A SIMPLE

GUIDE
Practice
Management
and Medical
Billing
Boost practice efficiency, enhance
patient convenience, and optimize
practice revenue
CONTENT The revenue cycle journey—let’s
begin
S
Your revenue cycle affects every aspect of your practice—
Lifecycle of a
claim ........................................................ 3 financial outcomes, patient satisfaction, provider experience,
When errors occur anywhere in the revenue cycle, you
and clinical outcomes.
increase your administrative workload—and may even
Eligibility and lose revenue.
demographics ......................................... 4
This e-book can help you optimize your revenue and make
Charge capture and billing more convenient for both staff and patients.
coding ............................................ 5

Claims creation and

scrubbing....................................... 6 Claims

submission ........................................................ 7

Clearinghouse
edits ...................................................... 8

Payer
adjudication ........................................................ 9

Remittance and payment

management ........................ 10

Claims follow-up and denial

management.................... 11 Reporting and

analytics............................................... 13

2
LIFECYCLE OF A CLAIM
Know the links in your revenue
chain
Accurate billing and timely follow-up is essential. Most states
require health insurers to pay claims within 30 or 45 days.1
Time frames depend on the insurance payer. Understanding
this process can help you identify broken links and resolve
issues that may lead to denials.

Every stage of the revenue cycle must be managed to ensure

doctors are fairly compensated and patients who received
services get their allowed insurance coverage.
PRE-ADJUDICATION POST-ADJUDICATION

Eligibility Remittance

Demographics Correspondence

Estimation Denial Management

Charge Capture Payment Posting

ADJUDICATION

Claims Creation & Patient Transfers

Scrubbing
Claims Submission Receivables Management

Clearinghouse Edits

Payer Acceptance

TABLE OF REPORTING AND ANALYTICS 3

CONTENTS
 ELIGIBILITY
AND
Get eligibility information at appointment
scheduling Verification with the RTS can occur days DEMOGRAPH
Collect information at every patient
in advance. Have office staff verify the information
again at check-in. ICS
visit
Understand your practice’s payer mix The first step in the revenue cycle is for the front office staff
Know your payer mix so you can accurately identify to collect patient data and a reason for the patient’s visit.
patient plans and insurance eligibility. Take a proactive Errors made when collecting demographic information are
approach to communication with patients—letting
among the most common reasons for claim denials by
them know up front which services are
not covered. It’s also crucial to know which
insurance payers.
insurers require preauthorization before services
are billed. Front office staff also need to verify insurance coverage. To
support this effort, your PM solution should incorporate a
Pinpoint the patient’s insurance plan remote transaction server (RTS) that connects with payer
When the patient registers and identifies their systems, allowing you to validate patient benefit eligibility,
insurance provider, make sure you identify the exact determine coverage, and estimate patient responsibility via
plan. Failing to pinpoint the specific plan may cause online access. This eliminates the need to call payers
you to miss timely filing deadlines and can create individually or log in to separate payer websites. It can also
significant roadblocks to payment. For example, if the
help you collect the patient’s co-pay, up front.
patient has Medicare, ask if they have a red, white,
and blue Medicare card, or is Medicare written on
another insurance card (for example, Preauthorization is an important part of registration.
UnitedHealthcare). If the patient has Medicaid, Insurance payers commonly require preauthorization for
determine if it’s a Medicaid managed care plan.

Manage policies and procedures

90% of claims
medical procedures other than a primary care physician
visit. If you don’t obtain it, the physician will not be paid.

It’s important to maintain standard operating procedures

for patient eligibility and registration.
errors
Utilize automated outreach can be prevented with
Take advantage of automated outreach solutions
integrated with your EHR and appointment-scheduling better processes and
technology
TABLE OF . Schedule automated patient reminders
using text alerts, emails, or voice messages
CONTENTS
technology.2 4

according to each patient’s preference.

