A claim is part of the billing cycle for any medical service, turned in by the provider to your insurance company for payment. The process of paying for health care services involves submitting and following up on claims to health insurance companies. Whether you have a government issued policy, a group plan, or a private health plan, the claims process is similar, though it varies slightly based on the type of plan you have.

A simplified example of a claim would be an office visit with a physician, which has a total cost of $100. Your plan allows you to pay a $25 copayment when you provide your insurance card, and the remaining $75 is billed to your insurer by the doctor.

Providers usually charge more for services than what has been decided upon by the doctor and the insurance company, therefore reducing the expected payment from the insurer. The portion paid for by the insurance company is referred to as the allowable amount. An Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) will be received to outline what each party is responsible for paying after payment has been made.

Claim forms include the some of the following information in order to describe and document the services rendered:

  • Code of medical service
  • Date of service
  • Provider name and information
  • Patient name and information
  • Insurance policy number and plan details
  • Diagnosis or nature of illness or injury
  • Procedures, services, or supplies

Here is an example of what a claim form looks like and includes:

 Different Plan Types and Payment

The medical billing process varies based on what type of coverage you have. If your plan offers services for a co-payment, then you will be subject to the designated amount established by your plan. Other methods of payment are also frequently exercised. The following is how paying for health care services with the most common health insurance plan types typically works.

HMO

Co-payments make these such an appealing plan type, as they are one of the most simplified methods of providing a doctor with payment. For HMOs, claims are a mandatory element of payment. All providers in the HMO network are required to file a claim in order to get paid. Whether you have an individual plan or coverage through your employer, HMOs cover most services for a co-pay. The provider is also paid a contracted amount by the insurance company for each service.

POS

Similar to an HMO, the POS plan makes many services available for a co-pay. Therefore, the doctor is paid by your set amount, then the claim with the remainder is sent off to your carrier. The providers are paid directly by the health insurance company at a rate already negotiated between them and the insurer. Each service has its own set cost, and the co-payment represents the patient’s portion, while the insurer has its own previously established payment to make.

PPO

Depending on the plan, co-pays may cover certain services, or the patient’s cost will be subject to the deductible or coinsurance. Without a co-payment to regulate the costs, a slightly less predictable claims process occurs, leading to potential mistakes and denial. The provider sends your claim to the insurance company, the insurer reviews it, pays the provider, and sends you the remainder of the bill and an Explanation of Benefits (EOB). Read below for a more detailed description.

PPO Claim Order of Operations

The claims process can be very smooth, though there can be errors made along the way as well. In order to know what to look for to ensure a claim’s correctness, internalizing each step of the way is essential. This can help you understand what went wrong if you experience a claim denial and need to make an appeal.

  1. A patient receives a medical service from any sort of provider, showing their insurance identification card in order to verify their insurance plan type and benefits.
  2. Using their insurance information, the doctor or facility sends an electronic claim form with codes representing the type of service received and diagnosis to the patient’s insurer.
  3. When the insurance company receives the claim, the charges are reviewed to check that the patient’s benefits are properly recorded in order to determine the allowed charge and the amount owed by the patient.
  4. An EOB and a check for the allowed amount from the insurer is sent to the provider.
  5. The provider reviews the EOB, accepts necessary adjustments, and bills the patient for the remainder of the service cost.

 

Denial and Appeal

To prevent experiencing a claim denial, there are a few things to take into consideration. Firstly, before receiving any medical service, it is essential that you consult your schedule of benefits – especially noting the exclusions – or call your insurer to confirm you are covered for a certain type of care. If the service is not covered, you will obviously receive a denial and have to pay the full amount on your own. Some services may require authorization or referrals, which are also necessary in order to ensure coverage is effective.

Another reason your claim can be denied is if your plan has limits on certain services. If you have only a few covered doctor’s office visits with your policy per year, and you have used all of your covered visits up, you will have to pay in full. Waiting periods also can result in claim denial if you have a pre-existing condition with an exclusion period issued, or become pregnant before your maternity benefits are available, for example. Just make sure you are aware of your plan and everything it covers before you go into the office.

If your claim is denied for any reason not listed above, you need to review your file in depth, and check for any errors. Call your insurance company’s customer service department, informing them of the content of the claim, and sort out whether or not the denial was justified. Often times, mistakes happen. The provider puts in the incorrect code for a service your plan does not cover. Other instances have included health insurers incorrectly processing the claim or neglecting to process it. If this is the case, the insurance company can correct the problem.

If the your problem is unable to be resolved through your health insurance company, filing an appeal is the best plan of action. Your policy will indicate how to go about writing an appeal, and the accompanying documents you need to include. This usually consists of copies of the claim form, contact information of your medical provider, and your doctor’s diagnosis on a referral statement.

Each health insurer has a different appeal process, which will be outlined in your benefits booklet. If your first appeal is rejected, you may make another one without penalty. There is lots of waiting and various steps in the appeal process, so be prepared with the right documents to verify and explain your situation, and ultimately clarify your side of the story.