How to Start a Medical Practice and Set Up Billing

Introduction

I recently found a blog post in my inbox titled “A guide for new and first-time physicians participating in federal healthcare programs.” The Centers for Medicare & Medicaid Services (CMS) published it, and Shantanu Agrawal, MD, wrote it.

It pointed out that new physician graduates move into the workforce after July. Most of them probably join an existing private medical practice or become medical center staff members. Both settings have well-established billing policies and procedures. In those cases, the new doctor does not have to worry about how to generate income, get patients or establish payer contracts. Those tasks come with the position. Some doctors want to be their own boss and open their own practice. They may be surprised by how complex it is to create and run the business of a new medical practice.

Chapter one: payer enrollment

A medical degree alone does not make you a legally practicing doctor. I am not sure there is an exact legally required list for starting a medical practice. The CMS provider enrollment form on PECOS (the Provider Enrollment, Chain and Ownership System) is a very good place to start. PECOS states the first requirement for any payer enrollment very clearly:

“Note: If you are a Medical Provider or Supplier, you must register for an NPI before enrolling with Medicare.”

Section one: National Provider Identifier (NPI)

If this is the first time you have heard the term NPI, or you need to know more about its importance and use, the questions and answers below cover what you need to know.

Q: What is the NPI and how is it used?

A: The NPI is a Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification Standard. It is a unique identification number for covered health care providers. Covered health care providers and all health plans and health care clearinghouses must use the NPI in the administrative and financial transactions adopted under HIPAA. This means all individual health care providers, health care groups and health care facilities must apply for an NPI to use on all of their transactions with health care payers.

Q: How do I apply for an NPI?

A: There are three ways to apply:

Online at the NPPES website.
On the paper application, Form CMS-10114. You can also request the form from the NPI Enumerator by calling (800) 465-3203, by sending an email to customerservice@npienumerator.com, or by sending a letter to NPI Enumerator, P.O. Box 6059, Fargo, ND 58108-6059.
Through Electronic File Interchange (EFI). If an EFI Organization (EFIO) asks for permission, you may agree to let it submit your application data on your behalf through a bulk enumeration process.

Q: What is the difference between an NPI and these other numbers?

Tax ID or EIN. The Tax ID or EIN is the number the IRS issues to a business for tax purposes. Multiple NPIs can be linked to one Tax ID. For example, a medical practice has 3 providers. Each provider and the practice entity have an NPI, for a total of 4, but the IRS issues only one Tax ID.
UPIN. The UPIN (Unique Physician Identification Number) was a six-character alphanumeric identifier that Medicare used to identify doctors in the United States before the NPI. UPINs were discontinued in June 2007, so they have no use in any health care transaction today.
PIN or PTAN. A PIN (Provider Identification Number) is a unique number that a specific payer, such as Medicaid or Blue Cross Blue Shield, issues to identify a health care provider, group or facility. PINs are becoming obsolete, and in many cases the NPI has replaced them on all health care transactions. A PTAN (Provider Transaction Access Number) is an identification number that only Medicare uses. The individual and the group each receive a PTAN when they apply to a Medicare contractor. Only the NPI goes on claims, but the PTAN is directly linked to the provider’s or supplier’s NPI. You need both the PTAN and the NPI when you contact the Medicare contractor about claims, enrollment and similar issues.

Q: Where can I look up NPI numbers?

A: You can search the complete NPI Registry. It lets you search for both individual and organizational providers. You can search by name, address, or NPI number if you already know it. The registry is public, so anyone can search for NPI numbers. NPIs are not private or confidential.

Q: What is the difference between a group NPI and an individual NPI?

A: When an individual health care provider is not a sole practitioner, the individual NPI must be linked to the group NPI along with the other providers in the practice. When services are rendered, the payer pays the group, not the individual. Specific fields on the HCFA-1500 form show this. Under the 5010 standard, field 24J contains the NPI of the individual rendering provider, and field 33 contains the NPI of the group billing entity.

For more information about the NPI, see the National Provider Identifier Standard (NPI) pages on the CMS website. You can also read the Medicare Learning Network (MLN) publication “The National Provider Identifier (NPI): What You Need to Know” and Chapter 10 of the Medicare Program Integrity Manual (Publication 100-08), which is in the CMS Internet-Only Manuals.

Section two: enrollment and contracting

Suppose you have your basic requirements in place: an NPI, a medical license, malpractice insurance, a tax identification number and a practice location. Next you need to decide which payers you want to do business with, and for which plan types.

If you want to be a Medicare provider and you followed the advice above about PECOS, complete your Medicare enrollment as soon as possible. The online format is much faster than paper enrollment, but Medicare contractors are known for taking a long time to process enrollment applications. Many state Medicaid agencies have a similarly slow and more complicated enrollment process.

