Medical Billing: Background and Medical Billing Providers

Medical Billing: Background

Purchasing medical insurance is a common practice for those wise enough to provide for the possibility of falling sick and thus need care. There are also health care providers who provide the medical services for such person. However, the bills for those covered by insurance is paid by the insurer, not the insured. In the United States of America, it is common for companies to provide medical billing services and they act as intermediary between the health care providers and the insurance companies. This allows those who provide medical care to concentrate what they do best and leave the business of billing and collection to those providing medical billing services.

Medical billing is a complicated process which start with the patient visiting the doctor who will record the patient's medical history, symptoms and where appropriate, a diagnosis and treatment. According to Wikipedia, the level of service is determined by qualified staff and translated into a five digit procedure code from the Current Procedural Terminology. The verbal diagnosis is translated into a numerical code as well, drawn from the International Classification of Diseases, Ninth Edition, or ICD-9. These two codes, a CPT and an ICD-9. These procedure and diagnosis codes done by the biller who then transmit the claim to the insurance company frequently electronically by formatting the claim as an ANSI 837 file and using Electronic Data Interchange to submit the claim file to the insurer either directly or via a clearinghouse.

The claim will be evaluated by the insurance company based on patient eligibility, medical service provider credentials and the necessity of the medical treatment, and if approved, payment will be made. Those not meeting their criteria will be rejected. The medical provider (or the medical billing service), upon receiving the rejection, study it and make corrections where applicable and resubmit a claim. This may occur multiple time and may result in full or partial reimbursement.

The frequency of rejections, denials, and claims adjustment ("provider write off" or "contractual adjustment") is high and obviously a physician will not like to be burdened with such paperwork and hassle of negotiating with the insurance companies.

Medical Billing Companies

The convoluted process described above may be the reason why there are many medical billing companies acting as intermediary between the medical service provider and the insurance companies. One of them Prefered Health Resources which probably had been founded in 1997 based on the year the co-founders started serving. Prefered Health Resources, quoted a recent article in Dermatology Times which stated that a claims adjustment rate of between 20% and 35% is considered good and acceptable. Prefered Health Resources claims to having achieved an adjustment rate which is consistently lower, in the case of Medicare, as low as 12%. Having a proper software, Preferred Health Resourses Practice Management System, to help them provide the medical billing services probably helped them achieve such commendable claims recovery rate.