The Medical Billing Process - Step By Step

Detailed medical billing instructions, with screenshots.

1. Patient Registration (IF you are on the front lines)

Greet the patient upon arrival.

If the patient is new or hasn't been in for quite a while, give them a registration form (This contains all the demographic information needed in the next few steps).

Give the patient the HIPAA Privacy notice after the office policies in regards to Protected Health Information have been explained (this will need to be signed by the patient).

Make a copy of the Patient's Insurance Card (front and back).

Create a new patient account or update an existing account using the information provided by the registration form.

Create a new encounter form and attach it to the patient file (This is usually done in offices that are still using paper methods).


2. Insurance Verification/Authorization

This is to be done before the patient is seen by the doctor!

You need the patient's name, the policy holder's name and date of birth, group number, and the policy number. With the exception of the patient's name (if they are not the policy holder) this information is located on the insurance card.

Call the number for the insurance provider; this information is located on the back of the patient's insurance card. Ask to verify medical coverage.

The representative will ask you a series of questions. Provide the information required. Insurance verification information will be provided. This may include such things as the policy's effective dates, co-insurance, deductibles, etc.

Finally, request the information to be emailed or faxed to your office. Place a copy in the patient's medical records for future use.

You can also verify insurance information using the office Practice Management System.

Start by opening the Online Eligibility button from the main menu of the PMS. Open the patient's account. The patient's information is already entered for you. Check for any errors and make sure the correct insurance type (primary, secondary, or other) is selected.

If everything is correct, click the Send to Payer button to begin the verification process. When the transfer is complete, click the view button to see the results.

The information provided by the Online Eligibility Report includes the Insurance Provider name, Policyholder name, status (hopefully it states ELIGIBLE), patient's name, patient's DOB, patient's gender, office co-pay/deductible, account number, and the healthcare provider's name.

Click the Save button to place it in the patient file and close the window.


3. Encounter Form

The encounter form contains both procedural and diagnosis codes which correspond with the patient's examination. It is filled out by the physician after the patient encounter.

Make sure the encounter form is filled out completely. Identify any additional notes the physician has made.

Parts of the encounter form:

  • Patient name - the name of the patient receiving the services.

  • Reference number -identifies and matches documentation of services posted to the PMS.

  • Place of service - where the encounter took place - office, hospital, homecare.

  • Date of service - date of the patient encounter.

  • Procedure list - lists the practice's most common procedures and their codes.

  • Miscellaneous - where any procedures not listed can be written in.

  • Amount paid - deductibles and copays made by the patient at the time of the encounter.

  • Diagnoses not listed - are where any unlisted diagnosis are filled in.

  • Diagnoses list - the physician places a "1," "2," or "3" on the line to the right of the diagnosis code to represent the primary, secondary, and tertiary diagnoses.

  • Advanced Beneficiary Notice (ABN) - lets patients know when Medicare is likely to deny payment for certain services.

  • Doctor's Signature - signature to confirm the information the encounter form contains.

  • Patient return - indication of when the patient should be seen again.

  • Practice and physician information - practice demographic information and EIN number.


4. Coding

First identify any diagnosis listed on the encounter form. If a diagnosis cannot be assigned, note any symptoms as reasons for the visit. Also, locate any procedures performed during the patient's visit; these are also found on the encounter form.

To code for the diagnosis you need the ICD-9-CM code book.

First look up the name of the diagnosis in the alpha-index followed by the tabular index. Verify any diagnoses codes found on the encounter form. Each diagnosis must match the code description.

Always locate the term you are looking for in the alpha-index before trying to find it in the tabular list; this will keep errors to a minimum.

To code for any procedures, drugs, or other services provided to the patient use the CPT code book.

The encounter form is the first place to look. There will be codes for the type of encounter as well as codes for the procedures performed during the patient encounter.

First look up the procedures in the alpha-index followed by the numerical index. If you are not familiar with a procedure, start your search by the anatomical body system.

READ CAREFULLY. The CPT code descriptions can be very tricky. Just like the ICD-9 codes, CPT codes have to match exactly. Verify any codes found on the encounter form.


5. Demographic Entry

Most of this section should have been done at registration and is located in the practice management system (PMS).

The following steps may vary depending on the type of PMS your office utilizes.

Assuming you work in a computerized office, open the PMS, click on patient registration, and find the patient you are dealing with.

Input any information required including the patient's name, social security number, address, gender, marital status, date of birth, employer/school, phone number, and whether the patient is the guarantor (person responsible for paying medical expenses).

Next enter the spouse/parent/other information. Usually this consists of their name, gender, birth date, Social Security Number, address, employer, and whether they are the guarantor.