For commercial payers, do your research:

Find out which companies serve large groups in your area, and consider your patient demographics. For example, a pediatrician would not focus on payers that mainly cover Medicare Advantage patients.
Research provider complaints against payers about inappropriate claim denials, underpayments and similar problems. Weigh the frustration that problem payers can cause against the possible financial benefit.
Meet with provider relations representatives from new payers. Joining a new payer’s provider panel early can bring you patients without much competition from other providers.
Consider participating in an accountable care organization (ACO). Some commercial insurers support ACO development for their own members, in response to the Affordable Care Act’s goal that ACOs will eventually be available to everyone. Multispecialty medical groups, physician-hospital organizations (PHOs), integrated delivery systems (IDSs) and independent practice associations (IPAs) are likely candidates to become the ACOs of the future.

For general information on ACOs, see the ACO pages on cms.gov and the HealthCare.gov ACO fact sheet.

Chapter two: medical office clerical workflow

Medical school prepared you to be a doctor, but probably not an office administrator. You will need to hire someone to fill that role. To choose that person well and to understand your own practice, you need to know the clerical workflow of a medical office in detail.

Successful claims reimbursement is getting harder. Payers are more focused on detail, and they check that every part of the claim filing process is done exactly as they require.

Use this step-by-step guide to organize your office clerical procedures and help your practice succeed financially. These processes help you get claims paid correctly and improve your cash flow, with steps that aim for full reimbursement the first time each claim is filed.

Section one: new patient checklist

When staff schedule a patient’s first visit, they should tell the patient what to bring. This makes registration go smoothly and helps your physician make the first visit as thorough as possible.

Give staff this list as a guide:

Picture identification and current insurance cards. Once you have this information, verify insurance coverage and benefits. This is the best time to collect copayments from the patient.
Contact information for an emergency contact or health care surrogate. Make sure the patient lists the names of any authorized persons on your HIPAA notification form.
Contact information for all current health care providers. Ask the patient to add to the HIPAA form the names of any physicians they want your physician to communicate with or share medical records with.
Copies of any applicable medical records and recent diagnostic test results. If the patient hands you their only copy of a record, make your own copy and return the original to the patient. They may need it for another provider. If the patient leaves X-rays or radiology films stored on computer discs after the visit, log them in the patient’s record.
A complete list of current medications, both prescription and over the counter. Adding the pharmacy name and phone and fax numbers to the patient chart makes it easier to issue any required prescriptions.

Section two: verify patient insurance coverage

Successful claims processing and payment start with proper verification of each patient’s insurance coverage and benefits.

Have clerical staff follow the guide below to collect everything needed for a complete and accurate patient benefit profile.

Basic information needed before you contact the insurance company:

First and last name of the patient, and of the subscriber if that is someone other than the patient
Patient’s date of birth
Policy number as shown on the insurance card (the insurance card is one of the essential items your patient should bring to the first visit)
Diagnosis or chief complaint
CPT codes for the anticipated procedures

Ask these questions to build the patient benefit profile:

What are the effective dates of the current policy?
Are there any pre-existing condition limitations?
What are the benefits for the anticipated service?
Does a deductible apply, or only a copayment?
If there is a deductible, how much is it and how much has been met?
After the deductible, what is the coinsurance amount?
How much is the copayment?
What is the annual out-of-pocket maximum, and how much has been met?
Do the deductible and copayments count toward the out-of-pocket maximum?
Does this policy require any type of authorization for the anticipated services? If yes, get the contact information for the internal department or outside agency that handles it.
Is there an annual, lifetime or per-illness or per-diagnosis maximum benefit? If so, how much has been met?

If some of these terms are confusing, the table below explains them.

Term	Explanation
Pre-existing condition	This most often comes up after a lapse in insurance coverage. The new insurer can refuse to cover a condition that was diagnosed before the effective date of the policy.
Deductible	The amount the subscriber must pay before insurance pays its portion.
Copayment	A flat amount the subscriber must pay for specific procedures. It applies most often to office visits and outpatient diagnostic procedures.
Coinsurance	The percentage of the charge that the subscriber is responsible for. With an “80/20” benefit, the insurance pays 80% and the patient pays 20%.
Out-of-pocket maximum	The total out-of-pocket financial responsibility the payer sets for the patient. Once the subscriber has met this amount, the payer covers services at 100%.
Benefit maximum	The payment limit set on the subscriber’s policy. Once this maximum is reached, the payer has no more financial liability, and the subscriber must pay for services rendered.

Iridium Suite medical billing software from Medical Business Systems has an integrated insurance Real Time Eligibility function that can do most of this work for you and your staff.

Section three: obtain proper authorizations

During insurance verification, staff may learn that one or more of the services you will provide or order for your patient require an authorization.

