Medical Billing - Electronic Billing

The world of medical billing has come a very long way. In the old days, you'd go to your doctor, have your treatment, for whatever it may have been, get your bill, submit your check or give him cash and that was the end of it. Of course, if you had insurance, which back in the stone ages was as rare as hens' teeth, the doctor then sent a paper bill to the insurance carrier, whether it be a private carrier, Medicare or Medicaid. We all know how easy it is for paper to get lost. Well, those days are long behind us. Yes, some doctors still live in the stone ages, but the majority have entered the modern era with the rest of the world and have begun to utilize what is known as electronic medical billing.

Understanding how electronic medical billing works is really not hard. Understanding what is actually involved with the whole process is a different story. So we'll try to keep this article as simple as possible so that you'll have a basic understanding the next time you have to go to the doctor for medical services.

Electronic billing is paperless billing. The bill that is printed out and given to you by the doctor or provider, such as with a clinic, is then entered into the computer along with a lot of information which covers just about everything including who your insurance carrier is, which is the most important piece of information. Without this information, the insurance provider would not know how to process the claim so that the doctor or clinic gets paid.

After the information is entered into the computer, using a specialized medical billing software program, the information is then electronically submitted to the carrier via a modem. A modem is a device that utilizes your phone line in order to transmit information, similar to a fax machine. The difference is that with a fax machine a piece of paper is inserted into the machine, a copy of it is electronically made and passed along the phone line to another fax machine which prints out a copy of the paper on the other end. With electronic billing, there is no paper at all. The information is typed into the computer and then the software itself takes that data and transmits it over the modem to the carrier.

In order for the carrier to be able to read this information, it needs to be sent in a certain format. This format is called NSF format and is standard for every carrier. Having said that, a special program has to be made for each carrier because even though the format is standard, not every carrier uses every field in the format. Because of this, if certain fields are transmitted that the carrier doesn't use, they may reject the claim. But that's another problem altogether.

We'll more closely examine the NSF standard format in a future article in this series while going into more detail regarding the red tape of medical billing. This is one of the main reasons that medical costs are so high.

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Michael Russell Your Independent guide to Medical Billing

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