Medical Claims Processing

If you are interested in becoming a medical biller, here is a lesson on medical claims processing. 

Lesson Objectives

Objective 1: Billing Electronic Claims

  • Define an 837-P
  • Define an 837-I
  • Identify the sections of the Transaction Set
  • Define a clearinghouse

Objective 2: Billing Paper Claims

  • Identify different paper billing formats
  • Complete a CMS-1500 or UB-04 form
  • Proper submission of a paper claim

Billing Electronic Claims

Health care reimbursement
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Medicare, Medicaid, and most other insurance companies accept electronic claims as the primary billing method. The electronic version of the CMS-1500 is called the 837-P, the P standing for the professional format. The electronic version of the UB-04 is called the 837-I, the I standing for the institutional format.

To successfully file electronic claims, medical billers must understand the requirements for the different types of insurers they submit claims to.  Each 837 submission sends a data file to the insurer which is called a Transaction Set.  The Transaction Set is broken into sections:

  1. Transaction Header
  2. Billing Provider Detail
  3. Subscriber Detail
  4. Patient Detail
  5. Claim Detail
  6. Transaction Trailer

While it is not important for billers to understand transaction sets, it is important that each item entered into the billing system follows the proper guidelines to prevent errors and claim rejections.

A clearinghouse is a company that will accept all of your claims and electronically forward them to the insurance payers for processing. They also have edits in place to check for errors in your claim to help avoid delays in billing.

The major benefit of electronic billing whether you use of clearinghouse or you direct bill is that you will speed up your claims processing. Paper billing can take up to 45 days for processing while electronic billing can take 7 to 21 days.


Billing Paper Claims

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Paper billing is not the first choice for billing medical claims but is sometimes a necessary chore. Of course, the electronic claims process is much simpler and faster compared to the manual process of paper billing.

Whenever paper billing is used, keep these in mind:

  • Choose the correct billing form: It is important to understand and use the standard medical claim form. Choose between the CMS-1500 and the UB-04 claim forms.
  • Make sure the format is correct: Some payers accept the photocopied black-and-white versions of the medical claims but the best process is to submit the original red-and-white version. Depending on the payer, when the original claim form is not used, the claim may not scan into their system properly creating a delay or denial in payment.
  • Enter accurate data in the right location: Check with each insurance payer to determine what data is required. Ensure that all data is entered correctly and accurately in the correct fields.
  • Include proper documentation: Sometimes paper billing requires proper documentation to be mailed with the claim form.

Lesson 4: Medicare, Medicaid, and Other Payers

Understanding the basics of Medicare, Medicaid, Tricare, and Commercial insurance payers

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