Use these steps to build your office process for authorizations:

Gather the patient information. You need the patient’s name, date of birth, insurance policy number and the contact information for the authorizing entity. The authorizing entity can be the insurance company, but payers more and more often contract this work out to third-party organizations.
Collect the clinical data. You need an accurate diagnosis with the ICD-9 or ICD-10 code, copies of related medical records, the history and physical report from your physician, and the procedures ordered with the correct CPT codes. Because the authorizing entity needs accurate medical data and sometimes actual office notes, you may not control how fast the authorization comes through. When possible, schedule services far enough ahead to allow for processing time.
Submit the request. Follow the authorizing entity’s guidelines for the authorization request. Requests may be made by phone, online or by fax. Fill out every form as accurately and completely as possible. Keep a file on the authorization process for each authorizing entity you work with, so staff have the information ready each time.
Wait for the response, and follow up. An online submission may return an authorization within seconds or minutes. Other authorizing entities take 24 to 48 business hours as their standard turnaround. Sometimes a week or more passes between the request and the response. If you do not get a response in the time the entity specified, staff should follow up by phone or email. You may find the request was incomplete, which gives you the chance to send the missing information. Sometimes the request is simply sitting unprocessed on someone’s desk, and a call brings it to their attention.
Pass the authorization on. Once you receive the authorization, send it to the right party: your billing staff for an in-office procedure, the hospital or outpatient facility, or the diagnostic center.

Section four: collecting your charges and filing claims

When you register the patient properly and verify their benefits, you have done the groundwork for correct claims reimbursement.

Next you need a reliable process for collecting charge data and filing claims. One of the best ways to do this is to use your practice schedule. Billing staff should confirm that they have a charge slip, or superbill, for each patient marked as seen on the schedule.

Integrating your systems can improve efficiency. Billing and coding software that imports charge data directly from your EHR removes the need to enter charges by hand from superbills.

Iridium Suite medical billing software now comes with the Connectivity Clearinghouse, which connects to multiple EHR systems. You can connect to your EHR as often as your office workflow requires. With accurate and complete data entry in your EHR, you can bring in all the information needed to bill and file your patient claims. The Connectivity Clearinghouse can use multiple protocols, such as LLP, HTTPS and SFTP. It can also be extended to use multiple data formats, such as multiple versions of HL7, any well-formed XML and delimited text. This flexibility lets Iridium Suite integrate with your existing electronic health record, which saves your practice time and money.

To prevent denials and get paid correctly, know which of your services or procedures may conflict with others or be bundled together under NCCI (National Correct Coding Initiative) edits. Iridium Suite has a built-in claim scrubber, so a biller can be confident that coding violations are caught before the claim is generated.

Stay informed about your commercial payers’ medical policies and your government payers’ coverage guidelines. For more detail on payer policies, see “Researching a medical necessity denial” below.

Once you have entered your clean claims, send them to the payer. You can file claims:

On paper, using the standard HCFA-1500 claim form
Electronically

Electronic claims use electronic data interchange (EDI). EDI is the structured electronic transmission of data between organizations. Claims are batched in the medical billing software and then sent in an electronic format directly to the payer or to a clearinghouse.

Iridium Suite uses EDI to improve your claims processing in these ways:

You can track electronic claims from receipt by the clearinghouse to acknowledgment and acceptance by the payer.
Electronic claims are pre-screened for certain errors, and notices come back to the practice within days for quick correction and resubmission.
Payers process electronic claims much faster because of their format. In some cases this cuts the wait for payment from weeks to days.

Section five: payment posting

Once your claims are sent, payer responses can arrive in as little as 5 days for electronic claims and 3 weeks for paper claims. An electronic response is usually called an electronic remittance advice (ERA). A paper response is usually called an explanation of benefits (EOB). Payments can also arrive electronically through electronic funds transfer (EFT) or by paper check.

Iridium Suite practice management software imports the ERA and can often post the payments automatically to the patient’s account. Denial information is attached to the affected services with complete details, so office staff can research the denial and choose the best way to resolve it with the payer.

Understanding a remittance advice: terminology

Whether or not your billing software posts ERAs automatically, billing staff need to understand the terms used on every format of payer remittance. The “Amount Paid” column is usually clear. The details that explain the unpaid amounts are much harder to read.

The original eBook showed a sample remittance in the standard Medicare Remittance Notice format. Most payers use their own formats and terms, so the table below crosswalks other payers’ terms to the Medicare terms.

