenue cycle management services is necessary to ensure professionalism.

Certified and experienced staff: Best billing is impossible without certified, experienced, and trained staff because it requires keen focus, time, professionalism, and expertise, which is also considered among the best services.
Outsourcing with a top-leading medical billing company provides all the best services because the expert billers and coders streamline revenue and increase hospitals' bottom lines. Grand View Research reports that the outsourcing market is expected to reach 25.3 billion dollars by 2028 because the best billing services consequently increase productivity, profitability, and reputation.

What role does MedsIT Nexus play in your hospital's medical billing and revenue?

MedsIT Nexus is renowned because of the expert billers and coders that streamline revenue and increase the bottom line of your hospitals. To ensure that patient's healthcare records are gathered precisely and consistently and that health claims are correctly processed for Medicare, Medicaid, and other health programs, MedsIT experts have a standardized coding system for medical services and procedures. We implement team-based coding interventions to ensure our clients achieve precise documentation that reflects the complexity of care delivered. We are "all in one" approach, but it does not mean that our services are one-size-fits-all; rather, we tailor our RCM services according to your organization's needs. So stop stressing and collaborate with us. Book an appointment to understand how we do it all.