Frequently asked questions

US Healthcare Medical Billing

A. Fundamentals of Medical Billing

1. What is medical billing?
Answer: Medical billing is the process of submitting healthcare claims to insurance payers and following up to obtain reimbursement for covered services provided to patients.

2. What is the Revenue Cycle Management (RCM)?
Answer: RCM is the financial process that begins with patient registration and ends with collecting payment and resolving outstanding balances.

3. What is a medical claim?
Answer: A medical claim is a request submitted to an insurance payer for reimbursement for healthcare services provided to a patient.

4. What is the difference between medical coding and medical billing?
Answer: Medical coding converts clinical documentation into standardized codes, while medical billing uses those codes and other claim information to request payment from payers.

5. What is a clean claim?
Answer: A clean claim contains complete, accurate, and valid information and can be processed by the payer without requiring additional information.

6. What is a claim scrubber?
Answer: A claim scrubber is software that checks claims for errors, missing information, coding issues, and payer-specific requirements before submission.

7. What is claim submission?
Answer: Claim submission is the process of sending a healthcare claim to an insurance payer for adjudication and payment.

8. What is claim adjudication?
Answer: Adjudication is the payer's process of reviewing a claim to determine whether the service is covered and how much the payer and patient owe.

9. What is a payer?
Answer: A payer is an insurance company or government program that reimburses healthcare providers for covered medical services.

10. What is a provider?
Answer: A provider is an individual or organization that delivers healthcare services, such as a physician, hospital, clinic, or laboratory.

B. Patient Registration & Eligibility

11. Why is patient registration important?
Answer: Accurate registration ensures that the patient's demographic, insurance, and contact information is correct for billing and claim submission.

12. What information is typically collected during registration?
Answer: Patient name, date of birth, address, contact information, insurance information, subscriber details, and other required demographic information.

13. What is insurance eligibility verification?
Answer: It is the process of confirming whether a patient's insurance coverage is active and determining applicable benefits.

14. What does "active coverage" mean?
Answer: It means the patient's insurance policy is currently in force for the date of service.

15. Does active insurance eligibility guarantee payment?
Answer: No. Eligibility does not guarantee payment because coverage, medical necessity, authorization, coding, network status, and other conditions may affect reimbursement.

16. What is a subscriber?
Answer: The subscriber is the person who holds the insurance policy.

17. What is a dependent?
Answer: A dependent is an individual covered under another person's insurance policy, such as a child or spouse.

18. What is the subscriber ID?
Answer: It is the identification number assigned by the insurance payer to the policyholder.

19. What is a group number?
Answer: A group number identifies the employer or organization associated with a group insurance plan.

20. What is a payer ID?
Answer: A payer ID is an electronic identifier used to route claims and other transactions to the appropriate insurance payer.

C. Insurance Concepts

21. What is a premium?
Answer: A premium is the amount paid to an insurance company to maintain insurance coverage.

22. What is a deductible?
Answer: A deductible is the amount the patient generally must pay for covered services before the insurance plan begins paying according to its benefit structure.

23. What is a copayment?
Answer: A copayment is a fixed amount the patient pays for a covered healthcare service.

24. What is coinsurance?
Answer: Coinsurance is the patient's percentage share of the allowed amount for a covered service after applicable deductible requirements are met.

25. What is patient responsibility?
Answer: Patient responsibility is the amount the patient owes after insurance processing, such as deductible, copayment, coinsurance, or certain non-covered amounts.

26. What is an out-of-pocket maximum?
Answer: It is the maximum amount a member generally pays for covered services during a plan year before the plan pays 100% of covered benefits, subject to the plan's rules.

27. What is an in-network provider?
Answer: An in-network provider has a contractual relationship with the patient's insurance plan.

28. What is an out-of-network provider?
Answer: An out-of-network provider does not have a participating contract with the patient's insurance plan.