If it is not already done, enter all the data for the patient's primary insurance. Include the type of plan (HMO, PPO, BCBS, etc.), the patient's relationship to the policy holder (self, spouse, child), the policy holder's information (name, address, DOB, phone number, etc.), the office co-pay, etc.

6. Charge Entry

Refer to the encounter form for required information.

Open the Practice Management Software and click on the procedure posting button. Open the patient's account information and click the add button.

Enter the reference number, service provider, place of service, date of service, procedures, diagnoses, modifiers, insurance to be billed, and whether the encounter was related to an accident.

This has to be done for each CPT code. The PMS will automatically generate the charge for each CPT code used.

When entering the diagnosis codes, be sure to enter the primary code in the first spot (usually box A) followed by the secondary code (box B) and so on.

When you are finished with the entries, check them for accuracy. Click the post button when entry is completed.

7. Claims Submission

Each insurance provider may have different requirements for information provided on claim forms. It is beneficial to check with the insurance provider regarding the specific process required.

The 2 most widely used methods to submit a claim is electronically or by paper.

Electronic claims are more efficient in terms of reimbursement. The office's PMS has a claim preparation function to help you process a claim.

The following steps may vary with each PMS:

  1. Click the Insurance billing button in the main menu.

  2. Select the following settings: sort by patient name; bill by the healthcare provider you are processing the claim for (bill by all if you are sending a batch).

    Select the service dates by entering them in the "From" and "trough" fields; select the patient name and patient account number (select all in both fields if sending a batch); check "electronic" in the transit type field; check which billing option you are using - "primary" for primary insurance, "secondary" for secondary insurance, and "other" for any other payers; select which payer is being billed.

  3. Click the Prebilling Worksheet button to view the report of claims and check for any errors. (Return to patient account to make any corrections.) If no corrections are needed, close this window and proceed to the next step.

  4. Click generate claims button. View the claim form and check for any errors. If no corrections are needed, close this window and proceed to the next step.

  5. Click on the Transmit EMC button to send the claims to the insurance provider/clearinghouse. An automated upload will start and display a Transmission Status window. The transmission is complete when the window says that is has disconnected.


To submit a paper claim manually, enter all the necessary information on the CMS form required. Once completed, review the claim for any errors. If there is no errors, mail the claim forms and any attached documentation to the insurance provider. If possible, mail as a certified letter; this allows for easier tracking.

A Practice Management System may also be used to generate paper claims. The following steps may vary with each PMS:

  1. Click the Insurance billing button in the main menu.

  2. Select the following settings: sort by patient name; bill by the healthcare provider you are processing the claim for (bill by all if you are sending a batch); select the service dates by entering them in the "From" and trough" fields; select the patient name and patient account number (select all in both fields if sending a batch); check "paper" in the transit type field; check which billing option you are using - "primary" for primary insurance, "secondary" for secondary insurance, and "other" for any other payers; select which payer is being billed.

  3. Click the Prebilling Worksheet button to view the report of claims and check for any errors. (Return to patient account to make any corrections.) If no corrections are needed, close this window and proceed to the next step.

  4. Click generate claims button. View the claim form and check for any errors. If no corrections are needed, close this window and proceed to the next step.

  5. Click on the Print Forms button to send the forms to the printer. Check the claim for any errors.

  6. Mail the claim to the insurance provider using the address shown at the top of each form.


8. Reimbursement

After payment is received by the insurance provider, review the remittance advice (RA) to make sure the correct amount was paid.

If the payment is correct, follow these simple steps to apply the payment to the patient's account (note - these steps may vary depending on the PMS utilized.):

  1. Open the main menu and click the Posting Payments button. The patient selection window should open.

  2. Select the patient the reimbursement applies to by single clicking their name, then clicking the Apply Payment button.

  3. Refer to the RA for the patient and find the first CPT code that payment was applied to. Single click the procedure charge area containing the first CPT code. Then, click the select/edit button. The balance due should show in the Balance Due field.

  4. Enter the date of posting in the Date field. Select PAYINS in the Payment Type field. Enter the ICN provided by the RA for the patient in the Reference number field.

  5. Enter the reimbursement amount in the Amount Paid field. Press enter. The new balance should show in the Balance Due field.

  6. If applicable, the adjustments are entered next. Select ADJINS in the Adjust field. Then, enter the amount of the adjustment in the Adj. Amt. field. Press enter. The new balance should show in the Balance Due field.

  7. Click the Post button to apply the payment/adjustment.

  8. Repeat steps 1 - 7 for each additional CPT code included on the RA for the patient.

  9. When all payments are applied, click on the view ledger button to review the postings. Check for any errors.

After the patient's account is updated, notify the patient of the remaining balance.







If you found this page useful, please click "Like"! Thanks.