Sample Medical Science Research Paper on Understanding Medical Contract Compensation and Billing Guidelines

Understanding Medical Contract Compensation and Billing Guidelines


            Medical billing or coding is the process of making a follow up and submission of claims regarding health insurance companies with an anticipation of receiving payment for rendered services by a provider of healthcare (Cox, 2005).The healthcare service is thus translated into a billing claim. Medical billing process is also used by insurance companies for both government and privately owned companies. The contents of a medical coding report are limited to the prices, diagnosis and treatment admitted therein. The medical billers are recommended, not by law though, to take a range of exams in order to get satisfied. For example they can take exams such as RHIA and CMRS set of exams, just to pin point a few. Moreover, the requirement for the certification schools is to provide a strong theoretical ground for the specific students interested in the medical billing field.

            The medical research and billing is a very important process. Matters regarding to health are significant and hence care ought to be taken while jotting down the prices, dispensed treatment and the diagnosis of a patient. This can be used for further review of the patient’s history. Historically in the United States medical billing was done on a piece of paper. However, the introduction of the medical practice management software (health information systems) managing large amounts of claims has become a possibility and this has enhanced efficacy. Software Companies have sprung up to offer the medical billing software with others offering services on their websites negating individual licensed package costs (Cox, 2005).

            The dynamics of the United States health insurance, office management and diversity of medical billing has pushed for the need for specialized training in the field. Credentials are thus offered along with some form of certification by various agencies with regard to training received in medical billing. This paper aims at meticulously addressing the issue of medical billing also known as coding while delving deeper into the basic procedure of medical coding, challenges faced along with merits of the medical billing with regards to the United States of America.

The process of medical billing

            The key players in the medical billing procedure are majorly the insurance company and the health care provider. The insurance company in this case is the payer of the healthcare provider. This entire process is known as Revenue cycle management also referred to as the cycle of billing. The main process to be followed are three in nature; that is management of the claims, the payment and lastly the billing. Before a resolution is reached, several months may pass meaning that this process can take some time before payment is made.

Payment is only made upon the reaching of a resolution. This is a transparent process that has to follow the rule of law and the constitution. The relationship between a healthcare provider and an insurance company is analogous to that of a vendor and a contractor or sub – contractor. This can be best understood in terms of viewing the entire case scenario as insurance companies granting the health care providers to provide healthcare services. This interaction begins with the physician taking record of the patients’ information upon a visit in the office (Smiley, 2012).

Procedure codes and a diagnosis is made after the physician meets the patient. The importance of the codes is to enable the insurance companies determine medical necessity of the granted service and extent of the coverage. The insurance company which happens to be the payer in this case is then provided with the diagnosis codes and procedure. This process is done electrically, that is; formatting the claim in terms of ANSI 837 file. The claim is then submitted using Electronic Data Interchange to the insurance company via the clearing house directly.

The payer then process the claims using either claims adjusters or medical claims examiners. Rubrics for patients’ eligibility, medical necessity and credentials are used by medical examiners in the evaluation of the validity of payment of the claims of higher amount of dollars as a directive from the insurance companies. Claims that survive this stage and get approved are reimbursed as a fraction or percentage of the services that are billed. The healthcare providers and the insurance companies negotiate the respective rates beforehand. However, some claims that fail this stage are rejected and a written notice is sent back to the healthcare provider. These denied (rejected) claims are often sent in the form of Electronic Remittance Advice (ERA) or Explanation of Benefits (EOB).

In the event that a healthcare provider receives a rejected claim, the healthcare provider must decipher the message and concentrate on reconciling the claim with the one that was considered original, make all the necessary adjustments or amendments and resubmit the claim to the insurance company. This exchange between the health care provider and the insurance company might go on for a long period of time till there is full payment of the claim or the healthcare provider accepts a reimbursement that is incomplete from the payer (Smiley, 2012).

