This blog will explain the overall medical billing process that works in the USA. We will spotlight every process, even though it is not the same for the specialties and medical billing services. This is because big hospitals and healthcare specialties’ billing rules differ.
What Is the Medical Billing Process?
The medical billing process defines all the work related to the healthcare services. It circles around the patient verification, keeping payment records and doing the constant follow up on the unpaid claims. It also takes care of the patient who takes care of the insurance portion directly covered by the patients.
Billing and coding are interconnected. They rely on each other, the coder assigns codes on the basis of clinical record. The biller uses those codes along with the other relevant details to prepare the claim for submission.
Revenue cycle management is the big umbrella that covers the whole billing cycle. The task might be from prior authorization to final submission and reporting to the healthcare providers.
| Function | What it covers |
|---|---|
| Medical coding | Choosing supported codes for the documented diagnoses and services |
| Medical billing | Preparing claims, reviewing payer responses, posting payments, and following balances |
| Revenue cycle management | Managing the practice’s financial work from patient access through account resolution |
When billing for the small healthcare practice, a small team or solo biller might handle the billing side. However, they need to get their hands dirty in all major parts of the billing and make sure nothing goes wrong in the claim timeline.
A Quick Look at the Medical Billing Workflow
It helps to look at the work in three parts before breaking it into individual steps.
| When the work happens | Main tasks | People usually involved |
|---|---|---|
| Before the visit | Registration, insurance checks, authorization, and referrals where required | Front office, verification staff, and clinical team |
| After the visit | Documentation, charge capture, coding, claim review, and submission | Provider, coders, and billers |
| After submission | Payer review, payment posting, follow-up, secondary insurance, and patient billing | Payer, billing team, and patient accounts staff |
The 12 steps below are one way to organize that workflow. Some practices combine tasks, and several activities can happen at the same time.
Step 1: Collect and Check the Patient’s Information
The front desk gathers the details the practice will use to identify the patient and bill the visit. These include the patient’s name, date of birth, contact information, insurance plan, member ID, and subscriber information.
A returning patient still needs a check. They may have changed jobs, moved to another plan, or received a new insurance card since the last appointment.
Small differences can create extra work later. A transposed digit in the member ID may stop the claim even when the patient has active coverage. Staff should compare the record with the current card and resolve conflicting information before it reaches billing.
If the patient is covered under someone else’s plan, check the subscriber details and relationship, too.
Step 2: Verify Insurance Coverage and Benefits
Step 3: Check Authorization and Referral Requirements
Prior authorization is the initial and most important step in healthcare billing. The front desk staff need to check and make sure that there is nothing left unfilled, like patient data, his name, insurance coverage and payment plans. There are some plans which need referrals or advance level notification.
Never ignore the record and unpaid claims until they are reimbursed. Also pay attention to the important details such as healthcare services rendered, location, dates and the number of visits for the medical procedures provided.
You also need to pay attention to the limited number of visits as the treatment continues. Sometimes, the healthcare reimbursement models are based on the basis of the number of patient visits. The billing team should be able to find the approval details without searching through the unrelated messages.
Clinical staff often provide the records the payer requests, while the authorization team handles the administrative work. Make that division clear so requests do not sit unanswered.
Step 4: Finish the Clinical Record and Capture the Services
After the patient leaves the doctor’s office, he hands over the documents to the medical billing company or the team working inside the office. The form includes the medical procedures. The billing specialist translates these medical procedures into the codes and thoroughly verifies the patient benefits.
An unfinished chart can leave a completed appointment unbilled. So can a charge that never transfers from the clinical system to the billing system.
Charge capture identifies the reportable services and items from the encounter. Charge entry places that information into the billing system. Depending on the software, parts of this work may happen automatically.
The billing team compares the appointments with the patient encounters for billing. If one visit has not been recorded, this might not be the only problem reported, you can also check the documentation issues, charge capture or system exception. If the billers are not sure of the notes provided, they can contact the healthcare providers for procedure clarification. If not done in that way, there might be ongoing reimbursement delays in coming days.
Step 5: Code the Visit and Enter the Charges
The coding team works from the clinical record. Physician practices use ICD-10-CM for report diagnoses and CPT or HCPCS codes for the medical procedures, services rendered and the overall supplies involved in the medical treatment.
Code sets change, so use the version that applies to the service date. CMS publishes ICD-10 files and guidelines. Hospital inpatient procedure coding uses ICD-10-PCS, which serves a different purpose from physician procedure coding. www.cms.gov.
The claim also needs the correct modifiers where supported, units, service dates, charges, place of service, and provider details. If these units somehow fail to match with the services rendered, the billing team needs to resolve these issues before final submission.
