Medical Office Workflow White Paper
Successful claims reimbursement is increasingly challenging. Payers have become more detail-oriented, and they check that every part of the claim filing process is completed exactly as they require.
In this white paper, we offer pointers that can help you organize your office procedures and reduce the opportunities for payers to deny your claims. By outlining these processes, we hope to help you increase your reimbursement and improve your cash flow. The goal is to put steps in place that achieve maximum reimbursement the first time each claim is filed.
Step 1: New Patient Check List
When you schedule a patient for their first visit to your practice, tell them what they need to bring. This helps the registration go smoothly and helps your physician make the first visit as thorough as possible.
Use this check list as a guide:
- Picture identification and current insurance card(s). 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 and/or healthcare surrogate. Make sure the patient lists the name(s) of any authorized persons on your HIPAA notification form.
- Contact information for all current healthcare providers. Have the patient add to the HIPAA form the names of any physicians they would like your physician to communicate with or share their medical records with.
- Copies of any applicable medical records and recent diagnostic testing results. If you are handed records that are the patient’s only copy, make your own copy and return the originals to the patient. They may need them for another provider. If X-rays or radiology films stored on computer discs are left behind 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.
Step 2: Verify Patient Insurance Coverage
Successful claims processing and payment starts with the proper verification of each patient’s insurance coverage and benefits.
Follow the guide below to gather all the information you need to create a complete and accurate patient benefit profile.
Information you need before you contact the insurance company
- First and last name of the patient and the subscriber (if 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 their first visit)
- Diagnosis or chief complaint
- CPT codes for anticipated procedures
Questions to ask 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 (see b) or only a copayment (see d)?
- If there is a deductible, how much is the deductible 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 apply toward meeting the out-of-pocket maximum?
- Does this policy require any type of authorization for the anticipated service(s)? If yes, get the contact information for that internal department or outside agency.
- Is there an annual, lifetime or per illness/diagnosis maximum benefit? If so, how much has been met?
Benefit terms explained
If some of the terms above are confusing, the table below explains them.
| Term | Meaning |
|---|---|
| Pre-existing condition | Most often occurs with a lapse of 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 is responsible to pay before insurance will pay its portion. |
| Copayment | A flat rate assigned to specific procedures that the subscriber is required to pay. It applies most commonly to office visits and outpatient diagnostic procedures. |
| Coinsurance | The percentage of the charge that is the subscriber’s responsibility. It refers to benefits like “80/20,” where the insurance pays 80% and the patient pays 20%. |
| Out-of-pocket maximum | The total out-of-pocket financial responsibility for the patient set by the payer. Once the subscriber has met this amount, services are covered at 100% by the payer. |
| 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 the services rendered. |
Iridium Suite medical billing software from Medical Business Systems has an integrated real-time eligibility function that can do most of this work for you.
Step 3: Obtain Proper Authorizations, When Required
During insurance verification (see Step 2), you may learn that one or more of the services you will provide or order for your patient require an authorization.
If you have no method in place for obtaining authorizations, use the following suggestions to create your office process.
- Gather all pertinent patient information: name, date of birth, insurance policy number and contact information for the authorizing entity. The authorizing entity can be the insurance company, but payers more and more often contract with third-party organizations to perform this function.
- Obtain the clinical data: an accurate diagnosis including the ICD-9 or ICD-10 code, copies of related medical records, the history and physical report from your physician, and the procedure(s) ordered with the appropriate CPT code(s). You will need accurate medical data on your patient, and in some cases actual office notes, to give to the authorizing entity. This means you may not be able to control how fast the authorization is obtained. For this reason, when possible, schedule the services far enough in the future to allow for processing time.
- Submit the request. Now that you have the basics, you are ready to begin the authorization process. Follow the guidelines of the authorizing entity to complete your request. Requests can be made by phone, online or by fax. Complete any forms as accurately and thoroughly as possible. It helps to keep a file on the authorization process for each authorizing entity you work with, so the information is available the next time.
