What are Medical Claims, and How They Work?

In the current healthcare setting, providers must submit and manage medical claims to receive payment for their services. Medical claims are the most common way to request payment from health insurance for services provided to patients. Medical billing consists of one major component. The patient visit and the sequence in which the service provider makes payments. Knowledge of the definition of medical claims and their possible inclusion in a business transaction is of utmost importance to a medical provider and a patient as it helps alleviate payment delays.

In this post, we will define medical claims and explain their workings. Effects of medical claim billing services on medical practitioners’ revenue cycles.

What are Medical Claims?

Health businesses receive payment from health insurance firms for providing healthcare services to individuals through structured medical claims. Patients seek medical services from physicians, undergo operations, or receive other necessary medical procedures. Following the provision of care, healthcare providers file a request for reimbursement with the patient’s insurance for the services provided. Such a payment request contains details on the medical procedure provided and diagnosis numbers. And the costs and other expenditures incurred, amongst other things.

There are two types of medical claims:

• First-party claims: These can be defined as claims that the patient herself makes directly to the insurance provider. This usually occurs in cases where the healthcare provider does not submit a claim for the patient.
• Third-party claims are the majority of claims. In these, the health care provider files the claim with the service purchaser, the patient’s insurance. The patient usually does not handle the claim.

Then, the insurance company reviews the claim to decide the amount it will pay according to the insured person’s plan. The patient bears any outstanding amount beyond what the insurance covers.

How Do Medical Claims Work?

Processing claims in the medical field entails many steps involving the service provider. The insurance provider and, at times, the patient. However, this process can be simplified into several stages, as discussed below, on a much broader scale.

Patient Registration and Insurance Verification

The identification of a patient becomes the primary concern for medical facilities that bill patients. In this context, the healthcare provider requests the individual’s details to make an appointment and/or access medical services. Such as their full name, date of birth, and, most notably, health insurance details.

For any services that have yet to be provided, the practitioner checks if the patient’s insurance will cover the expenses. This step, known as insurance verification, is essential to avoid claim denials at later stages of the process.

Medical Coding

After a patient has undergone the necessary medical procedures. The health care provider’s obligations to that patient do not cease or limit themselves to the respective treatment. Still, they also record all the services rendered. They record such services in the respective medical codes using systems such as ICD-10. This refers to the International Classification of Diseases 10TH Edition for diagnosing illnesses and procedures coded using CPT. It stands for Current Procedural Terminology. Insurance firms may not be able to understand the services provided without the correct codes. They could base the provider’s reimbursement on speculation.

Claim Submission

Once you have coded the services, you will claim them from the insurer. Most providers prefer to make submissions in electronic claims to ease the process and avoid mistakes. However, you can also submit using paper claims. One of the primary characteristics of such services is that they often prepare and electronically submit the claims to the insurance companies. All these advanced medical billing solutions use intricate medical billing software and their proficient coders to fill and submit all claims promptly and accurately, ensuring they meet targets for payments quickly.

Claim Adjudication

Once the insurance company receives the claim, it goes through the process of claim adjudication. The above process assesses the legitimacy of the given insurance claim, as well as the services availed of by the patient within the limits of their insurance. In addition, it addresses coding discrepancies, policy coverage of the patient, and healthcare services provided. 

If the claim is proper and valid, the insurance company assesses the extent of responsibility it will assume regarding the patient’s medical coverage. When identifying a problem, payment may disallow or exclude the claims.

• Rejection of claims: These are usually erroneous claims containing wrong details about the patient or do not contain required codes and hence issues to the provider for correction prior to resubmission. 
• Denial of claims: This is when the insurance company approves all other claims but withholds approval for payment of the services rendered, usually because the procedure is not included in the patient’s policy or pre-authorization wasn’t obtained.

Reimbursement

After the insurance settles the claim, the healthcare provider receives payment for the covered services. The patient’s health insurance policy determines the value of the claim resolution, including deductibles, co-pays, and co-insurance.

The balance not paid by the insurer, on the other hand, falls upon the patient. The provider may send a direct bill to the patient for that portion.

Follow-Up and Denial Management

Whenever a practitioner rejects or determines a claim to be unwarranted, they must take the necessary steps to follow up. In numerous instances, alter the versions of the claims and resubmit them. At this level, medical billing services incorporate undertakings as they follow all the claims. Reasons for non-disbursement and negotiations with the respective insurance companies to settle them. The management of commercial denial of healthcare claims is important for the healthy operation of a revenue cycle. Service providers must avoid letting any denials for reimbursement sit for any prolonged period and take action on them. It helps prevent any loss of money. Effective denial management can greatly minimize the incidence of cases with a delay in reimbursement. And enhance the processes involved in handling medical claims.

The Role of Medical Billing Services in Medical Claims Processing

Healthcare providers must go through a potentially lengthy process to guarantee payment for their services during the medical claims process. They must ensure accuracy and persevere to ensure they are paid. Medical billing services help providers deal with this complexity by carrying out the following activities, among others: 

• Claims Submission: Medical billing services ensure that all claims are filled correctly and submitted on time, lowering the probability of rejection or denial. 
• Insurance Verification: Such services check if the patient is eligible for the services or procedures and if there is appropriate coverage prior to the claims being submitted, significantly minimizing mistakes and delays. 
• Denial Management: Medical billing specialists track rejected or denied claims, find out why they were denied, and assist providers in fixing the problem as soon as possible.
• Revenue Cycle Management: These billing services cover the whole revenue management cycle, from patient registration to payment receipt, aiding in ensuring that providers have healthy collections. 

By transferring these responsibilities to trained medical billers. Healthcare practitioners can direct their energies toward caring for patients without worrying about claim generation and the risk of late payment.

Common Reasons for Medical Claim Denials

For healthcare professionals, it is important to find out why medical claims are denied so as to reduce the chances of revenue loss. Some of the common reasons for claim denials include the following: 

1. Coding Errors: Claims can be rejected or denied due to incorrect or incomplete codes.
2. Missing Information: Claims can be rejected if necessary information such as patient name, date of birth, or phone number is omitted.
3. No Pre-Authorization: Some procedures need the insurance company’s prior approval. Pre-authorization failing to be duly obtained can also result in denial of a claim.
4. Eligibility Issues: The claim will be denied if the patient is not active on the insurance member list or if services rendered are not included in his or her cover.
5. Multiple Claims: It may be a case of resubmitting the same previously denied or processed claim.

Conclusion

Healthcare organizations heavily rely on medical claims as part of their revenue cycle management, ensuring that they receive payment for the services they provide. Although this process appears complicated, it is of great importance in ensuring the financial viability of any healthcare institution. Each component of the system, from correct coding to denial management, requires detailed focus and a high level of skill. 

Medical billing services streamline the medical claims process, allowing healthcare providers to submit claims accurately. Handle claim denials and keep revenue flowing. Thus, by outsourcing billing jobs, healthcare institutions can focus more on clinical services rather than worrying about how best to manage their claims. This is why we will do it efficiently and effectively.