There is a marked difference between a rejected and a denied claim though both terminologies are used in medical billing to mean the same thing. A rejected claim is one that has not undergone through processing by the insurance company (Payer) as a result of a terrible mistake or error provided in the claim. The common errors that result into rejection of claims include; the errors in the information that is provided in the claim and personal information that is considered inaccurate. On the other hand, a denied claim refers to one that has gone through processing by the Insurance Company and has been found not payable. The service provider has the right to correct or appeal a denied claim for consideration. Moreover, the insurance company (insurers) must indicate clear reasons for denying the claim and provide a solution/ give directions on ways of combating (disputing) the decision (Smiley, 2012).

The benefits of medical billing are far stretched. However, challenges at times in the billing procedure that might take a long time and stretch the resources of a healthcare service provider. For example, in the case of rejected or denied claims, the service provider has to follow a set of procedures which includes the process of resubmission of the claims. The billing period may be lengthy and tedious considering that the healthcare provider has the main work of dispensing diagnosis, administering treatment and facilitating payment. The procedural rigidities that comes along with the payment of the submitted claims are a wastage of time and sufficient and necessary ways out to be arrived at which are shorter and time consuming.

Problems at times ensure when the officials of a service provider are transferred or retire form the perceived medical facility. The billing, which is the submission of claims might come in handy when the personnel has transferred from the respective organization, proving timely and tough to trace. This used to be the case when billing was done on paper. However, the dynamics of modern day technology has toiled to make the process simpler. As a result of this complexities and time wastage that might ensure as a result of medical billing, most health providers outsource their medical billing to a third party.

Medical billing services

            Healthcare providers outsource their medical billing to a third party as this practice continues growing. This third party is referred to as the medical billing service. The main agenda of the medical billing service is the provision of the practice with the ability to grow, increase efficiency and reduce the paperwork that is involved therein. The challenge is that all these ought to be done as fast as possible while still ensuring that the legal process is followed, that is no claims are paid that grants erroneous information. There are billing services which can be outsourced and they include; collections assistance, reimbursement tracking, regular invoicing, just to name a few. Medical billing services have proven effective in reducing costs and enabling the address of challenges faced by physicians without necessarily wasting time.

            The regulations that are introduced by medical billing are subject to change and are mostly complex. The challenges posed by medical billing is in terms of keeping staff updated with billing rules which is both costly and time consuming. This in most cases leads to errors which results into rejected claims that take time and long procedures to sort out. Billing services also aim at utilizing their knowledge of coding to ensure maximum insurance payments. The responsibility of the medical billing service is in ensuring that there are maximum payments from the insurance company as opposed to denials (Walsh & Crowder, 2003). The denials or rejections should be as minimum as possible.

Request for payment

            Insurance companies are offering medical billing claims that the healthcare providers must have knowledge of to be clear on payment of the submitted medical billing claims. Moreover, the healthcare provider must be clear on the laws and regulations that are instituted to govern the whole process of billing. Upon acceptance of the insurance companies plan by the healthcare provider, the contractual agreement is composed of numerous details. For example, fee schedules, and rules regarding filing guidelines. The fee schedule dictate the amount to be paid by the insurance company to the service provider on the covered procedures (Walsh & Crowder, 2003). The amount that is payable by the insurance company to the healthcare provider is known as the allowable amount.


            Billing is the process of submitting medical claims by a healthcare provider to an insurance company by for the purpose of payment by the insurance company of service rendered. The billing process is a complex process and has many dynamics. The billing process begins with the interaction between the patient and the physician who jots down the procedures, codes and diagnosis and ends upon the receipt of payment of the medical bills by the insurance company. The process is usually long and time consuming. Modern businesses have obtained a way of dealing with the procedural rigidities which involve a third party. The third party is called the medical billing service. The medical billing service ensures that there is maximum payments done by the insurance companies and minimum denials and rejections.


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Cox, J. (2005). U.S. Patent Application No. 11/214,036.

Smiley, K. (2012). Medical billing & coding for dummies. Hoboken, NJ: John Wiley & Sons.

Walsh, C. S., & Crowder Jr, R. J. (2003). U.S. Patent No. 6,655,583. Washington, DC: U.S. Patent and Trademark Office.

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