CHARGE
CAPTURE AND
CODING Go digital—all the way
Encourage clinicians and staff to enter all billing data
Create the record that will become a into the EHR.
claim
Ensure physicians sign off in a timely manner
Charge capture is the process that physicians, other Until an encounter is signed off in the EHR, you can’t
healthcare providers, and medical office staff use to record start the billing process. A friendly reminder to
information about services provided. Once recorded, this providers to sign off can help.
information is translated into a claim and sent to third-party
ICD-10
payers
• diagnose codesSeveral
for reimbursement. – describe
typesa of
patient’s condition
code sets are Save time with a mobile solution
usedor for
injury, as well
different as social
purposes determinants
during of health
this process, and
including: Capture information about diagnoses and procedures
other patient characteristics faster and more accurately with a mobile solution that
•
allows physicians and other staff to dictate notes on-
Current procedural terminology (CPT) and healthcare the-go using a smartphone. Built-in voice dictation
common procedure coding system procedure codes – and transcription make it easier and more convenient
indicate what actions were performed by the provider in to record details about patient visits and capture
administering care during an encounter charges. Look for a mobile solution that integrates
•
with your EHR.
Charge capture codes – connect physician order
entries, patient care services, and other clinical items Increase accuracy with a certified coder
•
with a chargemaster code, a list of the prices for each Medical coding standards are increasingly complex. A
service certified medical coder is trained in these regulations
Professional codes – capture physician and other and requirements and is better prepared to translate
•
physicians’ reports into accurate medical codes.
clinical services delivered and connect the services with
a code for billing
Facility codes or place of service codes – account for
the cost and overhead of providing healthcare services,
such as charges for using space, equipment, and
supplies3

TABLE OF 5
CONTENTS
CLAIMS
CREATION AND
SCRUBBING Use a charge review rules engine
A charge review rules engine allows you to automate the
Get it right the first time comparison of your charges against standards set by
Medicare, Medicaid, and private payers. Before the
Coding requires staff to gather information from the medical import of charges from the EHR into the PM system, the
record and other documentation for billing. The codes are rules engine applies millions of coding rules to the
used to generate insurance claims, which go to third-party submitted charges to ensure billing accuracy. It alerts you
payers. Claims creation is where coding is transformed, to errors, so you can correct them before a claim is
submitted to the payer.
manually or electronically, into billing.
A charge review rules engine reduces the need for time-
consuming manual review of charges.
Superbills
A superbill is the primary source of data for creating claims Correct repeated coding errors
—an itemized list of services provided to a patient. If you find certain claim edits keep coming back,
identify the issue that’s causing the repeated error.

Forms for submitting claims

Medical billers create claims by pulling information from
the superbill, either by hand or electronically, using the PM
system. The CMS-1500 form (created by Medicare) is
accepted by most third-party payers.
Medicaid and other third-party payers may use different
claim forms based on their specific requirements. Claims editing tools help detect errors such as missing CPT
code modifiers or incorrect diagnosis codes that will likely
result in denials. Expect to check your claims against
Claims scrubbing National Correct Coding Initiative edits, implemented by CMS
During claim preparation, medical billers or coders check for to promote proper coding.
errors— claims scrubbing. This helps ensure that all
information is complete and correct, including: patient, Claims scrubbing software that integrates with your EHR and
provider, and visit information, as well as procedure, PM helps ensure claims are billed at the actual contracted
diagnosis, and modifier codes. The goal is to generate a amount, coded accurately, and processed as quickly as
clean claim and prevent denials. Much of the claims possible.
scrubbing process may be automated.
TABLE OF 6
CONTENTS
 CLAIMS SUBMISSION

Check daily for the status of your claim file

A clean claim saves time
Usually clearinghouse services provide a dashboard that Be aware that payers have specific deadlines to submit
checks for updates on the status of submitted claims.
claims—timely filing limits. If a claim is denied because you
Note that they enroll
new insurance payers in their services on an ongoing missed the timely filing deadline, you have no appeal
basis. Therefore, new payers are continually being added rights.4 Your practice forfeits all money that potentially may
to the dashboard. have been collected.
A clearinghouse also provides digital proof of
timely filing, which can be more difficult with For example, Medicare claims must be submitted within
paper-based claims. one year of the date of service. Timely filing deadlines for
other payers vary; they may be 90 days from the date of
Set expectations for payment timelines service, depending on your contract with the payer.
Medicare commonly pays within 14 days and many
Blue Cross/ Blue Shield payers pay within 14 or 21
The first phase of submission occurs when a claim leaves your
days, as does UnitedHealthcare. But worker’s
compensation or Veteran’s Affairs claims can take 45 practice for review, usually by a clearinghouse service. The
to 90 days before you receive payment. clearinghouse aggregates mountains of electronic claim
information, almost all of it managed by software. The
clearinghouse sends this information to third-party payers.

