CHAPTER-3
OVERVIEW MEDICAL BILLING
3.1 Medical Billing:
Gone are the days when the physician used to accept entire amount due from all the patients
directly and immediately after the services was rendered. In those days medical expenses was
affordable. But it is a different scenario now. Costs of medical expenses are so high that a normal
middle class people will not be able to afford the entire cost of medical expense. Here is where
the insurance company comes into picture. When patient takes policies with a health insurance
company, the insurance takes the responsibility of all the financial risks undergone by the patient
in relation to medical treatment for himself or is dependants during the tenure of the policy.
Since insurance companies carry financial risks they are also referred as carriers
The terms and conditions of a patient ‘s medical policy clearly define its scope. The scope may
be limited to a given set of benefits or subject to certain conditions. Only if the services are
within the scope of the policy and only if the conditions, if any, are met will the services will be
covered and reimbursed by the carrier. In recent times insurance sector has come along way
in health care reimbursement.
As discussed above, the physician does not get paid for his services immediately after they are
rendered. Majority of the patients has insurance coverage and details of such coverage are
provided to the physician before treatment. It is the responsibility of the physician to submit
claims to the insurance company and get paid for his services. Submitting claims and getting
paid is not as simple as it looks. It is a lengthy process and involves a lot of rules and regulations,
systems and is very complicated. The physician cannot provide his entire attention to this
activity. Hence the concept of Medical Billing arose.
3.2 Parties in Medical Billing
There are three parties in Medical Billing Process. The PHYSICIAN, The INSURANCE
COMPANY and The PATIENT. The Physician in order to attain his objective both should
comply with the rules and regulations spelt out by various insurance companies in submitting
claims and at the same time do not penalize the patient.
WHAT IS HEALTH INSURANCE?
The dictionary defines Insurance as: “Protection against risk, loss or ruin by a contract in which
an insurer (The Insurance company) guarantees to pay a sum of money to the insured (you)
in the event of some contingency (a random occurrence) such as an accident, a death, or illness,
in return for the payment of a premium”. Among the many types of insurance are health,
disability, liability, malpractice, property, auto and life insurance. Health Care Insurance is a
contract between a policyholder* and an insurance carrier (or government program) to reimburse
the policyholder for all or a portion of the cost of medically necessary treatment rendered by
health care professionals. In some policies the contract can include preventive care as well
as medically necessary treatment.(*A policyholder is an individual in most cases. In Group
health insurance the policyholder will be the employer the individual works for who holds the
contracted with the insurance company. )As a medical biller, you need to recognize the various
ways in which a patient may obtain health insurance coverage. There are three way a person may
obtain health insurance coverage:
1. Group Health Plan: a plan arranged by an employer or special interest group for the benefit of
members and their eligible dependents. This plan provides maximum benefit packages based on
desired coverage and cost factors. Group policies are often benefits of employment that are
provided by the employer with little or no cost to the insured(employee).
2. Individual or : a plan issued to an individual. This type of coverage has a high premium with
benefits based on the needs and financial factors of the individual policyholder.