Medicare term	Definition	Terms used by other payers
Remittance Notice	The report the payer issues that summarizes how the claim was processed.	Explanation of Benefits, Explanation of Payment, Remittance Advice, Statement of Payments
Billed / Billed Amt	The fee charged for the services.	Charge Amount, Charges, Requested Amount, Submitted Expenses
Allowed / Allowed Amt	The amount of the fee allowed under the contracted rate with the payer.	Eligible Expense or Amount, Approved, Covered Charges
Deductible / Deductible Amt	Shows whether any of the allowed fee was applied to an outstanding deductible on the patient’s policy.	Annual Deductible
Coins / Coins Amt	The amount of the allowed fee that the patient must pay under the policy terms.	Customer or Patient Liability, Out of Pocket Amount (OOP). Commercial payers may also show a copayment on a service, which is a flat amount charged regardless of the fee.
Grp/RC-Amt / Total RC Amt	Grp stands for group and RC stands for reason code. These codes give the reason for any amount the payer did not pay. See the next section for details on group and reason codes.	Adjustment Group and Reason Code, Not Covered Reason, Payment Codes
Prov Pd / Prov Pd Amt	The amount paid for the claim.	Amount Paid, Payment, Benefits Paid, Pay Amount, Net $, Total Benefit, Policy Pays
HIC	The patient’s health insurance identification number.	Subscriber ID, Member Number, Policy Number
ICN	The internal control number the payer assigns to the claim when it is processed. The payer uses it for internal tracking.	Claim Number, Payer Claim Control Number
Pt Resp	The amount the patient can be billed for the services on the claim.	Customer or Patient Liability, Out of Pocket Amount (OOP). This is usually the total of the deductible, coinsurance and copayment amounts applied to the services.
Prov Adj (Prev Pd, Interest, Late Filing Charge)	The payer uses this area for additional adjustments to the provider’s portion of the payment. It increases the base payment when interest is paid. It decreases the base payment when part of the service was already paid on another ICN.	Penalty, Recoupment
Remark Codes	Codes that give more explanation for an adjustment already described by an adjustment group and reason code. See the next section for details on remark codes.	REM or RMK

Understanding a remittance advice: adjustment and remark codes

The reason for an unpaid amount is shown with a combination of a Claim Adjustment Group Code (two letters) and a Claim Adjustment Reason Code (CARC). CARCs can be numeric or alphanumeric and range from 1 to W5. A CARC communicates an adjustment. It explains why a claim or service line was paid differently than it was billed. If there is no adjustment to a claim or line, there is no adjustment reason code.

The complete list of Claim Adjustment Reason Codes was published on the Washington Publishing Company website.

These are the 5 Claim Adjustment Group Codes:

Code	Description	Indicated action
CO	Contractual Obligation	The amount of the fee that must be written off as uncollectable under the provider’s agreement with the payer. It most often shows the amount billed over the payer’s allowed fee schedule amount. A contracted provider cannot pass contractual obligation amounts on to the patient.
CR	Corrections and Reversals	Mainly used to show that the payer reprocessed a service. It applies when a denial was overturned and additional payment was sent. It is also used when the payer reverses an original payment, which tells the provider about an overpayment on the service.
OA	Other Adjustment	A miscellaneous category. The attached reason code explains the effect of the adjustment and how to process it. It usually appears on a secondary payer’s EOB to show the amount the primary payer paid and how that affected this payment.
PI	Payer Initiated Reductions	A payer may use this code to explain money withheld from the claim payment. If a provider owes the payer a refund, the payer can withhold payment on new services.
PR	Patient Responsibility	The most straightforward of the codes. Any amount to be passed on to the patient, or in some cases to a secondary payer, carries this code. It applies to deductibles, copayments and coinsurance.

Examples of EOB claim adjustments:

Grp/RC	Indicated action
CO-45	The claim amount that must be written off based on the payer’s contracted fee schedule.
CO-97	The benefit for this service is included in the payment or allowance for another service or procedure that has already been adjudicated.
OA-23	The effect of prior payer adjudication, including payments and adjustments.
PR-1	The amount applied to the patient’s deductible.

When the payment for a service needs more detailed information, the remittance contains a Remittance Advice Remark Code (RARC). It may match a standard message in the RARC list, or it may refer to a payer-specific message shown on the EOB.

The complete list of RARCs was also published on the Washington Publishing Company website.

Some examples of remark codes and their use:

Remark code	Expected use
M2	Applied to a denied or bundled service to show that the service was not paid separately because the patient was an inpatient.
M25	Explains why a service was paid at a lower rate than the expected contractual rate: the information furnished does not support the need for this level of service.
M29	Applied when a service that requires documentation was denied because the operative note or report was missing.
MA18	Used by Medicare to show that the claim information was sent electronically to a secondary payer.
MA40	Explains a denied inpatient service with a missing, incomplete or invalid admission date.

On the standard Medicare remittance, the Grp/RC-Amt column shows the combined adjustment code for the service billed. Directly to the right of the code is a number, for example CO-45 87.17. This number is the disallowed amount for the service line. Other payers may show the same amount under other terms, such as Non-allowed Amount, Not Covered, Discount, Ineligible or Policy Does Not Cover.