Know your Once your practice’s claims are ready to be submitted,

your system will generate an 837 file, a HIPAA-compliant
payers so you electronic format used to transmit healthcare claims and
upload them to the clearinghouse.
know how
long it’s likely
to take to get
paid.
TABLE OF 7
CONTENTS
CLEARINGHOUSE EDITS
Last chance to prevent a denial Understand reasons for clearinghouse rejections
A claims clearinghouse acts as an intermediary between your Be aware of seasonal trends that may affect the
number of claims coming back from the clearinghouse.
practice and third-party payers. The 837 file you generated
For example, January can be a challenging month for
during claims submission gets uploaded to a computer coders and billers because payers tend to
platform and the clearinghouse performs its own series of make coding changes in the new year. These changes
edits. After this review, the clearinghouse forwards your can trigger an unusually high number of clearinghouse
claims information to insurance payers. edits.
Address clearinghouse rejections
Clearinghouse edits present a last Clearinghouse rejections should be handled as soon as
opportunity to ensure the integrity of a possible. Many practices have a policy that most
claim before it clearinghouse rejections will be addressed within 24
gets to the payer—and prevent a hours.
denial. If the clearinghouse finds
a problem with your claim, they
will reject it. Although a rejection
from a clearinghouse doesn’t have
the same impact as a denial from
an insurance payer, these
rejections
T should be minimized.
o reduce clearinghouse rejections, be conscientious about
scrubbing claims and correcting errors in charges—
especially errors that repeat themselves.

TABLE OF 8
CONTENTS
 PAYER ADJUDICATION

Use automation to pull info from the 277

Review and decision
file When a third-party payer receives your claim and starts
Find a billing and PM solution that can the review process, it’s known as adjudication. The payer
automatically pull clearinghouse information to
decides, based on the information you provide, whether
check whether or not a claim was accepted.
the claim is valid and should be paid. Expect payers to
Be prepared for information requests
review claims meticulously. They want to be
You may need to respond to a request for
information from the insurer or a denial indicated in assured that you have all the records needed to back them
the 277 file. In some instances, up, especially for high-dollar claims.
a registered nurse or physician employed by the Healthcare payers use a specific file format—the EDI 277
insurance payer may review related medical records Health Care Claim Status Response transaction set—to report
to help adjudicate the claim. If manual review is on the status of claims. The 277 file generated by the
required, you can face a significant delay. clearinghouse indicates whether the payer has accepted
Provide any requested information quickly to
accelerateresults
payment and reduce aging of your
your claim and can be automatically loaded into your PM
Monitor system. If a claim is denied, the 277 file will usually tell you
accounts receivable.
Tracking is vital when it comes to payer adjudication. the exact loop and segment where errors or omissions were
You’ll want to know the percentages of your claims that
flagged, as well as the reason for the denial.
are being denied, which will also let you know the
percentage of clean claims. You’ll also want to track Note: A loop is a section or block of an EDI file; each
the effectiveness of appeals to determine the denials loop contains multiple segments.
that are worthy of the appeal effort.

