Thirty patients on the schedule, a full waiting room, and payroll still comes up short. Practice owners run into these issues more often than they admit, and the cause is rarely the clinical work. The money gets stuck somewhere between the exam room and the bank account.
That stretch is medical billing, and this article shows how medical billing works from the first phone call to the final statement. It covers ten steps, who handles the claim at each one, and where claims stall.
Claimstone Billing has 10+ years of collective experience, and the same handful of mistakes turn up in nearly every practice the team reviews.
The four players on every claim
The practice delivers care. Whoever has the money to pay—Aetna, UnitedHealthcare, Medicare, or a state Medicaid plan—determines what is covered and what it will pay. Most visits have a deductible, copay, or coinsurance requirement. Most claims go through a clearinghouse, either Availity or Waystar, between the practice and the payer, to ensure that the file is complete and sent.
Coding and billing get lumped together, but they are two jobs. Coders translate the visit into codes. Billers turn those codes into money. A mistake in the first shows up as a denial in the second.
Step 1: Verify coverage before the patient walks in
With billing beginning at scheduling. Staff input the patient’s name, birth date, insurance ID, and group number and perform an eligibility check. That check is an electronic “270” request, and the plan will respond with a “271” message that states the plan’s status (active or otherwise), the plan’s deductible, the amount of the plan’s deductible that is covered, and the copay.
Skip it and the claim may bounce three weeks later over a lapsed policy. Running it a day or two ahead gives the front desk time to call the patient. Coordination of benefits gets sorted here as well. For a child covered under both parents’ plans, the birthday rule applies: the plan of the parent whose birthday comes first in the calendar year pays first.
Step 2: Get approval for services that need it
Certain services need the payer’s sign-off before they happen. MRIs, many specialty drugs, elective surgery, and therapy visits past a set number all commonly qualify. Miss the approval, and the claim comes back with reason code CO-197, which is very hard to reverse after the fact.
The AMA’s 2024 prior authorization survey put the average at 43 requests per week for physicians and their staff, roughly 12 hours of work. Someone in the office has to own that queue.
Step 3: Document the visit so it supports the bill.
Payers pay for what the chart shows. A visit note holds the chief complaint, history, exam, assessment, and plan, plus the total time when time sets the level. Since 2021, office visit codes 99202 through 99215 are chosen by medical decision-making or by total time on the day of the encounter.
Consider a note that says “patient doing well, continue meds.” A 40-minute visit with a complicated patient gets coded as a low-level visit off that one line. Repeat that a few times a day, and the loss is real money. The copay belongs to this step too. Front desks that collect it at check-in bring in more than those that wait for a statement.
Step 4: Turn the note into charges and codes.
Once the provider signs the note, coders convert it. CPT and HCPCS codes describe what was done. ICD-10-CM codes describe why. The United States transitioned from ICD-9 to ICD-10 for diagnoses on October 1, 2015. Most coders carry an AAPC CPC or an AHIMA CCS credential.
Modifiers go on at this point. Modifier 25 often draws payer audits when used for a separate E/M service on the same day as a procedure. Every diagnosis has to support the procedure it is attached to, because that pairing is how payers judge medical necessity. Charges should be entered within 24 to 72 hours of the visit. Older charges get sloppy and slow.
Step 5: Build the claim and scrub it
Billing software assembles the claim from registration data, charges, and codes. Physician and other professional services use the CMS-1500, or its electronic twin, the 837P. Hospitals and facilities use the UB-04, or the 837I.
A scrubber then reads the claim before anyone else does. It hunts for empty fields, code pairs that cannot go together, and conflicts with the National Correct Coding Initiative edits that CMS publishes. A fix at this point costs a few minutes. The same fix after a denial costs weeks. Most billing teams want at least 95 percent of claims to pass the payer’s first review.
Step 6: Submit the claim before the clock runs out
The claim usually goes to a clearinghouse, which reformats it, applies its own edits, and passes it to the payer. Two reports come back: a 999 acknowledgement for the file, then a 277CA status on each claim. A rejection means the payer never took the claim in, so the practice fixes the error and resends it. No appeal is needed. A denial is a different animal, covered in Step 9.
Electronic filing is mandatory for Medicare under the Administrative Simplification Compliance Act, though providers with fewer than 10 full-time equivalent employees are exempt. Filing deadlines vary. Medicare Part B gives 12 months from the date of service, and many commercial payers give somewhere between 90 and 180 days. Miss it and the claim is denied as CO-29, with almost no way back. In February 2024 the Change Healthcare cyberattack showed how much rides on the clearinghouse, as practices across the country waited weeks to send claims and receive payment.
Step 7: Wait for the payer’s decision.
The review of the payer is called adjudication. The date of service is when coverage is confirmed, the medical necessity criteria is applied, it searches for duplicates, and the codes are cross referenced to its contract and edits. After that it will pay, deny, reduce or postpone the claim, and will request additional information.