Posting the payment or denial

Once billing staff understand the terms, they can post the remittance:

Match each service date and procedure, then enter the payment, the contractual write-off and the patient responsibility shown.
Move the patient responsibility amounts, such as copays, coinsurance and deductibles, to the next responsible financial party. This may be the patient or another insurance company.
Once the service line is entered, the remaining balance for the payer you are processing should be $0, unless the service was denied (see the next section on denials). Any amount that was allowed but not paid now shows as the responsibility of another party, either the patient or another payer.

Researching a medical necessity denial

A denial is usually identified by a $0 allowed amount. Billing staff should never assume, without checking, that the payer processed a $0 allowed amount correctly. Check the adjustment code against the payer’s payment policies, NCCI edits, your billing records for the account and the patient’s medical record. Accept the write-off only when you are sure the service was denied correctly.

Payer payment policies are the payer’s guidelines for what counts as a covered benefit. They are usually based on the accepted standard of medical care for a particular diagnosis.

Medicare uses National Coverage Determinations (NCDs) for its nationwide policies. Local Coverage Determinations (LCDs) are set by the fiscal intermediary that processes claims at the state level. Each fiscal intermediary (FI) has the authority to write its own LCDs, based on the NCDs. When new procedures are developed, the FI creates an LCD for them. The FI also reviews existing LCDs to decide whether changes are needed because of treatment advances, statistical data, industry standards and similar factors.
- How would an LCD cause a denial? If the criteria in the LCD are not met, you will get a denial very quickly. If your billing staff know the requirements of the LCD, you may be able to avoid the denial, or at least have the exact medical documentation that addresses the likely reason for denial. Most LCDs contain a medical necessity clause. If your documentation shows that the case is an exception to the rule and the procedure is medically necessary, your appeal will likely succeed. (See “Appealing a Medicare denial” below.)
- The websites of all FIs include an LCD search. You can enter a CPT or HCPCS code to get the most recent version of the LCD.
Commercial payers may call these policies medical policies or clinical guidelines, and they are used the same way as LCDs. Payer websites usually let you search their policies by procedure name or CPT or HCPCS code. Most Medicare replacement plans offered by commercial payers must follow the medical coverage policy issued by the state’s Medicare fiscal intermediary. Non-Medicare plans can follow the same policies or set their own coverage rules. True Medicare supplement policies must follow Medicare coverage guidelines: if Medicare pays, they pay.

Billing staff should know this information and keep it close for quick reference. Then they can tell the physician as soon as possible when an ordered procedure is not covered by the patient’s insurance plan. This gives the physician and patient the chance to discuss other treatment options that are covered. If the non-covered procedure is the only option, staff can contact the insurer right away to ask for a pre-service review of medical necessity and coverage. A pre-service review is much more efficient than an appeal after the service, and it usually has a favorable result.

When you know the coverage guidelines, the patient can get the best treatment without paying for a non-covered procedure, and the provider receives full payment on time.

Other common denial reasons

18: Duplicate claim or service. Entering services by hand can lead to duplicate entries. A configurable claim scrubber, such as the one in Iridium Suite, checks each service entered and alerts the user right away if the same service is already on record.
16: Claim or service lacks information needed for adjudication. Some payers have claim rules that require nonstandard information in the 5010 format. One example is the rendering provider’s taxonomy code in addition to the standard NPI. Iridium Suite lets the user include this information on claims to the payers that need it.
97: Payment is included in the allowance for another service or procedure. Government payers, such as Medicare, and the larger commercial payers have adopted the NCCI standard for bundled services. The Iridium Suite claim scrubber comes with all current NCCI edits built in. The scrubber alerts the user when two or more procedures entered are considered part of each other.
29: The time limit for filing has expired. Each payer sets its own time limit for claim submission. It can be as short as 60 days. The current Medicare limit is 12 months. The sooner you submit your claims, the sooner you are paid, and you remove the risk of timely filing denials. With the Connectivity Clearinghouse in Iridium Suite, you can import patient demographic and service data directly from your EHR or EMR into the billing software. Patient and charge entry can be almost fully automated, so you can submit claims for your services close to real time.
140: Patient or insured health identification number and name do not match. The Real Time Eligibility function in Iridium Suite can nearly eliminate this denial and similar ones, such as “subscriber not eligible at time of service.” You can submit charges to the correct active payer with the right identification number and get paid correctly on the first submission.
197: Payment adjusted for absence of precertification or authorization. Billing software that flags payers requiring authorization, and that tracks a multiple-service or multiple-visit authorization as it is applied to the procedures performed, helps office staff with this issue. Iridium Suite has a specific area in the patient insurance information section to record authorization requirements and authorization details. Before a claim can be submitted, it is scrubbed for authorization requirements, and the user is warned if the authorization is missing. The claim cannot be submitted without the required authorization.

Advanced medical practice management billing software like Iridium Suite from Medical Business Systems can help you avoid many of these denials.

Appealing a Medicare denial

If your Medicare contractor denies a claim, you have the right to appeal.