TABLE OF 9
CONTENTS
REMITTANCE AND
PAYMENT
MANAGEMENT Post payments daily
To gain better control of your cash flow, consider posting
Take control of your cash flow claim payments daily and reconciling with the bank. This
includes payments from 835 files, as well as paper
Remittance refers to the process of getting paid. The checks from insurers, insurance credit card payments,
Electronic Remittance Advice (ERA) or 835 file, is an patient checks, and patient credit cards.
electronic transmission of claim payment information. ERA or Keep original claims files
835 files can be uploaded directly into your PM system. This Claim files, remittance advice, and EOB statements should
file provides an explanation of the claims you’ve submitted be organized in a document management system to
—the reasons for payment, adjustment, or denial. follow up on denials and subsequent appeals.
Insurers provide two types of statements to explain payment
or denial of claims—(1) remittance advice and (2) Post zero-dollar remittances
explanation of benefits (EOB) statements. Usually, the Zero-dollar remits should also be posted, because they
remittance advice is provided to the healthcare usually include denial codes and other information. To
capture zero-dollar remittances, it’s helpful to know when
provider and the explanation of benefits statement is sent
payers send their remittances. Information from these
to the patient.
Payment remittances may help you rework denials and submit
The insurance company deposits payment into the practice’s appeals.
Track correspondence related to transactions
account by means of electronic funds transfer (EFT). Your Keep information that may affect your revenue, like
practice may still need to collect a copayment, coinsurance, correspondence regarding prior authorization or physician
or deductible from the patient. credentialing. These records can help with claims follow-
up and may prevent loss of revenue.
Reconcile payment with the claim
After the practice receives the ERA or EOB statement, the
medical billing staff matches payments to the respective
patient accounts, reconciling each payment against the
claim. They check whether data from ERAs and EOBs match • Move balances to patient responsibility for
actual
• Findpayments. During
denials and thisthey
ensure process, the practice
are reworked and can: • patient billing Take write-offs and make
• resubmitted Review line items to identify reasons for • adjustments
denials, such as medical Identify in-person patient collection issues, such as failure
necessity issues, non-covered services, or lack of prior to collect co-payment at the front desk
authorization
TABLE OF 10
CONTENTS
 CLAIMS FOLLOW-UP
AND DENIAL
MANAGEMENT
Understand denials
Follow up on denials to get maximum revenue earned by the
practice. Most practices meet timely filing standards for the
initial submission of a claim, but there are also deadlines for
reworking and appealing denials.

Insurance payers communicate claim denials to providers

using remittance advice codes that include brief
explanations. Review these codes to determine whether
to correct and resubmit the claim or bill the patient.

There are many reasons a claim may be denied. Payers

may reject services due to a lack of medical necessity
or because services took place outside of the
appropriate time frame. Denials may also be attributed
to non-coverage by the patient’s insurance plan.

TABLE OF 11
CONTENTS
How Medicare communicates payment adjustment
After Medicare processes a claim, either an ERA or a
Standard Paper Remit (SPR) is sent with final claim
adjudication and payment information. Itemized information in
the ERA or SPR helps you associate the adjudication with the
Track and share denial information
appropriate claims or line items. The ERA or SPR reports the
As you review denials month-over-month, you may be
reason for each adjustment, and the value of each able to identify patterns. Track denial volume, root
adjustment.
• Three setsGroup
Claim Adjustment of codes
Codemay be used:
– assigns financial causes, and appeal success rates.
responsibility for the unpaid portion of the claim to the Update your rules engine to mitigate future
provider or the patient denials
•
If a high percentage of your denials are related to the
Claim Adjustment Reason Code – provides an overall same error or omission, you can use preprogrammed
• explanation for the financial adjustment rules to avoid that error.
Remittance Advice Remark Code – may provide a Select an EHR and PM solution that allows you to
more specific explanation for the financial adjustment Determine if a claim
update the rules is so
engine, processable
you can avoid recurring
denials.
When a Medicare claim contains incomplete or invalid
Know your options information, CMS may return it as “unprocessable.” You
A denied claim isn’t the final word. For Medicare denials, you must correct the claim and resubmit it—generally within
may resubmit the claim to CMS for redetermination or one year of service. There are no appeal rights on claims
reconsideration. Commercial insurers have an internal appeal deemed unprocessable and not followed up on by this
deadline. Note that deadlines for appealing a claim after
process.
a denial are a different matter altogether.
Most insurers have multiple levels of internal appeals, Make sure providers are identified as in-network by
external review, and a grievance process if you disagree with payers Make sure each provider affiliated with your
the outcome after you’ve exhausted the internal appeals practice is properly credentialed and connected to the
process. Medicare denials can ultimately be appealed appropriate group for billing purposes, especially if your
through the federal court system. For commercial insurers, practice contracts out some professional
grievances can be taken to your state insurance services. Identification of the physician as out-of-
commission. network is a common cause of denials.
A national provider identifier (NPI) number is a
unique 10-digit identification number issued by CMS
to healthcare providers. The NPI is a required
physician identifier for Medicare services and
commercial healthcare insurers. Each individual
physician has their own NPI. In addition, every group
practice has its own NPI. Out-of-network denials may
result if NPI and tax ID information is mismatched.

