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Medical Insurance Terms

Managed care

Organizations that function as both insurer and provider of health care simultaneously. HMOs were the first type, but variations include preferred provider organizations and independent practice associations. HMOs tend to operate with stricter rules than their variations.

Medical Billing

Medical Billing is the practice of submitting claims to Insurance companies or the government, specifically Medicare in order to receive payment for services provided to a patient by a doctor.

This process is typically performed in a series of steps where the doctor examines a patient who is sick or provides other services. Depending on the service provided and the examination, the doctor creates or updates the patient s medical record. This record will record the things that the patient noted to the doctor regarding illnesses or lifestyle. These form the basis for the diagnosis (may be multiple) that are referenced by the doctor as the basis for treatment.

The treatment, along with the diagnosis, and even the time spent with the patient all can be combined to determine the level of service or procedures that were provided to a patient. The doctor then either provides this information to a medical coder (A certified professional coder is known as a CPC.) or may do the coding himself. Next a billing record, either paper (usually a standardized form called an HCFA) or electronic, is generated with the information, including various diagnoses identified by using numbers from the current ICD-9 manual.

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

Based on the amount negotiated by the doctor and the insurance company, the original charge is reduced. This is sometimes referred to as an allowable. For example, a charge for $80.00 may have a reduction by the insurance company of $24.73. This would mean that when the doctor receives the payment, it would actually be 80.00 - 24.73 = $55.27.

This is further reduced if the patient has a copay. With$5.00 copay, the doctor in the previous example would only be paid by the insurance company for $50.27. The doctor is then responsible to obtain this money from the patient.

Billing Numbers (UPIN, PIN)

The first step to billing for your services is applying for a "Unique Physician Identification Number" (UPIN), a number assigned to an individual physician that stays with him/her throughout his/her career, and a "Physician Identification Number" (PIN), assigned to physician, group or clinic by the assigned Medicare carrier. The PIN number may change with the circumstances of the practice.

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