- Wait for the response. With online submissions, you may have your authorization within seconds or minutes. Other authorizing entities take 24 to 48 business hours as their standard turnaround. On occasion, a week or more may pass between the request and the response. If you do not get a response in the time the entity specified, do not simply wait. Follow up by phone or email. You may find that the request was incomplete, and you can provide the missing information. Sometimes the request is sitting unprocessed on someone’s desk, and you have to bring it to their attention.
- Pass the authorization on. Once you receive the authorization, give it to the appropriate party: the billing staff in your office for an in-office procedure, the hospital or outpatient facility, or the diagnostic center.
That completes the authorization process. We hope this makes obtaining authorizations for your patients easier to understand.
Step 4: Collecting Your Charges and Filing Claims
By properly registering your patient and verifying their benefits, you have laid the groundwork for correct claims reimbursement.
Next, establish a reliable process for collecting charge data and filing claims. One of the best ways to do this is to use your practice schedule. Verify that you have received a charge slip or superbill for each patient marked as seen on your schedule.
Integrating multiple systems can improve efficiency in your office. Billing and coding software that imports charge data directly from your EHR removes the need for manual charge entry from superbills. Iridium Suite medical billing software now comes with the Connectivity Clearinghouse, which enables connections to multiple EHR systems.
Preventing denials
To prevent denials and receive proper reimbursement:
- Know which services may conflict or be bundled. Be aware of any services or procedures you provide that may conflict with others or be bundled together according to NCCI (National Correct Coding Initiative) edits. Iridium Suite has a built-in claim scrubber, so a biller can be confident that coding violations will be caught before the claim is generated.
- Stay informed of payer policies. Follow your commercial payers’ medical policies and government payers’ coverage guidelines. These two articles give more detailed guidance on payer policies: Reviewing Commercial Carrier Medical Policies/Clinical Guidelines and Understanding Medicare Fiscal Intermediaries LCDs and How They Affect You.
Filing claims
Now that you have entered clean claims, it is time to send them to the payer. You can file claims on paper, using the standard HCFA-1500 claim form, or electronically.
Electronic claims use electronic data interchange (EDI). EDI is the structured transmission of data between organizations by electronic means. Claims are batched in the medical billing software and then transmitted in an electronic format directly to the payer or to a clearinghouse.
Iridium Suite uses EDI to improve your claims processing in the following ways:
- You can track electronic claims from receipt by the clearinghouse to acknowledgement and acceptance by the payer.
- Electronic claims are pre-screened for certain errors, and notices are sent back to the medical practice within days for quick correction and resubmission.
- Because of their format, electronic claims are processed much more quickly by the payer. In some cases, this reduces the wait for reimbursement from weeks to days.
Step 5: Payment Posting
Once your claims have been sent, you can expect payer responses in as little as 5 days for electronic claims and 3 weeks for paper claims. You may receive these responses electronically, as an Electronic Remittance Advice (ERA), or on paper. 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 correct patient account. Information about denials is attached to the services involved, with complete details, so medical office staff can research the denial and choose the best action to resolve it with the payer. For more detail, read our white paper Understanding Explanation of Benefits Statements.
Whether or not your medical billing software can post ERAs automatically, you need a full understanding of the terms used on every format of payer remittance. The “Amount Paid” column is the easiest to understand. The details that explain the amounts not paid are harder to work through.
Claim Adjustment Group Codes
The explanation for each amount not paid uses a combination of a Claim Adjustment Group Code (two letters) and a Claim Adjustment Reason Code, which can be numeric or alphanumeric. There are 5 Claim Adjustment Group Codes:
| Code | Name | Meaning |
|---|---|---|
| CO | Contractual Obligation | Most commonly refers to amounts not allowed under the payer’s contracted fee schedule. |
| CR | Corrections and Reversal | Indicates a reprocessed claim, either one overturned on appeal or one that denies a previously approved service. |
| OA | Other Adjustment | The default code used when no other group applies. |
| PI | Payer Initiated Reductions | May reflect a penalty imposed by the payer. |
| PR | Patient Responsibility | Typically applies to deductible, copayment and coinsurance amounts under the patient’s policy. |
For more details on these codes, read What are EOB Claim Adjustment Group Codes?
