Author: May 29, 2020

The cost of healthcare is perennially a hot-button issue in the United States. Regardless of your stance on who ought to be footing the bill, it’s worth taking the time to learn how the private hospital billing process works. The following is a simple primer on a complicated process: there are a huge number of considerations that go into hospital billing, and many bills pass between multiple firms, sometimes several times each if multiple audits are required. That said, even a simple bill will at least pass through these basic steps.

Patient Care and Coding

The first step is always to make sure the patient receives appropriate care. This is handled up-front by the check in process, which performs triage and obtains a basic health history. Then the patient is diagnosed and treated. Once discharged, the billing process begins properly, as the hospital inventories what was done. This creates a “code” which is a condensed description of the care that was given.

Coding to Billing                                  

Once a code has been created, it is used to create an itemized bill which can be used to create and file a claim. This is usually done by dedicated medical billing personnel. While in the past this process was done by manually comparing the procedures and care given to a list of codes, then selecting the appropriate coding to create the bill, these days chargemaster software often handles this part of the billing process. After the bill is audited for accuracy it can be sent to claims.

Billing to Claims

Nearly all hospital treatment is eventually paid for by health insurance, so the next step is to create a claim and pass it to the insurance company. This is often done via a clearinghouse, but some hospitals send the claims directly. At this point the insurance company either pays the claim, sends it back to the hospital for corrections, or denies the claim (usually based on details of the healthcare policy purchased by the patient.)

It’s the last part of the process that tends to generate the most controversy, but the entire billing process remains somewhat obscure to most patients, who simply receive the itemized bill after their stay, hopefully along with an explanation of benefits from their insurance company. The entire process generates overhead, but it’s also important to ensure accuracy and accountability, so having multiple ‘middlemen’ in the process isn’t necessarily a bad thing. Overall, healthcare spending remains a fiendishly complicated issue, one that defies easy solutions.