Depending on the reason codes on the ERA, a clerical reopening may be the right step instead of an appeal. Minor errors or omissions on some Part B claims can be corrected and reprocessed through the clerical reopening process.

There are two ways to start a clerical reopening:

By telephone. The interactive voice response (IVR) system lets providers request telephone reopenings on certain claims. Your contractor publishes an IVR reopening help sheet.
In writing. Use your contractor’s clerical reopening request form.

Common clerical errors include:

Mathematical or computational mistakes
Transposed procedure or diagnosis codes
Inaccurate data entry
Misapplication of a fee schedule
Computer errors
Claims denied as duplicates when the party believes they were incorrectly identified as duplicates
Incorrect data items, such as provider number, modifier or date of service

First level of appeal: redetermination

A redetermination is a review of a claim by fiscal intermediary (FI), carrier or Medicare Administrative Contractor (MAC) staff who did not make the initial claim determination. The appellant, the person filing the appeal, has 120 days from receipt of the initial claim determination to file. A redetermination must be requested in writing. There is no minimum dollar amount required to request a redetermination.

Second level of appeal: reconsideration

A party to the redetermination may request a reconsideration if they disagree with the redetermination decision. A qualified independent contractor (QIC) conducts the reconsideration. The QIC process allows an independent review of medical necessity issues by a panel of physicians or other health care professionals. There is no minimum dollar amount required to request a reconsideration.

Third level of appeal: hearing by an administrative law judge (ALJ)

If at least $140 remains in dispute after the QIC’s decision, a party to the reconsideration may request an administrative law judge (ALJ) hearing within 60 days of receiving the reconsideration decision. Appellants must send notice of the ALJ hearing request to all parties to the QIC reconsideration. The Office of Medicare Hearings and Appeals (OMHA) conducts ALJ hearings. The OMHA website has more information.

Fourth level of appeal: review by the Medicare Appeals Council

If a party to an ALJ hearing disagrees with the ALJ’s decision, the party may request a review by the Medicare Appeals Council. There is no minimum dollar amount for this level. The request must be made in writing within 60 days of receiving the ALJ’s decision, and it must state the issues and findings being contested.

Fifth level of appeal: judicial review

If $1,400 or more is still in dispute after the Medicare Appeals Council’s decision, a party may request judicial review before a federal district court judge. The appellant must request a federal district court hearing within 60 days of receiving the Medicare Appeals Council’s decision. The council’s decision explains how to request judicial review.

Additional resources

The CMS websites have information on all five levels of the Part A and Part B appeals process:

CMS appeals web resources
CMS appeals process flowchart
MLN brochure “The Medicare Appeals Process”
CMS Internet-Only Manual Publication 100-04, Chapter 29: Appeals of Claims Decisions
CMS Internet-Only Manual Publication 100-04, Chapter 34: Reopening and Revision of Claim Determinations and Decisions

Section six: aggressively work your accounts receivable

If you followed the steps above, you identified the patient’s benefits, obtained the needed authorizations and produced clean claims. Each of those steps keeps your accounts receivable (A/R) “young.” They get your claims paid as fast as possible, which keeps your cash flow steady and predictable.

Why “young”? One of the most common ways to evaluate a practice’s cash flow is to look at open balances by age. The aging is usually divided into 30-day buckets: 0 to 30 days, 31 to 60 days, 61 to 90 days, 91 to 120 days, 121 to 150 days, and 151 days and over. Balances should get smaller as the age increases. The largest amounts should always be in the 0 to 60 day categories.

Keeping your A/R current takes three main tasks:

Review all rejected and denied claims as soon as you receive them. For electronic claims, the clearinghouse pre-screens claims for bad data. Rejected claims often come back to your practice management software within 24 hours for quick correction and resubmission. Electronic claims that pass on to the payer can be processed within a few days, and the ERA comes directly into your billing system.