Claim Adjustment Reason Codes range from 1 to W2. They define the adjustment by stating why a claim or service line was paid differently than it was billed. For a complete list, see the Claim Adjustment Reason Codes published by X12.
Posting the remittance
Once you understand the terms, you can post your remittance:
- Match on the service date and procedure, then enter the amounts shown for payment, contractual write-off and patient responsibility. Patient responsibility amounts, such as copays, coinsurance and deductibles, are moved to the next responsible party. This may be the patient or another insurance company.
- When you finish entering the data for a service line, the remaining balance for the payer you are processing should be $0. Any amount that was allowed but not paid should now show as the responsibility of another party, either the patient or another payer.
A $0 allowed amount identifies a denial. Never assume, without checking, that the payer processed a $0 allowed amount correctly. Review the adjustment code carefully against payer payment policies, NCCI edits, your billing records for the account and the patient’s medical record. Accept the write-off only when you are convinced the service was denied correctly.
Step 6: Aggressively Work Your Accounts Receivable
If you followed the previous steps, you have identified the patient’s benefits, obtained the needed authorizations and produced clean claims.
Each of these steps helps keep your accounts receivable (A/R) balances young, meaning recent. They give you the fastest turnaround for claim payments, which keeps your cash flow steady and predictable.
We use the word “young” because one of the most common ways to evaluate a practice’s cash flow is to analyze open balances by age. Aging is usually broken into 30-day groups: 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. As the age increases, the balances should decrease, with the highest amounts always in the 0 to 60 day groups.
The best strategy for keeping your A/R current involves two 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, and rejections often appear in 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, with an ERA returned to your medical billing system. Iridium Suite practice management software uses electronic claim responses and remittances with a warning system. The user sees visual alerts when claims have been rejected or an ERA contains a denial. These tools keep office staff aware of problems that hurt your accounts receivable.
- Regularly check all claims over 61 days old for activity by office staff or the payer. Whether you have had no payer response or you are waiting on a reply to a resubmission, evaluate your aging accounts receivable for proper activity. For example, after you send records for an appeal, call the payer at least every 4 to 6 weeks for a status update. Iridium Suite practice management software is designed for paperless A/R follow-up. An entire accounts receivable 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 progress and resolutions.
The best plan for an efficient and productive medical office is to have a workflow process in place. We hope you can use the recommendations in these six steps to create an office where each person can do their job with ease and confidence.
What has changed since this was written
- ICD-10 replaced ICD-9. ICD-10-CM diagnosis codes have been required on claims since October 1, 2015, so authorization requests and claims now use ICD-10 only. See 5 Facts About ICD-10.
- Pre-existing condition exclusions and dollar limits ended for most plans. Under the Affordable Care Act, most health plans cannot refuse coverage for pre-existing conditions or set lifetime or annual dollar limits on essential health benefits, starting with plan years in 2014. See HealthCare.gov.
- The HCFA-1500 is now the CMS-1500. The paper claim form carries the CMS name, and the current version is the 02/12 form. See CMS-1500 form box by box.
- Prior authorization decisions now have deadlines for some payers. Since January 1, 2026, Medicare Advantage, Medicaid and CHIP plans must answer standard requests within 7 calendar days and expedited requests within 72 hours under CMS-0057-F. See Radiation therapy prior authorization in 2026.
- Medicare patients have new ID numbers. The Medicare Beneficiary Identifier (MBI) replaced the SSN-based HIC number on Medicare cards and claims. See HIC number, MBI and ICN.
- Reason code lists moved to X12. The Claim Adjustment Reason Codes and Remittance Advice Remark Codes are now published at x12.org instead of the Washington Publishing Company website.