Medical Billing Cycle - Healthcare

What is Medical Billing and Medical Billing process steps in USA?

What is Medical Billing?

Medical Billing is a process of billing the healthcare claims to the respective insurances (also known as carriers) of the patient from the providers or medical billing companies in order for reimbursing the provider for the healthcare services delivered to the patient.

Now let us see the process of Medical billing to understand how exactly the medical billing process works in the United States of America.

Medical Billing Process steps in USA?

In the United States of America the medical expenses are too high, so almost every citizen has medical insurances (private or federal insurances) to cover their healthcare expenses.


  • Patient Pre-Registration in Medical Billing:

In United States of America whenever the patients wants to visits provider office for non-emergency services, first patient fix the appointment at the front desk of the provider office by giving the demographic details as well as insurance details .

The function of this department can be categorized into two:

  • Scheduling the patient’s visit
  • Collecting the Demographic details and insurance details

At the time of registration or at the time of visiting the provider office, patient must also sign the following important documents at front desk:

  • AOB – Assignment of Benefits and
  • ROI – Release of Information

Assignment of Benefits (AOB):  A written consent, signed by the policyholder/patient (in the absence of the policy holder) at the time of registration. This is to an insurance company, to pay the benefits directly to the providers. Block # 13 on CMS 1500 form should have the phrase “Signature on file”. If not found, then the claim will be paid to the patient and not to the provider.

Release of Information (ROI): A signed statement from patients or guarantors that allows the doctors and hospital to release medical information to the entities who all are involved in the medical billing cycle.

Once the patient registration done, the next step in the medical billing process is Insurance eligibility and benefits verification.


  • Insurance Verification in Medical billing:

Provider or Medical billing company will check the eligibility of patient either by reaching eligibility department of the insurance or through insurance website.

This step is done to know the following information:

  • Whether patient policy is eligible for the healthcare services to be delivered and healthcare services covered under the patient plan.
  • Some of the health care services require authorization from the insurance company in order to pay those healthcare services, so during this stage provider also takes the authorization from the insurance company to deliver those services if required.

This step in medical billing process is very important in decreasing the denials from the insurance companies.


  • Patient Encounter:

In this stage patient visits the provider office as per the scheduled time and interacts with the provider about his/her current health condition and also about their medical history. Provider then conducts the physical examination to diagnoses the disease of patient and renders the treatment to improve the patient’s health condition.  During this stage provider does medical virtual scribe (Documents the patients encounter in real time) or it will be recorded as a voice file which will be later converted to text file by medical transcription.


  • Medical Coding:

It is the process of assigning medical codes (numeric or alpha numeric codes) from the medical coding team to the diagnosed disease and procedures rendered by healthcare provider. Once the medical codes are assigned, we call that as super bill or charge sheet.

Click the following article to know more about what is Medical Coding, Importance of Medical coding, what does medical coder do, what knowledge required and how to become medical coder?


  • Demo Entry in Medical billing:

It is the process of entering physical characteristics of a patient such as age, sex, address, etc. and also insurance details into medical billing software.

Click the following article to know more about what is Demographic entry, List of details captured during this demo entry process and Importance of demographic entry with examples in medical billing?


  • Charge Entry in Medical billing:

In this process, the date of services, procedure, diagnosis codes, modifiers, etc. are entered into medical billing software by seeing the super bill.

Click the following article to know more about what is Charge entry, List of details captured during this Charge entry process and Importance of charge entry with examples in medical billing?

Once the demo entry and charge entry are captured into medical billing software, then we proceed towards creating the claim, which is then submitted to insurance company for reimbursement.

Claims are of two types:

  • Paper Claims: Mailing claims to the insurance address through US postal service.
  • Electronic Claims: Submitting claims electronically through clearing house to insurance company.


  • Clearing house in Medical billing:

Once the electronic claims are created, which will be then uploaded into clearing house. Clearing house scrubs the uploaded claims for errors and securely transmits claim to the respective insurance for adjudication.

Click the following article to know more about what is Clearing house, How clearing house works, role of payer ID, how to choose the best clearing house and advantages of clearing house in medical billing?


  • Insurance Adjudication Process:

Once the insurance company receives the claim, they adjudicate the claim and decide whether to pay or deny the claim. Insurance will send the EOB to provider or medical billing company which explains how they have adjudicated the claim.


  • Payment Posting in Medical Billing:

Once the provider or medical billing company receives the EOB, the payment posting team will post the payments or denial information to particular patient’s account in medical billing software.

Click the following article to know more about what is Payment posting, types of payment posting, role of payment posting team, list of terms we come across during payment posting process and importance of accurate payment posting in medical billing?


  • Denial Management in Medical Billing:

Whenever there is a denial or partial or outstanding payments, the AR team will reach out respective insurance company in order to resolve and follow up on the claim.