A clean electronic claim won’t be paid by Medicare until after day 14, and Medicare will have interest due on clean claims that are not paid within 30 days of day 14. Commercial payers are governed by state prompt-pay requirements and many of those requirements are 30-45 days.
Step 8: Post the payment and check the math
Money arrives by EFT, along with an electronic remittance advice, the 835 file, that lists each claim as paid, adjusted, or denied. Posting means matching every line to the right account.
Run the numbers on a $200 office visit. The contract lets the payer allow $120. The patient’s copay is $30, so the payer sends $90. The other $80 is a contractual adjustment, written off because the contract bars billing the patient for it. The 835 labels these amounts with group codes: CO for the contractual write-off, and PR for what the patient owes, split into deductible (PR-1), coinsurance (PR-2), and copay (PR-3).
Someone also has to compare each payment to the contract rate. Underpayments hide easily. A payer that pays $112 against a $120 allowed amount quietly keeps $8 on every claim.
Step 9: Work every denial
A denial sitting in a queue is money lost. Four reason codes show up constantly: CO-16 (missing or invalid information), CO-18 (duplicate claim), CO-50 (not medically necessary), and CO-97 (payment bundled into another service). CO-16 gets corrected and resubmitted. CO-50 needs an appeal letter with the medical record behind it.
Great teams look at all of their denials and divide them into 3 categories: Fixable, Appeal and Write off and then work the Fixable pile first. People don’t have long terms to appeal. Most commercial plans have 180 days for a first-level Medicare appeal, called a redetermination, which must be filed within 120 days of the initial determination notice. Also, reason codes uncover patterns. Repairing the eligibility check is better than appealing 100 claims individually when 40 percent of a practice’s denials are from eligibility issues.
Step 10: Bill the patient and chase what is still open
After insurance pays, whatever remains moves to the patient. The statement lists the amount, the service date, and an option to pay online. A statement mailed within days of the insurance payment gets paid faster than one that goes out weeks later, since the visit is still fresh.
Accounts receivable (A/R) covers everything unpaid. Billers sort open claims into age buckets: 0 to 30 days, 31 to 60, 61 to 90, 91 to 120, and over 120. Claims past 90 days collect at much lower rates, so they get worked first. Many practices aim for 30 to 40 days in A/R. A figure above 50 usually means claims are sitting with nobody chasing them.
Frequently asked questions
What is the time required for medical billing from the visit to payment?
A clean electronic claim to a commercial payer will usually be paid in as little time as 14 to 45 days, depending on the commercial payer and prompt-pay rules in the state. Medicare will not cover costs until day 14. If a denial is received, the process will take an additional 30-90 days as the claim needs to be corrected or appealed and then re-evaluated.
What is the difference between medical billing and medical coding?
Coding converts the visit into the CPT, HCPCS, and ICD-10-CM codes. Billing programs use those codes to build and submit a claim, to post payments, and to follow up on outstanding payments. In a small practice, the two are sometimes performed by the same person; however, the skills vary.
What does it mean to have a clean claim?
A clean claim is complete with all necessary information, valid code combinations, proper patient and insurance information, and no reason for the payer to pause and ask a question. It goes through the scrubber and the payer’s first edits the first time and is received before the filing deadline.
What’s the difference between a rejected claim and a denied claim?
A claim that is rejected does not pass format or data checks before it is paid. The practice corrects the error and resubmits and does not appeal. A claim that has been denied is processed and denied; it requires a claim correction or a formal claim appeal based on the reason for denial.
What is the form CMS-1500?
The CMS-1500 is the most common claim form for professional services like doctor visits. It is maintained by the National Uniform Claim Committee, and the E-copy is the 837P. However, facilities are not equipped with the UB-04.
What is the time period for a practice to file a claim?
Medicare Part B provides a 12-month period of coverage from the date of service. Typically, commercial payers will cover the cost for 90-180 days and Medicaid will vary from state to state. The amount is specific to each payer contract, so it is important to have the dates on file with the billing team.
Who is responsible for the medical billing for a practice?
In a practice with one or two providers, they may only have one provider with an in-house biller for all ten steps, and that provider is out sick, or has decided to leave the practice. When outsourcing, a team is behind every step. Usually, billing companies take a percentage of the collections, which is usually 4 to 8 percent.
What are the reasons for medical claims to be denied?
These are typically due to missing or incorrect eligibility and registration data, prior authorization, codes not matching the documentation, late filing, and duplicate submissions. The vast majority of them begin at the front desk or visit note, prior to the construction of the claim.
Fix the leaks before adding more patients
Ten steps, and a slip at any one of them appears as a delay, a denial, or a write-off. Plenty of practices already see enough patients. The revenue gap hides in registration errors, missing authorizations, slow charge entry, and denials that wait 90 days for someone to open them.
Claimstone Billing works on exactly those points. The team brings 10+ years of collective experience across registration, coding, submission, denial appeals, and A/R follow-up, so each step has an owner and each claim has a follow-up date. Send over the last 90 days of your claims and denial reports. The team will show you where revenue is stuck and what it would take to recover it.