What Is Medical Billing?

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medical billing

You’re most likely aware of what billing is. However, billing in the healthcare industry is a bit more complicated.

Medical billing is the process that ensures that healthcare providers get paid for their hard work. In short, billers submit claims to insurance companies in order to obtain payments for services rendered by healthcare providers and organizations.

Once they translate the services into billing claims, they continue following the progress of the claim so that the healthcare provider can receive reimbursement for the work they performed. 

Let’s explore medical billing in a little more detail to find out how billers simplify the payment process in a healthcare organization. 

The role of medical billers

Medical billing is a process that comes with a lot of responsibilities. Billers are the link that connects patients, insurance companies, and healthcare providers. Billing is one of those things that happen behind the scenes that patients know nothing about because their point of contact is a single person – the physician.

The process starts with collecting the necessary information, such as patient demographic, medical history, insurance coverage, and the services provided to the patient.

Medical billers are the ones who rummage through the medical charts and insurance plans of the patient to validate the coverage of services. Only then do they generate the claim and submit it to the insurance company. Next, the insurance company approves the claim and sends it back to the biller with the amount they agreed to pay. 

Billers also have to prepare the patient’s bill. They deduct the amount covered by insurance from the total cost, and factor in deductibles, copays, and outstanding patient balances.

Once all payments get posted and reconciled, medical billers finally send an invoice to the patient. 

Medical billing is a multi-step process that needs to be taken care of in as short of a time frame as possible. Most state laws dictate that insurance companies have to pay claims within 30 and 45 days. Insurance companies often impose claim deadlines. If billers miss those deadlines, their claim will get denied without the option to appeal.

It’s just not deadlines that medical billers need to worry about. They also need to be as precise and effective as possible. Errors at any stage of medical billing can have disastrous consequences, both financial and in terms of administrative workload.

Medical billing can be broken down into two stages: front-end and back-end billing. 

Front-end medical billing

This stage takes place pre-service and involves front-office staff. The staff completes all the patient-facing activities that are essential for accurate medical billing. The front-end stage consists of the following activities:

1. Registration

The processing of the claim begins as soon as the patient makes an appointment. This is when the staff obtains information such as patient demographics and insurance information. 

Alternatively, the patient can also fill out a registration form once they arrive at the location.

Collecting accurate data is crucial in determining the patient’s eligibility and benefits.

2. Verifying insurance eligibility

The front office staff has to confirm if the patient’s health plan covers the services. This process includes verifying eligibility effective dates, plan benefits, patient coinsurance, copay, and deductible in regards to the place of service and specialty.

Pre-authorization is often required as a contingency of payment for medical services outside the primary care setting. 

3. Point of service collections

Next, the staff gets informed of the financial responsibility of the patient. Thus, the biller can collect the deductible, coinsurance, copay, or full balance while the patient is still present (either during check-in or check-out).

4. Superbill generation

A superbill or an encounter form is generated for each patient encounter. It contains patient demographics, an area where the physician can write diagnoses, and a list of common services.

When the encounter is complete, the provider ticks the appropriate boxes and signs the form to corroborate that the services were performed and may be billed.

5. Checkout

At this stage, the staff makes a follow-up appointment and ensures that the encounter form is filled out.


As the patient checks out, medical records are sent to the medical coders who convert the information into medical billing codes.

Back-end medical billing

The level of complexity increases drastically during the back-end billing. It starts after the patient visit and once the medical coders have completed their tasks. The billing process then continues in the back office, and it consists of:

1. Charge entry

By using the information in the encounter form, the charge entry staff inputs charges, along with any payments made by the patient, into the practice management system.

This is the opportunity to check if there is any missing information in the superbill. For instance, if any of the diagnoses are missing, they’ll have to ask the physician for more information.

The charge entry staff also reviews charge captures to ensure all receipts get added when patient charges are reconciled

2. Claim generation 

With the superbill data available, medical billers can finally prepare the claim by including all the patient information, essential provider information, and the dates of the service. 

All of this information is converted into a claim and sent to the insurance provider. 

3. Claim scrubbing

Scrubbing is a process used to detect any errors in medical billing codes. Sometimes, medical billers complete this by themselves with the help of claim scrubbing software that detects errors automatically.

It’s also possible to send the claim to third-party companies known as clearinghouses that specialize in reviewing medical claims.

4. Claim submission

Once the claim is ‘’scrubbed’’, it can be submitted to the insurance company. Nowadays, this process is usually completed automatically through software that meets electronic filing requirements.

Alternatively, medical professionals can file claims through clearinghouses.

5. Claim tracking

Once the insurance company receives the claim, adjudication officially begins. Adjudication is a review process in which the insurance company decides whether the claim is valid and if they should pay it.

Medical billers track the status of the claim daily.

Once the insurers complete the adjudication, they generate two statements:

1. Electronic Remittance Advice (ERA) is sent to healthcare providers that details which services were paid, whether additional information is required, or why the claim was denied.

2. Explanation of Benefits (EOB) sent to patients.

6. Payment posting

Once the ERA, accompanying checks, and direct deposits are received, healthcare providers are required to post payments.

Medical billers are crucial in this process as they match payments to the respective accounts and reconcile payments against the claim. They also confirm if the data from two insurance statements matches the payments.

7. Patient payments

When ERA gets posted, patient statements get set to all outstanding balances. These statements contain the date of service, information about services performed, insurance reimbursement received, as well as which payments were collected, and why the patient’s balance is due.

Once a patient makes the payment, it needs to be posted and balanced. 

8. Denial management

Denied claims happen all the time in medical billing. The ERA contains denial codes and an explanation of why the claim was denied. The billing staff can then use this information to check whether more information is required and if they can correct any errors, or if they should appeal the denial. 

9. A/R collections

Medical billers are also in charge of managing delinquent accounts and following up with patients who didn’t make the required payments after a set period. 

This process can include offering financial conveniences to patients to accelerate collections, for instance, payment plans or online payment methods.

Once the payment is successfully collected, medical billers submit the revenue to A/R management. 

The backbone of healthcare

Medical billing is the bridge between a medical provider, the patient, and the insurance company. Without billers, the payment process in healthcare would be a mess as doctors wouldn’t be able to focus on treatment, and patients would have another worry on top of recovery.

Doing this job isn’t easy as it requires a wide range of skills, so the choice of a medical billing professional does matter. Medical billers not only make the lives of physicians and patients easier, but they also optimize revenue performance for the healthcare provider. 

So the next time you’re at the doctor’s office, remember just how important these underrated medical professionals are and take a moment to appreciate their hard work.