Iridium Suite practice management software makes the most of electronic claim responses and remittances with its warning system. The user sees visual alerts when claims are rejected or an ERA contains a denial. These alerts keep office staff aware of problems that hurt your accounts receivable.
Regularly check all claims older than 61 days for activity by office staff or the payer. Whether the payer has not responded or you are waiting on a reply to a resubmission, review aging A/R for proper activity. For example, when you send a claim with records for appeal, call the payer for a status update at least every 4 to 6 weeks.
Work patient balances with care. This is the most delicate of the three tasks. How a physician handles patient billing can affect their reputation in the community and with peers. These strategies help patients trust and understand their financial responsibility:
- When patients visit a freestanding physician’s office, they expect a bill from the provider they saw. When they receive services in an outpatient facility or as a hospital outpatient or inpatient, it is much less clear. Professionals the patient never sees, such as anesthesiologists, radiologists and pathologists, may perform services. There is usually a facility charge in addition to the professional charge. Patients do not always understand this. When you schedule the services, explain in detail who will bill for them. This keeps patients from being surprised when the bills arrive and prevents angry phone calls.
- Everyone makes mistakes. Mistakes can go both ways: billing services that did not happen, or missing services that did. Even EHR software with automated charge capture can contain honest errors, because people use it. Audit all charges internally for accuracy and proper medical documentation before you submit them to the payer. Then you will never have to defend your claims to the insurance company, and you can answer any patient question about whether a service was provided with confidence.
- Use billing software, such as Iridium Suite, that produces a clear, itemized statement of each service provided. Send statements on a regular schedule, ideally once a month. This lets patients match services to their insurance explanation of benefits and, if needed, make monthly payments on large balances they cannot pay in full.
- A typical healthy person uses very little of their insurance benefits and has little experience reading a medical bill, so they may need extra help from your staff. Make sure someone is available who has full access to the account details and a thorough understanding of the services rendered. That person should answer patient questions promptly, correctly and with patience and compassion. Your ideal contact person can explain complicated billing terms and processes in a way an everyday person can understand. This is the drawback of an outsourced call center: its staff usually can answer only the most general questions.

Iridium Suite practice management software is designed for paperless A/R follow-up. An entire module sorts and prioritizes your A/R the way you want to see it. You can divide work by payer or issue and assign it to individual staff members, then track their progress and results.

Chapter three: making your work count for EHR and PQRS incentives

Providers of Part B services paid under the Medicare Physician Fee Schedule (MPFS) can increase reimbursement and avoid future penalties through the Medicare incentives for EHR and PQRS reporting. This chapter explains both programs.

To qualify for Medicare PQRS incentive payments, eligible professionals (EPs) must report enough of the applicable quality measures. The 2013 PQRS program has several hundred measures. The “Getting Started” page of the CMS PQRS website helps you work through this process.

Advanced practice management software like Iridium Suite has an integrated PQRS claim scrubber. The practice can set up the billing system to automatically ask the physician to set up PQRS measures for each patient. The claim scrubber also recognizes which billing codes are possible PQRS denominators and suggests the PQRS numerator codes to add to the claim. The biller accepts the suggestions, and the claim scrubber adds the correct PQRS charge codes to the claim.

To qualify for the Medicare EHR incentive payments, EPs must use certified EHR technology in a meaningful way (meaningful use). EPs show meaningful use only by reporting clinical quality measures (CQMs) along with the meaningful use measures.

Providers who want to buy certified EHR software can find a list of certified products through CMS.

In 2013, EPs can meet the meaningful use objective to report CQMs to CMS in either of two ways:

Through the Medicare and Medicaid EHR Incentive Programs’ web-based Registration and Attestation System. EPs who report CQMs this way must still report individual quality measures or measure groups through one of the four PQRS reporting options to also take part in PQRS.
Through the PQRS-Medicare EHR Incentive Pilot, which uses the 2013 PQRS EHR Measure Specifications. EPs in the pilot can submit their meaningful use objectives through the CMS Attestation System, then make a single submission of CQMs to get credit for both programs.

EPs who take part successfully in both PQRS and the EHR program can receive an incentive in 2013 and avoid the 2015 payment adjustment for both programs.

CMS is making it simpler to take part in both programs in 2014 and later by aligning several key components. These are the changes for PQRS and EHR in 2014:

PQRS and the EHR program will use the same set of electronic CQMs (64 in total) and the same electronic specifications.
All Medicare EPs past their first year of meaningful use must report their CQM data to CMS electronically for the EHR program.
Submitting data electronically with 2014 certified EHR technology will meet the requirements of both the EHR program and PQRS.
Participating EPs can submit patient-level data (through QRDA I) or aggregate data (through QRDA III), using the same electronic reporting method for both programs.

Chapter four: watching the vital signs of your practice

A new medical practice that is set up well usually attracts patients. But a medical practice is a business and must be run as one. Check the health of your practice the same way you check the health of your patients. This chapter uses three vital signs, pulse, blood pressure and temperature, to help you assess the financial health of your practice.

The pulse: evaluate practice growth

How many new patients are you seeing each month?

After a few months in practice, you can compare patient numbers month over month. Use them to calculate your current growth rate and to estimate when you will need more staff or other changes to your infrastructure. If your patient numbers show a steady decline or a steep increase, you have the chance to find out why. One reason may be your referrals, covered next.

The pulse: monitor your referral base

Who is referring patients to you?

The internet has made it much easier and less expensive for physicians to reach a wide range of patients. Many people with basic medical needs are comfortable choosing a doctor online. Many others have complicated conditions, and their referrals usually come from colleagues and satisfied patients. Know which providers in your area refer patients to your office, and keep communicating with them about the patients you share. A patient who is happy with their care is the best advertising. Poor office staff can drive away patients who like their doctor, and those bad experiences can reach the referring colleague. Watch for a drop in referrals from a particular source, and contact that source personally.