When the document is bogus or unclear, requesting to the healthcare practice establishment is mandatory. Choosing the code simply because it resonates or more likely to correct can hiders the reimbursements.
Step 6: Review the Claim Before Sending It
Step 7: Submit the Claim and Check the Response
Medical claim submission sends the prepared claim to the insurance payer, often through a clearinghouse. The clearinghouse checks and routes electronic claim data between the practice and the payer.
Professional electronic claims generally use the 837P format, while institutional claims use 837I. CMS’s transaction standards page lists the adopted standards. www.cms.gov.
After sending a claim, check the acknowledgment reports. The word “sent” in the practice management system tells you about transmission. You still need to establish whether the payer accepted the claim for processing.
For Medicare, CMS explains the 999 and 277CA acknowledgment reports. These checks happen before the final payment decision. www.cms.gov. If a claim is rejected at this stage, read the response, correct the issue, and confirm acceptance after resubmission. Keep the submission history and track payer deadlines. Medicare generally requires filing within one calendar year of the service date, with limited exceptions, under its timely filing guidance. www.cms.gov
Step 8: Follow the Claim Through Payer Review
Once the payer accepts the claim, it reviews the information and determines how to process the services. This is called adjudication.
The result may include payment, adjustments, a denial, or a request for more information. Until the practice receives a decision, the billing team needs to monitor the claim’s status.
Payer portals and electronic status tools can help. For Medicare, CMS describes 276 status requests and 277 responses. These serve a different purpose from the 277CA acknowledgment received after submission. www.cms.gov
Step 9: Post the Payment and Check the Amounts
When the payer processes a claim, the practice reviews the remittance information and records the payment, adjustments, and remaining responsibility. The electronic remittance advice, or ERA, explains how the claim was processed. The electronic funds transfer, or EFT, moves the money. Match the remittance, posted amounts, and actual deposit when reconciling the payment.
CMS’s remittance guidance explains the adjustment group codes, claim adjustment reason codes (CARCs), and remittance advice remark codes (RARCs) used to describe payment decisions. www.cms.gov.
A payment below the billed charge may be correct under the provider’s contract. To investigate a possible underpayment, compare the payment with the applicable allowed amount and other processing details. Also look for posting mistakes. A payment assigned to the wrong account can leave one patient with an incorrect balance and another with an unexplained credit.
Step 10: Work Rejections, Denials, and Outstanding Insurance Balances
An unpaid account needs a reason and a next action. The response depends on where the claim stopped.
What happened | What the billing team should do |
Front-end rejection | Review the error, correct the claim, resubmit it, and check acceptance. |
Denial after payer review | Read the remittance and follow the appropriate correction, reconsideration, or appeal process. |
Accepted claim with no final decision | Check its status and respond to any outstanding payer request. |
Possible underpayment | Review contract terms and processing details before asking for a payment review. |
Stedi’s claim processing documentation gives examples of these status differences. www.stedi.com.
Follow each payer’s instructions. For Medicare, CMS distinguishes appeals from corrections involving minor errors and omissions, which may be handled through a reopening. www.cms.gov.
Work accounts with filing or appeal deadlines approaching, and consider the balance and reason for delay when setting priorities.
Leave useful notes. “Called payer” gives the next employee very little to work with. Record what the payer said, any reference number, the action taken, and when the account needs another review.
Step 11: Handle Secondary Insurance and Patient Balances
When a patient has more than one plan, check which payer should process the claim first. The secondary claim may need information from the primary payer’s decision.
CMS’s coordination of benefits guidance explains how that information is exchanged. If a claim crosses over automatically, check what happened before sending another submission. www.cms.gov
Before even getting in touch with the patient, you need to check the primary and secondary coverage of the patient. Payment already paid by the patient. It is not always the patient fault that healthcare providers are not getting reimbursement on time.
The statement should show enough details for the patient to understand the primary charge the services insurance activity overall amount properly owned to the patient.
Patients may also receive an explanation of benefits from their insurer. CMS explains that an EOB is not a bill. Keeping that distinction clear can prevent confusion when a patient calls about a balance. www.cms.gov.
Step 12: Resolve the Account and Review the Results
At the practice level, reports help identify repeated problems. Look at unbilled visits, claim rejections, initial denials, older insurance balances, days in A/R, and payment variances. Use consistent definitions when comparing results. Choose a specific problem to investigate. If the same member ID errors keep returning, review registration. If completed visits are waiting on notes, work with the clinical team. Give someone responsibility for the change and check the results after it has been in place.
An Example: What Happens to a $200 Office Visit Claim?
