Saturday, April 6, 2024

The Medical Insurance Claims Process: How Medical Claims Processing Works

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We can introduce medical billing as one of the most prominent professions in the health sector. The medical billing process is not completed in a short period. It includes many unique procedures. Among them, the most critical section is the Insurance Claims section. What are insurance and insurance claims? Let us explore how the billing process is completed with them.

What is health insurance?

Health insurance is currently the fastest-growing aspect of the American industrial economy. There are many types of medical insurance at different levels that you can get. 

America spends nearly $8,000 a year on health care. They have paid the most attention to health care, for health insurance.

Subscriber signs contracts with a health insurance company to provide any health insurance. The aim is to lower the impact of their medical expenses. Although we can see different health plans, most operate with one common feature. Most health insurance plans require subscribers to pay premiums. 

We call the premiums. They pay subscription fees. Also, they are usually assigned monthly or annually.

Certain types of health insurance have deductibles, which are monetary limits. Also, the health insurance company assumes the medical procedure or service cost in cases with such deductibles.

What is coinsurance?

We call coinsurance an arrangement made with the insurance company in which the responsibility for payment is divided by a percentage. Some subscribers may have coinsurance or co-pays with their insurance company. Coinsurance lists the beneficiary’s share with the payer’s company share. 

Imagine that the payer has a medical procedure that costs about $300. If so, imagine having an 80-20 coinsurance agreement with his insurance company. Then, the subscriber must pay $60 from the bill. After that, the insurance company produces the rest.

There are many types of Medical Insurance. They can be different for different occasions. Let’s see some of them now. Let’s see some of them now.

Compensation plans

An indemnity is a straightforward type of insurance where you pay a premium to an insurance company. Their key purpose is to protect you from medical expenses. Here you are often entitled to coinsurance, depending on your insurance plan. You know that most managed care options are costly. But an indemnity plan is usually less expensive than such care options.

What is a managed care MCO?

There are many managed care organizations like the one we mentioned above. Different organizations try to increase the quality of health services by using other methods to reduce the cost of medical insurance. In general, MCOs spend much less on indemnity plans than anyone else. But here, the opportunities for a patient to get treatment are limited. We can also divide MCO into three main types.

Health Management Organization

The most popular alternative to MCOs is Health Management Organizations (HMOs), which offer lower premiums to certain subscribers. Also, HMOs are the cheapest form of all MCOs. They are often flexible. Primary care physicians use these. 

Subscribers make referrals to specialists from primary care physicians. If the concerned subscriber finds an out-of-network Qassi provider, they will have to cover all costs related to that service out of their pocket.

Preferred Provider Organization (PPO)

It is an entirely different form of insurance than an HMO. That is, subscribers to a PPO can see any doctor or any other provider. Also, these have very high premiums. But they provide services with some flexibility for subscribers. If a PPO finds a provider in-network, they will reduce the amount.

Consumer Directed Health Plan (CDHP)

CDHP subscribers are eligible for PPO-like benefits in MCOs plans, as mentioned above, after they meet specific deductibles. This premium comes to you as a savings account that acts as a retirement fund. Here the reduction is relatively high.

Point of Service (POS) Design

In a POS plan, subscribers have access to various in-network medical needs but are allowed to go out-of-network for a higher fee. If a subscriber sees an out-of-network specialist, they pay more. Otherwise, they pay less when referred to the appropriate specialist by an in-network PCP.

Insurance Claims

Why should you know about the various types of Medical Insurance mentioned above? All those forms directly affect the claims. Imagine you are billing for some costly procedure. The patient who underwent the system can apply for the CDHP for less than the billing amount. To make a claim correctly, check the patient’s coverage and assign the deductible to the patient. They then give the payee the remaining amount owed to you.

If you have a good understanding of the ins and outs of any insurance plan, you will have an understanding of the coverage, deductibles, etc., that they provide you.

Medical Claims Filing Process

Health care providers may process the claim themselves. After a service, the doctor’s office collects your claim information from an insurance card with your data and sends it to a third-party administrator. Your claim form will then go through the insurance claims process. After the insurance coverage is done and the doctors are paid, you will get a bill for the remaining cost.

However, imagine a situation where you go to an out-of-network doctor. Then you have to make a claim yourself. For that, you should have to follow some steps.

Visit your Medical Insurance website with your credentials and find the correct claim form that aligns with the benefit plan. Please fill this out online.

Here, enter the essential information, such as service dates and medical codes you can get from the doctor’s office.

After the service:

  1. Check the deadline to complete your claim.
  2. Submit it before the relevant date.
  3. Make sure your plan covers the treatment you received.

You can also include a signed pre-approval form with your claim submission.

How do you react to a claim denial?

If you are notified that an insurance claim has been denied, you must discuss the reasons for the denial. Contact the relevant billing provider for that. Pay close attention to the reasons for claim rejection. that is,

Delay in your claim

  • Taking treatment without prior permission of the patient
  • Sending incorrect claim forms
  • You have filled the claim form incorrectly
  • Determining the services received as medically unnecessary

Whenever you have a claim denied, try to resolve it over the phone. If this is difficult, you can conduct a formal review with the insurance provider. From then on, they cancel your claim. Or you can try again to get the claim approved.

Claim forms are

HIPAA regulations state that you must complete the transmission electronically. You can complete claim forms electronically and manually. The rule does not say that you must submit all claims electronically. 

But it is preferable to do it electronically rather than manually. You may find that using manual claims is ideal for practices with fewer than ten employees. There are two common claim forms you can use at the same time—namely, CMS-1500 and UB-04. We cannot interchange these two forms.

The billing process is based on various variables for us. It includes many things, like the patient’s insurance plan and the payer’s guidelines for submitting claims.


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I am a medical biller, a blogger and have 20 years of experience in medical billing, medical billing management, and medical assistant. My background includes positions as a clinical medical assistant, medical records technician, medical office manager, biller, and coder. I am certified by the American Academy of Professional Coders (AAPC) as a Certified Professional Coder (CPC) and by the Practice Management Institute (PMI) as a Certified Medical Office Manager (CMOM). As an office manager/biller/coder, I was a member of the Michigan Medical Group Managers, Michigan Medical Billers Association. I also served as a committee member of the Michigan Osteopathic Association of Practice Managers Education Committee.

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