29. What is an allowed amount?
Answer: The allowed amount is the maximum amount a payer recognizes for a covered service under the applicable plan or contract.

30. What is a participating provider?
Answer: A participating provider has an agreement with a payer to provide services under specified contractual terms.

D. Medicare

31. What is Medicare?
Answer: Medicare is a federal health insurance program primarily serving people age 65 and older and certain younger individuals who meet specific eligibility requirements.

32. What is Medicare Part A?
Answer: Part A primarily covers inpatient hospital and certain other institutional services.

33. What is Medicare Part B?
Answer: Part B primarily covers physician services, outpatient services, and certain medical supplies and services.

34. What is Medicare Part C?
Answer: Medicare Part C refers to Medicare Advantage plans offered by private Medicare-approved organizations.

35. What is Medicare Part D?
Answer: Part D provides prescription drug coverage through private plans approved by Medicare.

36. What is Original Medicare?
Answer: Original Medicare generally refers to Medicare Part A and Part B administered under the federal Medicare program.

37. What is a Medicare Advantage plan?
Answer: A Medicare Advantage plan is a private health plan that provides Medicare-covered benefits under Part C.

38. What is the Medicare Beneficiary Identifier (MBI)?
Answer: The MBI is the unique identifier Medicare uses for beneficiaries instead of the former Social Security Number-based HICN.

39. What is Medicare Secondary Payer (MSP)?
Answer: MSP refers to situations in which Medicare is not the primary payer because another insurance arrangement is responsible first under applicable rules.

40. What is a Medicare crossover claim?
Answer: A crossover claim is a claim or claim information transmitted from Medicare to a secondary payer for consideration of remaining eligible amounts.

E. Medicaid & Commercial Insurance

41. What is Medicaid?
Answer: Medicaid is a joint federal and state program that provides healthcare coverage to eligible individuals under applicable federal and state rules.

42. Is Medicaid administered identically in every state?
Answer: No. Medicaid programs operate under federal requirements but have significant state-specific rules and administration.

43. What is commercial insurance?
Answer: Commercial insurance is health insurance provided by private insurers rather than government programs such as Medicare or Medicaid.

44. What is a managed care plan?
Answer: A managed care plan coordinates healthcare services through a defined network and contractual arrangements.

45. What is an HMO?
Answer: HMO stands for Health Maintenance Organization. It generally emphasizes a defined provider network and coordinated care.

46. What is a PPO?
Answer: PPO stands for Preferred Provider Organization. It generally provides access to a network of preferred providers and may provide some out-of-network benefits.

47. What is a POS plan?
Answer: POS stands for Point of Service. It combines characteristics of HMO and PPO arrangements.

48. What is a high-deductible health plan (HDHP)?
Answer: An HDHP is a health plan with a deductible meeting applicable federal requirements for that type of plan.

49. What is a self-funded health plan?
Answer: A self-funded plan is generally financed by the employer rather than the employer purchasing traditional insurance coverage for claims risk.

50. What is a third-party administrator (TPA)?
Answer: A TPA is an organization that may administer claims, benefits, or other plan functions on behalf of an employer or insurance arrangement.

F. CPT, HCPCS & ICD-10-CM

51. What is CPT?
Answer: CPT is a standardized code set used primarily to report medical procedures and professional healthcare services.

52. Who maintains CPT?
Answer: The American Medical Association (AMA) maintains the CPT code set.

53. What is HCPCS Level II?
Answer: HCPCS Level II is a code set used primarily for products, supplies, certain services, and other items not represented by CPT.

54. Who maintains HCPCS Level II codes?
Answer: CMS maintains HCPCS Level II codes.

55. What is ICD-10-CM?
Answer: ICD-10-CM is the U.S. clinical modification of ICD-10 used to report diagnoses and conditions.

56. What is the primary purpose of diagnosis codes on a claim?
Answer: Diagnosis codes communicate the patient's conditions or reasons for healthcare services and help establish medical necessity when applicable.