Consider a fictional patient seeing an in-network physician. The service is covered, the deductible has already been met, and the patient’s coinsurance is 20%. There is no secondary insurance or upfront payment in this example.
The practice verifies coverage, completes the clinical record, and submits the claim. The payer accepts it and applies the provider’s contracted rate.
| Item | Illustrative amount |
| Billed charge | $200 |
| Contracted allowed amount | $120 |
| Contractual adjustment | $80 |
| Insurance payment, 80% of $120 | $96 |
| Patient coinsurance, 20% of $120 | $24 |
The posting team records the $96 insurance payment and the $80 contractual adjustment. It then checks the $24 patient responsibility and sends an accurate statement.
After the patient pays $24, the account reaches zero. Total collections are $120. The $80 contractual adjustment is not passed to the patient for this covered, in-network service. www.cms.gov.
These figures illustrate the payment calculation. Real amounts depend on the plan and provider contract.
Now imagine the member ID was entered incorrectly. The claim could be rejected before adjudication. Staff would need to correct it and confirm acceptance before expecting the payer’s decision. The visit itself has not changed; the billing error has added another round of work.
Where to Look When a Claim Is Stuck
A useful first step is finding the last completed action on the account. That narrows the search and helps you involve the right person.
Problem | Start by checking |
The visit is complete, but no claim exists | Note status, captured charges, and system exceptions |
The claim keeps getting rejected | The exact error message and the field causing it |
The system says “sent,” but the payer cannot find it | Transmission history and acknowledgment reports |
The payer accepted the claim, but payment is missing | Current status and outstanding requests for information |
The payment looks too low | Contract terms, allowed amount, adjustments, and units |
The patient disputes the balance | Remittance information, secondary coverage, and earlier payments |
For example, a completed appointment with an unsigned note calls for a documentation check. Calling the payer about that encounter will not help if the practice has yet to prepare the claim.
How Long Does Medical Billing Take?
The timing depends on the payer, the service, and the work needed before and after submission.
A claim held for documentation has a different problem from one awaiting payer review. Track the time between the service and submission, then between acceptance and the payer’s decision. Review unresolved balances separately.
Medicare has payment floors for clean claims. CMS’s claim status guide advises waiting at least 14 days for electronic clean claims and 29 days for paper clean claims before checking payment status. These periods do not promise payment on those dates. Commercial payer timelines differ. www.cms.gov.
If the practice only tracks one average for the whole cycle, it may miss the stage responsible for most of the delay.
Making the Billing Work Easier to Manage
Start with one recurring problem rather than changing every part of the process at once.
If rejected claims are accumulating, assign someone to review the responses and route corrections. If the issue is unpaid accepted claims, build the worklist around payer status and deadlines. If patient calls are increasing, check statement accuracy and payment posting.
Keep account notes clear enough for another employee to continue the work. Staff absences should not require someone to reconstruct the entire claim history.
Software can help with repetitive tasks and exception reports. A person still needs to review the exceptions and decide what happens next.
Patient information also needs appropriate protection. Limit access according to staff roles and use secure methods to share records. HHS’s minimum necessary guidance explains the standard and its exceptions. www.hhs.gov.
Find Where Your Billing Process Needs Attention
If claims remain unpaid, start by finding the step holding them up. Unfinished notes, rejected submissions, unresolved denials, and posting errors each need a different response.
Swift Billing Solutions supports physicians, clinics, and medical groups with claim submission, payment posting, denial management, and A/R follow-up. Talk with our team about the tasks slowing down your billing and the reporting you need to track progress.
Frequently Asked Questions
The main steps include registration, eligibility checks, authorization where required, documentation, coding, charge entry, claim review, submission, adjudication, payment posting, follow-up, and patient balance resolution. Practices group these tasks differently, so the number of steps varies.
Yes. Registration and insurance checks usually begin before care. That gives staff time to clarify information and identify applicable authorization, referral, and financial requirements.
A clean claim contains the information needed for processing without additional development. Medicare has a specific definition explained in CMS’s claim status guidance. A claim passing a software scrub still needs payer review; the scrub alone does not establish payment eligibility. Checking Medicare Claim Status.
A front-end rejection occurs during submission or acceptance checks. A denial follows payer adjudication. Review the actual response because payer terminology can vary, then follow the appropriate correction or appeal process.
Patient responsibility depends on the reason for denial, coverage, provider contract, required notices, and applicable law. Confirm those factors before sending a statement. Denied insurance balances should not automatically move to the patient.
Yes. A practice can outsource selected tasks or broader billing support. The arrangement still needs clear responsibilities for patient information, provider documentation, authorizations, claim follow-up, and reporting.