Billing Process

A practice that has interactions with the patient must now under HIPAA send most billing claims for services via electronic means. Prior to actually performing service and billing a patient, the care provider may use software to check the eligibility of the patient for the intended services with the patients insurance company. This process uses the same standards and technologies as an electronic claims transmission with small changes to the transmission format, this format is known specifically as X12-270 Health Care Eligibility & Benefit Inquiry transaction. A response to an eligibility request is returned by the payer through a direct electronic connection or more commonly their website. It is called an X12-271 "Health Care Eligibility & Benefit Response" transaction. Most practice management/EMR software will automate this transmission, making them hidden from the user.

This first transaction for a claim for services is known technically as X12-837 or ANSI-837, and it contains a large amount of data regarding the provider interaction as well reference information about the practice and the patient. Following that submission, the payer will respond with an X12-997, simply acknowledging that the claim's submission was received and that it was accepted for further processing. When the claim(s) are actually adjudicated by the payer, the payer will ultimately respond with a X12-835 transaction, which shows the line-items of the claim that will be paid or denied; if paid, the amount; and if denied, the reason.

Due to limited technology, many payers (especially states' Medicaid) still adjudicate claims manually; this results in significant delays — up to 48 hours or even weeks to issue 835 responses to properly submitted 837 transactions. In many cases this manual processing subverts the entire point of Congress in mandating a standardized electronic billing process. These delays can also present catastrophic problems to the availability of healthcare for those patients with difficult payers — such as happened in California with the state Medicaid program referred to as "Medi-cal".

In order to be clear on the payment of a medical billing claim, the healthcare provider or medical biller must have complete knowledge of different insurance plans that insurance companies are offering, and the laws & regulations that preside over them. Large insurance companies can have up to 15 different plans contracted with one provider. When providers agree to accept an insurance company’s plan, the contractual agreement includes many details including fee schedules which dictate what the insurance company will pay the provider for covered procedures and other rules such as timely filing guidelines.