What is patient billing and collection?

Patient billing and collection is a process where a medical charge will be imposed on the patient and the amount will be collected after considering co-pays, insurance deduction, and non-covered insurance. Billing and collection in the medical process is a vital process for the patient as well as the health organization. For a health organization, collecting medical charges is income for service provided by them to a patient. For a patient, medical billing is the expense for using the service provided by the health organization. For some patients, certain services will be covered under the insurance policy, and the remaining charges have to be paid out-of-pocket. The collection of such bills has to be clearly stated without creating a chaotic situation for patients and insurance providers. A billing statement will be easily collected for the uninsured patient as medical charges will be directly collected from them.

Steps in medical billing and collection

In an efficient medical practice, the quality of care and the competence of the doctor is important. Billing is one of the processes of collecting payment for used services. But the medical practice is more important than billing. A successful billing and collection rely on the medical practice, as it generates revenue for the practitioner as well as the management. The following are the steps involved in medical billing and collection:

Step 1- Register patient

In a health organization, registering a patient is very important. Obtaining personal information and insurance policy information will be helpful for the insurance provider and the organization in creating and receiving medical bills. By registering a patient, the organization can provide required care from the start of diagnosis to the end of care. Every action and service provided for a patient is recorded in the patient file to ensure billing and collection documentation.

Step 2- Medical coding

Entry of the patient and exit of the patient is recorded. Every single one of the processes is recorded and coded by professionals. Medical coding is translating medical reports into a shortcode to summarize the report. A patient’s condition, diagnosis done by the health care provider, and procedures are coded. This practice of coding is sent to the insurance company that pays the medical bill of a patient. This coding practice also helps in tracking the health status of a person and maintaining a record of past treatment procedures.

Step 3- Assuring collection payment

As per the recorded information, patients have to verify details of billing, insurance eligibility, and insurance coverage. Talking to the insurance company would help the patient to know the status of the coverage. If the insurance does not cover the medical bills under the policy plan, then a patient has to pay the medical bill out-of-pocket. At a meeting with a healthcare provider, a patient will know the details about the treatment process and coverage of insurance in order to claim benefits. Then the invoice will be processed for collection after verifying by the patient, the insurer, and the health care provider.

Step 4- Claiming collection billing

The medical bill presented to the insurance company does not contain all medical charges, only the details of a patient’s claim. According to the policy taken by the patient, the insurance provider makes the claim payment to the respective health care organization. The claim medical bill must be displayed in a certain format for the insurance company to make the payment. After checking the claim bill, the insurance company will pay for the medical bill or even can reject the bill if not covered under the policy.

Step 5 -Patient statements

A patient account statement is a bill with a complete billing statement. It is sent either in paper form or in electronic mode. Every action carried out in the medical practice will be billed in the statement. A separate group from the organization is involved in preparing the statement. It contains all the costs of the medical practice carried out for the patient. The patient statement will explain the money owed for receiving the medical practice. It also states paid bills, claimed bills, and unpaid bills with date and timing.

Step 6- Collection of unpaid billing

When the patient leaves the medical center, the remaining payment bills are collected on the spot or can be transformed into medical loans for the patient. This concludes the collection of the medical billing process.

Context and Applications

The above content can be used for preparing professional exams for U.S. educational programs like

  • Bachelors of Science Business Management
  • Bachelors of Science Business Administration
  • Bachelors of Science Hospitality Industry
  • Masters of Science Business Management
  • Masters of Science Business Administration
  • Masters of Science Hospitality Industry

Practice Problems

Question 1: Medical charge imposed on patient is _______________ process.

  1. Liability
  2. Insurance practice
  3. Billing and collection

Answer: Option 3 is correct.

Explanation: Medical billing is the process of collecting bills from a patient in a health organization for medical service provided to them.

Question 2: Noah is a patient in JAMP hospital where she is taking treatment. Her insurance gives half coverage for treatment. Remaining amount will be paid by __________.

  1. Noah
  2. Other health organization
  3. JAMP hospital

Answer: Option 1 is correct.

Explanation: As the claim can cover only the half coverage. The remaining medical charges will be paid by Noah. She can pay the amount instantly or can convert the bill as a loan.

Question 3: Medical report summary created by professional is _______________.

  1. Java
  2. Medical coding
  3. C++

Answer: Option 2 is correct.

Explanation: Medical coding is prepared by professional coders. A patient’s details about their age, medication, the doctor who treated them, prescription drugs, insurance plan, and medication hospital will be converted into coding to summarize the medical report.

Question 4: _______ is important for the revenue of a health care organization.

  1. Medical equipment
  2. Service
  3. Medical billing and collection

Answer: Option 3 is correct.

Explanation: Medical billing and collection is the major source of income for a health organization. Health organizations give medical treatment as a service for patients, in return patient pays for provided service.

Question 5: ___________ is given to the patient after treatment.

  1. Patient statement.
  2. Insurance documentation
  3. Money

Answer: Option 1 is correct.

Explanation: After treatment, a patient statement will be sent either by paper document or electronic mode message. It consists of payment records, unpaid remaining charges, total treatment charges, claim amount, etc.

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