The blood pressure: track services provided

Are the number of services you bill increasing, decreasing or staying the same?

Depending on your type of practice, you may bill one or two procedure codes per patient visit. Some specialties, such as radiation oncology, may bill 10 procedure codes per visit. In either case, monthly statistics reports help you spot unusual billing patterns. A sharp drop in a certain procedure may point to missed coding and lost revenue. Many payers set filing limits from the date of service, from 60 days to one year. Regular reviews for missed charges help you meet those limits and get paid for all the services you provided. If a report shows an unexpected procedure, or an unusually high number of a certain procedure, you can audit the medical records for proper documentation. If you find billing errors, refund any payments for services not provided right away, before an insurance audit finds them. Staying in good standing with your payers is always important.

The blood pressure: analyze insurance reimbursement

Is your claim reimbursement in line with your contracted fees?

This analysis is valuable to any medical practice. Once you sign a contract with a payer, make sure you are paid the agreed contract rates. On busy days, office staff rarely have time to check every paid line item. A monthly report that compares payments received to the payer’s fee schedule shows payments below, and above, the contracted fees. A payment below the contracted fee should prompt an immediate call to the payer’s provider relations department. For payments above the contracted fees, check that the fee schedule you are using is correct. For example, the payer may have updated its schedule and you have not. This report can also show overpayments. If you refund them to the payer before it asks, the payer sees that your practice follows proper procedures.

The temperature: evaluate the aging of your accounts

What is the aging breakdown of your accounts receivable?

A basic accounts receivable report usually shows money owed in aging buckets: less than 30 days, 31 to 60 days, 61 to 90 days, 91 to 120 days, 121 to 150 days, and over 151 days.

Ideally the largest share of receivables is in the less-than-30-days bucket, and balances get smaller in each older bucket. The older a receivable gets, the harder it is to collect from the payer. If you do not address old balances on time, the amount of work keeps growing. It can become so large that office staff do not know where to start.

The temperature: verify collections activity

Do you have procedures that make sure money owed is collected quickly?

When you analyze your receivables in the 31 to 60 day bucket by payer, you can see whether most of that money is secondary payer balances. Because of processing time, it is normal to see secondary payer balances in this bucket and, to some extent, in the 61 to 90 day bucket. If you see a large amount of primary payer money in the 31 to 60 day bucket, check the claim status with the payer. The payer may not have received the claim, and you may need to resubmit it to avoid timely filing problems. If you wait until the claims reach 61 to 90 days or more, it may be too late. Address claim denials often: daily as you receive them if you can, and at least monthly during the accounts receivable review. Payers also set time limits for appeals, usually only 60 to 180 days after the date of the EOB. The sooner you send the appeal, the sooner you may be paid.

Now that you know the vital signs of a medical practice, follow the same advice you give your patients. Get regular checkups to keep your practice healthy. Practice management software like Iridium Suite has built-in report scheduling to help you keep watching the pulse, blood pressure and temperature of your medical practice.

What has changed since this was written

The MBI replaced the HIC number. Medicare replaced the Social Security-based HIC number with the Medicare Beneficiary Identifier (MBI). Since January 1, 2020, claims must use the MBI. See HIC number, MBI and ICN.
MACs replaced fiscal intermediaries and carriers. Medicare Administrative Contractors (MACs) now process claims and write LCDs, and every LCD is in the CMS Medicare Coverage Database.
ICD-10 replaced ICD-9. ICD-10-CM diagnosis codes took effect on October 1, 2015. See 5 facts about ICD-10 and the CMS ICD-10 page.
The HCFA-1500 is now the CMS-1500 (02/12). The billing provider NPI goes in box 33a and the rendering provider NPI in box 24J. See the CMS-1500 form box by box.
PQRS and the EHR incentive program became MIPS. Since 2017, the Merit-based Incentive Payment System (MIPS) under MACRA has replaced PQRS and the Medicare EHR incentive payments, and meaningful use is now the Promoting Interoperability category. See MIPS 2026 for radiation oncology and the CMS Quality Payment Program.
Pre-existing condition exclusions ended for most plans. Since 2014, the Affordable Care Act bars most health plans from refusing to cover pre-existing conditions and from setting annual or lifetime dollar limits on essential health benefits. See HealthCare.gov.
Appeal dollar thresholds change every year. The $140 ALJ and $1,400 judicial review amounts were the 2013 figures, and CMS adjusts them each year. Check the current amounts on the CMS Medicare appeals pages.
X12 now publishes the CARC and RARC lists. The code lists that were on the Washington Publishing Company site are now at X12. See remark codes in medical billing.
Radiation oncology delivery codes changed on January 1, 2026. Treatment delivery is now billed with 77402, 77407 and 77412, and several older delivery and guidance codes were deleted. See the 2026 radiation treatment delivery codes.

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