57. What is a modifier?
Answer: A modifier is a two-character code appended to a procedure/service code to provide additional information about how or under what circumstances the service was performed.

58. What is modifier 25 commonly used to indicate?
Answer: It indicates a significant, separately identifiable E/M service by the same physician or other qualified healthcare professional on the same day as another procedure or service, when applicable requirements are met.

59. What is modifier 59 commonly used to indicate?
Answer: It identifies a distinct procedural service when the applicable requirements are met and another modifier is not more appropriate.

60. Why must coders and billers follow current code-set guidelines?
Answer: Incorrect or outdated codes can result in claim denials, incorrect reimbursement, compliance risks, and inaccurate reporting.

G. Claim Forms & Electronic Transactions

61. What is a CMS-1500 form?
Answer: CMS-1500 is the standard paper claim form commonly used for professional and certain other non-institutional healthcare claims.

62. What is the UB-04?
Answer: UB-04, also known as CMS-1450, is an institutional claim form used primarily by hospitals and other institutional providers.

63. What is an 837 transaction?
Answer: The 837 is an electronic healthcare claim transaction used to submit claims to payers.

64. What is an 837P?
Answer: 837P is the electronic transaction format generally used for professional claims.

65. What is an 837I?
Answer: 837I is the electronic transaction format generally used for institutional claims.

66. What is an 835 transaction?
Answer: The 835 is the electronic remittance advice transaction used to communicate payment and adjustment information.

67. What is an ERA?
Answer: ERA stands for Electronic Remittance Advice. It provides electronic details about how a payer processed a claim.

68. What is EDI?
Answer: Electronic Data Interchange is the electronic exchange of standardized healthcare transactions between organizations.

69. What is a clearinghouse?
Answer: A clearinghouse acts as an intermediary that receives electronic claims, performs edits or validation, and routes claims to appropriate payers.

70. What is a claim acknowledgment?
Answer: A claim acknowledgment indicates that an electronic transaction was received and may provide information about whether it passed initial format or validation checks.

H. EOB, ERA & Payment Posting

71. What is an EOB?
Answer: EOB stands for Explanation of Benefits. It explains how an insurance claim was processed and how the allowed amount, insurance payment, adjustments, and patient responsibility were determined.

72. Is an EOB a bill?
Answer: No. An EOB explains insurance processing; a provider statement may be sent separately to request payment from the patient.

73. What is payment posting?
Answer: Payment posting is the process of recording insurance and patient payments, contractual adjustments, denials, and other claim-level financial information in the billing system.

74. What is a contractual adjustment?
Answer: A contractual adjustment is an amount that the provider agrees not to collect because of a contractual arrangement with the payer, when applicable.

75. What is an insurance payment?
Answer: It is the amount paid by the insurance payer toward a claim after adjudication.

76. What is a recoupment?
Answer: A recoupment is the recovery of money previously paid by a payer, often because of an identified overpayment or other payment issue.

77. What is an overpayment?
Answer: An overpayment occurs when a payer pays more than the amount properly due under the applicable claim and benefit rules.

78. What is an underpayment?
Answer: An underpayment occurs when the amount reimbursed is less than the amount expected based on the applicable contract, fee schedule, or benefit rules.

79. What is a credit balance?
Answer: A credit balance occurs when the account reflects more payment than is actually owed.

80. What is an aging report?
Answer: An aging report categorizes outstanding receivables according to how long balances have remained unpaid.

I. Denials & A/R Management

81. What is a claim denial?
Answer: A denial occurs when a payer determines that it will not pay some or all of a submitted claim or service based on the applicable rules.

82. What is a claim rejection?
Answer: A rejection generally occurs when a claim fails initial electronic or data validation and is not accepted for adjudication.

83. What is the difference between a rejection and a denial?
Answer: A rejection usually occurs before adjudication because of data or formatting problems, while a denial generally occurs after payer review/adjudication.