TABLE OF 12
CONTENTS
REPORTING
AND
ANALYTICS
Monitor the
health of your
practice
Accurate, timely reporting and analytics
need to be formatted consistently. A
strong foundation in data can help you:
• Measure practice financial
performance, manage cost, and
• improve revenue
Improve administrative
• efficiency and quality of care
• Mitigate the risk of revenue
loss
Analyze the effectiveness of
claims features
Reporting management and
should be built into
evaluate
your AR and should offer both
PM solution
ad hoc and automated reports.

TABLE OF 13
CONTENTS
Key reports
Timely reports give you a complete view of your revenue cycle. Use
reporting to improve processes, spot trends, achieve key performance
indicators (KPIs), and identify issues that may hinder revenue collection.
Examples of revenue cycle reports:
• Monthly changes in AR – provides information on beginning aging
Run reports on a regular
totals, charges, payments, adjustments, and ending aging totals schedule Establish a schedule
• Insurance aging less credits – shows all open insurance balances to run daily, weekly, and monthly
without any credits (overpayments); also associates balances with their reports to see financial trends.
respective financial class— for example, Medicare, Medicaid, Blue Cross This will help establish KPIs and
Blue Shield, UnitedHealthcare, Cigna, meet long-term financial goals.
• Daily reports may include
or other commercial payer
• a reconciliation of claims
Patient aging less credits – this report shows all open generated and submitted.
patient balances, minus any overpayments
• • Weekly reports may
•
Bad debt AR – outstanding patient balances that have been include a review of RCM
referred to collections system and clearinghouse
•
Receivables analysis – identifies accounts receivables according to edits, AR aging, and denial
category— insurance, patient, and credits • management activities.
Charges by financial class – identifies the amount of charges sent Monthly reports include
to Medicare, Medicaid, Blue Cross or other commercial payer; charges, payments, and
•
provides information on where charges are sent for processing adjustments; AR balance
Payments by financial class and date of service – shows how quickly trends; gross collection rates;
•
you receive payments from major payers after charges have been and provider productivity.
•
submitted
•
Service item summary – services billed, organized by CPT code
Denials by reason code – provides details on reasons for denial
according to payer
Standard monthly reports – any other reports that the board, practice
management, clinical management, or other departments may need for
monthly review and tracking

TABLE OF 14
CONTENTS
BETTER STARTS
HERE.
Contact us at 855-510-6398 or
Optimize your revenue cycle with a trusted
results@nextgen.com.
advisor
NextGen Healthcare offers many options for assistance with medical billing
and practice management. We can help you manage claims and payment
posting with revenue cycle technology and client services. You earned the
money—now optimize collections with a faster, more efficient revenue cycle.

1 Health Care: Resolving Billing Problems and Claim Denials, United Policyholders, 2020,
https://www.uphelp.org/pubs/health-care-resolving- billing-problems-and-claim-denials. 2 “How to Maximize Revenue with
Improved Claims Denials Management,” Rev Cycle Intelligence, November 4, 2016.
https://revcycleintelligence.com/features/how-to-maximize-revenue-with-improved-claims-denials-management. 3 Jacqueline
LaPointe, “Exploring the Fundamentals of Medical Billing and Coding,” Rev Cycle Intelligence, June 15, 2018,
https://revcycleintelligence.com/features/ exploring-the-fundamentals-of-medical-billing-and-coding. 4 P.J. Cloud-Moulds,
“Medical Payers’ Timely Filing Deadlines,” MJH Life Sciences Physicians Practice, January 17, 2015,
https://www.physicianspractice.com/blog/medical-payers-timely-filing-deadlines.

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