Understanding Few Medical Billing Terms

Health insurance, a product covering a person’s medical expenses, has become a necessity with mounting medical expenses that are too high to pay out of pocket. It has been observed that medical bills have become a major cause of consumer debt and associated financial problems for many people. Depending on an individual’s needs, one can buy a health insurance plan that suits his/her requirements. Medical billing professionals should be aware of various terms related to health insurance to perform their job better.

Health insurance doesn’t cover the total medical costs and it’s designed in such a way that the costs are split with the insurance purchaser until a certain point – the out-of-pocket limit. Once the purchaser hits this limit, the insurance company will pay 100% of the purchaser’s healthcare costs and medical bills. As a revenue cycle management professional, one should know about deductible, copayment, coinsurance and surprise billing. Understanding all these aspects of medical billing is important for perfect revenue cycle management.

  • Deductible: Theamount of money a patient needs to pay out of pocket before the insurer starts covering the patient’s medical expenses is the deductible which is a form of cost-sharing where the insurer splits the cost of medical care with the patient.
  • Copay: An amount that a patient pays as a flat fee any time after receiving certain medical services such as a doctor visit or purchasing prescription drugs is a copay. A copay or copayment is a form of cost-sharing set by the insurer to split the healthcare cost and it differs based on the services a patient receives and the health insurance plan the patient has. Irrespective of the actual charges for a doctor’s visit, a patient’s copay will remain the same. A copay may be applied before and after a patient hits the deductibles. A copay can depend on the type of doctor visited and medicines used. Generally, health insurance plans with a low monthly premium will have a high copay and vice versa.
  • Coinsurance: This is also another way for insurance companies to share costs with customers/patients. Coinsurance is the percentage of medical costs that have to be borne by the patient after reaching the deductible. It depends on the health insurance plan and insurance provider of the patient. A high coinsurance means the patient pays a low monthly premium and vice versa. The main differentiating point between copay and coinsurance is that while copay is a set amount paid at any time a specific healthcare service is received, coinsurance is the percentage of the overall medical bill.
  • Surprise billing: It is the amount that an insured patient receives as a medical bill from an out-of-network provider. It is also known as balance billing as it the difference or balance amount that the patient is billed after the insurer has paid their part. Normally, it is seen that surprise bills are received by patients after emergency visits when they do not have enough time to check if the healthcare provider is covered in the insurer’s network. In some cases, patients receiving non-emergency health care services can also receive surprise bills when they receive care from specialist physician out of network.

Since the profitability and reputation of the medical practices rely upon the medical billing process and RCM services providers, understanding various concepts of medical bills is necessary. When RCM services professionals understand these concepts well, they can prepare accurate bills and get timely collections from patients and reimbursements from insurance companies.

Understanding Few Medical Billing Terms
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