Private Practice Billing: Anatomy of an Insurance Claim

As I said in an earlier post, billing is a crucial factor in the viability of private practice. In order to be reimbursed by health insurance companies, you have to submit the standardized CMS-1500 form.

To complete the form, you need the following information: The client's name, date of birth, address, phone, marital and employment status, insurance policy number, name and address of the primary insured (if other than the client), as well as the client's relationship to the insured, the employer or school through which the insurance is provided, statement that the client has signed an authorization for the provider to provide medical information to the insurance company and receive payment of medical benefits, a beginning date for the current "illness," ICD-9 diagnosis code(s), prior authorization number (if applicable), date(s) of service (for outpatient therapy, the beginning and end date are the same), place of service code (11 is the designation for an outpatient office), procedure code (see my previous post for common codes), a diagnosis pointer (the number of the line on which the ICD-9 code for which treatment was provided), charges, number of units (a session would be 1), provider's NPI, tax ID, practice and billing address(es), and whether you "accept assignment" (will accept adjustment of the charges without billing the client for the difference - typically, if you have a contract with an insurance company, you have to agree to this provision).

Once you have the information, one option is to submit a hard copy of claims to an address provided by the insurance company, printed on the special paper form with red lines (yes, it has to be on this kind of paper, so you either need a fancy computer program that prints it in red and black following government specifications, and plenty of red ink, or to buy the paper).

Another option is to submit the form electronically. While electronic submission requires more effort to set up initially, it streamlines the process for subsequent submissions. It also has a faster turn-around time, which means you get paid faster. Because of HIPAA requirements for the security of electronic submissions, all claims submitted electronically have to be formatted/encrypted as EDI 837 documents (you may see this number with a letter suffix: 837p is the version for providers, and 837i is the version for institutions). There are several ways to accomplish this:

(1) A few health insurance companies have a system set up via their own website provider portal for claim submission

(2) You can use a billing clearinghouse that takes the non-EDI format claim you submit to the clearinghouse, transfers it to the prope 837 format, and sends it on to the insurance company. Clearinghouses may cost 6%-8% per claim, however.

(3) You may already be using practice management software or an electronic health record platform of some kind. If you are, or plan to use this kind of software, it probably has the capacity to generate claims in the approved format. If the software is web-based, you can probably establish EDI communication with the health insurance companies you work with, through which the claim can be submitted.

Most of these kinds of software platforms have some sort of subscription costs. The more elaborate it is - the more it resembles a medical record rather than a billing program - the higher the cost may be. For the frugal-minded, like myself, there are options, however. For a full electronic medical record, the cheapest option seems to be Care Paths (www.carepaths.com), at about $30 per month. I looked into that option and it seems like a decent system that could be customized to meet the needs of the private practitioner.

However, my practice is small and, as I said, I'm...frugal...so I went with another option: Office Ally (www.officeally.com) offers FREE software, including a bare-bones claim submission platform (Office Ally), but also a more elaborate practice management software platform (Practice Mate), where you can input each of your clients, create visit templates, which automatically fill out all of the key information that stays the same week to week, edit for the given appointment, record copays, issue receipts, and generate claim forms easily and quickly. Office Ally also walks you through the process of setting up EDI communication between Office Ally and each of your payers, allowing you to submit claims and get replies electronically.

Let me know if you are aware of other reasonably priced services, and/or what your billing practices and experiences have been!