The billing process is an interaction between the provider and the insurance company (payer). It begins with the office visit. After the provider
sees the patient, depending on the service provided and the
examination, the doctor creates or updates the patient's medical
record. This record contains a summary of treatment and demographic
information related to the patient. Upon the first visit, the provider
will usually give the patient a diagnosis (or possibly several
diagnoses), in order to better coordinate and streamline his/her care.

The treatment, diagnosis, and
duration of service combine to determine the procedure code that will
be used to bill the insurance. The doctor then either provides this
information to a medical coder or other billing specialist. From this, a billing record, either paper (usually on a standardized form called an HCFA) or electronic, is generated. This form includes the various diagnoses identified by numbers from the current ICD-9 manual.

This billing record or claim is then submitted either to a clearinghouse that acts as an intermediary for the information (this is typical for electronic billing) or directly to the insurance company.

The insurance company (payer)
processes the claim. The insurance side of the process begins with
testing the validity of the claim for payment. The tests cover patient
eligibility for payment, provider credentials, and medical necessity.
Upon passing successfully the tests, the payer pays the claim. If a
claim fails the tests, the payer rejects the claim and communicates the
rejection message to the claim submission source.

Upon receiving the rejection
message, the provider must decipher the message, reconcile it with the
original claim, make required corrections, and resubmit the claim
again. This exchange of claims and messages may repeat multiple times
until the claim is paid in full.

The frequency of rejections, denials, and underpayments
is high (often reaching 50%), mainly because of high complexity of
claims and data entry errors. Straight Through Billing technology,
procedures, and training help manage the billing process to receive all
payments on time.

Based on the amount
negotiated by the doctor and the insurance company, the original charge
is reduced. The amount that is paid by the insurance is known as an allowable.
For example, although a psychiatrist may charge $80.00 for a medication
management session, the insurance may only allow $50.00, so a $30
reduction would be assessed.

The insurance payment is further reduced if the patient has a copay, deductible, or a coinsurance.
If the patient in the previous example had a $5.00 copay, the doctor
would be paid $45 by the insurance. The doctor is then responsible for
collecting the out-of-pocket expense from the patient. If the patient
had a $500.00 deductible, the patient would have to pay the contracted
rate of $50 ten times until the deductible was met, at which point the
insurance would begin to cover a portion of the charge.

A coinsurance is a
percentage of the allowed amount that the patient must pay. It is most
often applied to surgical and/or diagnostic procedures. Using the above
example, a coinsurance of 20% would have the patient owing $10 and the
insurance company owing $40.