Medical Claims: What you need to know

Medical claims are some of healthcare organizations most valuable data sources. All payor claims contain detailed diagnosis and procedure information for any billable patient visit.

Healthcare organizations can use this claims information to trace referral patterns, improve population health, increase sales, and accelerate their go-to-market strategy. Doing all this without fully understanding medical claims data can be difficult. In this blog, we’ll help you learn the basics about medical claims: their origin, their origin, and their meaning.

What is a medical claim?

A medical claim is a bill that healthcare providers submit to a patient’s insurance provider. This bill contains unique medical codes detailing the care administered during a patient visit. The medical codes describe any service that a provider uses to render care, including:

A diagnosis
A procedure
Medical supplies
Medical devices
Pharmaceuticals
Medical Transportation

When a provider submits a claim, they include all relevant medical codes and the charges for that visit. Insurance providers, or payors, assess the medical codes to determine how they will reimburse a provider for their services. In a value-based care model, length of stay and 30-day readmissions impact provider reimbursements.

What information does a medical claims file contain?

Every medical claims file contains details specific to each patient and patient encounter. In a medical claims file, this information is split into two parts: the claim header and the claim detail.

Claim header

The claim header summarizes the most essential information in the claim. This includes confidential patient data like date of birth, gender, and zip code. The claim header also contains details like:

National Provider Identifier (NPI) for the attending physician and the service facility
Primary diagnosis code
Inpatient procedure, if applicable
Diagnosis-related group (DRG)
Name of the patient’s insurance company
The overall charge for the claim

Claim detail

The claim detail includes information about secondary diagnoses or procedures administered during an inpatient hospital stay. Each new claim detail, or service record, contains the following information:

Date of service
Procedure code
Corresponding diagnosis code
National Drug Code (NDC), if applicable
Attending physician’s NPI number
Charge for the service

What is a medical claims clearinghouse?

A medical claims clearinghouse is an electronic intermediary between healthcare providers and payors. Healthcare providers transmit their medical claims to a clearinghouse. Clearinghouses then scrub, standardize, and screen medical claims before sending them to the payor.

This process helps mitigate errors in medical coding and reduces the time to receive provider reimbursement. If a claim contains medical coding errors or fails to meet formatting requirements, the payor could reject it. This means that the claim would be resubmitted, delaying provider reimbursement.

The service that clearinghouses provide is also beneficial for payors. Clearinghouses format medical claims data according to the unique requirements of each payer. Standardizing the data in this way helps payors streamline their medical billing process.

What is the medical billing process?

The medical billing process contains seven essential steps. These steps trace the entire claims journey from the moment a patient checks in at a healthcare facility, to the moment they receive a bill from their insurance provider.

1. Patient Registration

Patient registration is the very first step in the medical billing process. Registration occurs when a patient gives their provider personal details and insurance information.

2. Insurance eligibility verification

After a patient has registered, the care provider must verify the patient’s insurance. This helps to confirm that the patient has adequate coverage for the care that they will receive. Verification helps care providers determine coverage and eligibility, and assess the following:

What the patient’s policy benefits are
Whether the patient has accumulated co-pay, deductible, or out-of-pocket expenses
Whether the patient’s insurance provider requires pre-authorization

3. Medical coding

Medical coding is a critical step that occurs after it has been administered. Care providers transcribe their notes and other clinical documentation into standardized medical codes. Some of the most common medical coding systems include:

Diagnosis-related group (DRG)
Current procedural terminology (CPT)
Healthcare Common Procedure Coding System (HCPCS)
International classification of diseases (ICD-10)
National Drug Code (NDC)

Care providers use these codes to describe which medical diagnoses, procedures, prescriptions, and supplies they administer and why. The specificity of medical codes also helps providers describe the patient’s condition.

4. Charge entry

Charge entry is the last step before care providers submit their claim for payment. Providers or medical billing specialists list the charges that they expect to receive.

5. Claims transmission

Claims transmission is when claims are transferred from the care provider to the payor. In most cases, claims are first transmitted to a clearinghouse. The clearinghouse reviews and reformats medical claims before sending them to the payor.

In some cases, healthcare providers send medical services claims directly to a payor. High-volume payors like Medicare or Medicaid may receive bills directly from providers. This helps to reduce the time that it takes to receive reimbursement.

6. Adjudication

Adjudication occurs once the payor has received a medical claim. The payor evaluates the claim and then decides whether the medical claim is valid and how much of the claim they will reimburse. If the claim is accepted, the payor will issue provider reimbursement and charge the patient for any remaining amount.

The payor may deny the claim if the patient has insufficient coverage or did not get pre-authorization for service. If a payor denies a medical claim, the patient may have to submit an appeal to gain coverage for the care costs.

The payor may also reject a claim. This happens when the claim does not meet formatting requirements or contains an error in medical coding. Rejected medical claims can be resubmitted for payment once the errors have been corrected.

7. Patient statement

The patient statement is the final step in the medical billing process. Once the payor has reviewed a medical claim and agreed to pay a certain amount, they bill the patient for any remaining costs.

Careers in Medical Billing and Coding

A career in medical billing and coding offers various opportunities within the healthcare industry. Medical billers and coders work in physician offices, hospitals, and other healthcare facilities. Certified professional coders (CPC) and other professional coders play a vital role in the revenue cycle management of healthcare organizations.

The American Academy of Professional Coders (AAPC) and other organizations provide certification and training for those interested in this career path. According to the Bureau of Labor Statistics (BLS), the demand for medical billers and coders is expected to grow, making it a promising career option.

Conclusion

Understanding medical claims data is crucial for healthcare organizations to optimize patient care and streamline their practice management processes. Medical terminology and insurance claims knowledge are essential for professionals in this field. Whether you are an aspiring certified professional coder (CPC) or already working in the healthcare industry, continuous learning is key to staying updated with the latest in medical billing and coding.

By mastering the intricacies of medical claims, healthcare providers can enhance their practice management, improve patient outcomes, and ensure efficient revenue cycle management.

The Academy of Professional Coders (AAPC) offers resources and certifications that are invaluable for those pursuing a career in this essential aspect of healthcare.

Medical Claims: What you need to know