84. What is denial management?
Answer: Denial management is the process of identifying, analyzing, correcting, appealing, and preventing claim denials.

85. What is an appeal?
Answer: An appeal is a formal request asking a payer to reconsider a claim determination.

86. What is a timely filing limit?
Answer: It is the deadline established by a payer or applicable rule for submitting a claim.

87. What happens if a claim is submitted after the timely filing limit?
Answer: The claim may be denied unless an applicable exception or valid proof of timely submission exists.

88. What is a medical necessity denial?
Answer: It occurs when the payer determines that the service does not meet its applicable medical-necessity criteria or documentation requirements.

89. What is a duplicate claim denial?
Answer: It occurs when the payer identifies a claim as a duplicate of a previously submitted or processed claim.

90. What is an eligibility denial?
Answer: It occurs when the payer determines that the patient did not have applicable coverage for the service/date of service or the submitted eligibility information was incorrect.

J. Compliance, HIPAA & Advanced Billing

91. What is HIPAA?
Answer: HIPAA is a U.S. federal law that includes requirements concerning health insurance portability, privacy, security, and electronic healthcare transactions.

92. What is PHI?
Answer: PHI stands for Protected Health Information. It is individually identifiable health information protected under HIPAA when maintained or transmitted by covered entities and business associates as applicable.

93. What is a Business Associate?
Answer: A business associate is generally a person or organization that performs certain functions or services involving PHI on behalf of a covered entity and is subject to HIPAA requirements.

94. What is a HIPAA violation?
Answer: A HIPAA violation is a failure to comply with applicable HIPAA requirements, such as improperly using or disclosing protected health information.

95. What is prior authorization?
Answer: Prior authorization is payer approval that may be required before certain services, procedures, medications, or supplies are provided or covered.

96. Does prior authorization guarantee payment?
Answer: No. Prior authorization does not necessarily guarantee payment because other requirements, such as eligibility, coverage, medical necessity, coding, documentation, and claim-submission rules, may still apply.

97. What is coordination of benefits (COB)?
Answer: COB determines how benefits are coordinated when a patient has more than one health insurance plan.

98. What is a primary payer?
Answer: The primary payer is generally the insurance plan responsible for processing and paying a claim first under applicable coordination-of-benefits rules.

99. What is a secondary payer?
Answer: A secondary payer may consider remaining eligible expenses after the primary payer processes the claim, subject to the secondary plan's rules.

100. What are the major stages of the medical billing cycle?
Answer: Major stages include:

Patient Registration → Insurance Verification → Authorization/Referral → Charge Capture → Medical Coding → Claim Creation → Claim Scrubbing → Claim Submission → Payer Adjudication → Payment Posting → Denial Management → Patient Billing → A/R Follow-up → Account Resolution.

Quick Exam Revision

For billing exams, students should especially understand these distinctions:

Concept

Key Point

Deductible

Patient pays toward deductible before applicable plan benefits begin

Copayment

Fixed patient amount

Coinsurance

Percentage of allowed amount

Premium

Cost to maintain insurance

EOB

Explains claim processing

ERA

Electronic remittance information

Rejection

Usually fails before adjudication

Denial

Payer adjudicates but does not pay some/all

CPT

Procedures/services

ICD-10-CM

Diagnoses

HCPCS Level II

Supplies/products/certain services

CMS-1500

Professional claim

UB-04/CMS-1450

Institutional claim

837P

Professional electronic claim

837I

Institutional electronic claim

835

Electronic remittance

Clearinghouse

Routes/validates electronic claims

Prior authorization

Approval may be required before service

COB

Coordinates multiple insurance plans

A/R

Accounts receivable

RCM

Revenue cycle management

Note: For exam preparation, payer-specific rules, Medicare requirements, claim forms, code sets, and reimbursement policies should always be studied from the current-year official guidance, because requirements can change.