Episode 1: Bird’s Eye Billing

A Billing Overview

In this episode, Sage takes listeners on a tour of the entire insurance billing cycle from claim creation to payment received, and dives into the details for each step of the cycle including CPT codes, EDI files, clearinghouses, and ERA payments. Listen now or check our the transcript below!

Introduction

Hi there! Thank you for joining us for our very first episode of Billing Breakthroughs, a podcast devoted to helping you find billing success. My name is Sage, and I’m a Billing Specialist here at TheraNest.

Today we will be taking a look at the insurance billing cycle from a bird’s eye view in order to gain a deeper understanding of what exactly happens to an invoice from creation to payment.

3 Legged Stool: Scheduling, Clinical Documentation, and Billing

You’ve probably heard of the 3 Legged Stool metaphor, it’s not exactly a new concept. People have used this metaphor time and time again in reference to processes that require three main components in order to be successful. The idea is to think of a process, or an organization or community, or what have you, as a three legged stool. The stool has three legs to keep it standing and it requires all three legs to be strong and stable in order for it to remain a functional object. If one leg were to break, the whole stool would operate far less effectively. I’ve heard this metaphor applied to the concepts of wellbeing: Mind, Body, and Soul, or Self, Family, and Community.

If you’ve watched the TheraNest training video entitled “Billing Set Up”, you’ve seen our training specialist Lauren use a similar model when talking about the triangle of Calendar, Notes, and Billing. So the 3 Legged Stool metaphor can be used within the context of mental health practice management to refer to the three main aspects of the system: Scheduling, Clinical Documentation, and Billing.

Scheduling is the leg that gets your clients in the door (or on the video call, if you are using Telehealth). It’s integral to the sustainability of your practice for obvious reasons: if you don’t have clients scheduling with your practice, you’re not going to have much to do in your office!

Clinical Documentation, such as Intake and Progress notes, are the meat of your professional work. You have worked extremely hard to become an expert in your field, and here is where you excel. You document the observations, diagnosis, and other important details of your client sessions so that your journey with each client is well recorded and able to be tracked over time.

Billing is, in short, the final step after scheduling and documentation that ensures you are compensated for your services.

As you well know from your experience as a clinician, none of these three components can exist without each other. You need to meet with clients in order to create clinical documentation, that documentation is needed to bill for your services, and you need to have an effective billing cycle in order to sustain the income of your practice so that you can continue to see clients.  

Importance of Billing Cycle Comprehension:

If you bill insurance for your services, I know that billing can sometimes feel like this big black box where invoices go in one end and payment, hopefully, comes out the other. Understanding the insurance billing cycle is a little underrated in my opinion. Of course you can be an awesome clinician without a super firm understanding of the insurance billing cycle, but I believe that it will greatly benefit you, your practice, and your clients if you take the time to get really clear on how this system works.  

After all, billing is your source of compensation, this is your income! This also directly affects your clients, because your understanding of the billing cycle allow you to confidently answer questions your clients may have about their bill.

Why Bill Insurance?

You might be wondering what the benefits are to billing insurance if it requires so much know-how. So I’m going to take some time here to go over what those benefits are!

First off, when you are in network with an insurance payer you essentially gain a built-in referral service, because the insurance companies are going to send their members to providers that are in-network the the member’s plan.

This also means that you gain a steady client base, because members are being directed straight to you. And, the services are usually way more affordable for the client because the insurance payer is covering some if not all of the cost. With more affordability comes higher retention rates, because clients do not have a financial barrier to keep them from continuing their sessions with you.

By accepting insurance, you are also increasing your community’s access to treatment, because many clients cannot afford quality treatments if they are paying entirely out of pocket for the services.

Bird’s eye View of the Insurance Billing Cycle:

Okay, now that we’ve gone over the benefits of billing insurance, I think it is high time for us to start our bird’s eye scenic tour of the insurance billing cycle. For this episode I am going to focus on electronic claims, because it is the most common form of insurance billing, it’s the most efficient, and it is also the future of the industry.

Everything starts with the invoice. And just to be clear, in TheraNest you may hear the words “invoice” and “claim” used interchangeably, which is because they both refer to the same thing: the thing that you are submitting to insurance in order to be paid for your services. You’ll invoice your appointments, and in doing so you will begin the process of creating an electronic file (known as an EDI file: Electronic Data Interchange) that will make its way to the insurance payers.

At this point I want to pause for a moment to talk about CPT codes. CPT stands for Current Procedural Terminology. CPT codes communicate to the insurance payers what occurred during the sessions for which you are billing. Each service type that you bill to insurance has a corresponding CPT code.  It is the aspect of the billing cycle that dictates your return from the payer: you set billable amounts for service types and their corresponding CPT codes, then the insurance payer will pay you for that service based on your contracted rate for that CPT code. It is super important to pay close attention to which CPT codes you are using for your service types and to make sure they are accurate before you move on to the next step in the insurance billing cycle.

Alright, so you have created invoices with accurate service types and corresponding CPT codes for the services you have rendered. The next step in the insurance billing cycle is to submit the invoices to the clearinghouse.

Clearinghouses are companies that function as intermediaries who forward the claim information, the EDI file, from your practice management system, like TheraNest, to the insurance payers. They perform a process called claims scrubbing, where the clearinghouses check each claim for errors and verify that it is compatible with the payer software. A few examples of clearinghouses are Apex EDI and Office Ally.

TheraNest, and other practice management systems. can check claims for high level errors like a missing date of birth or address, but the clearinghouse can look for payer specific errors.

When you submit your invoices to the clearinghouse, your claims are converted into those EDI files. If your claim is rejected at the clearinghouse, you will need to make the necessary corrections to your invoice as dictated by the rejection codes you receive from the clearinghouse and resubmit the EDI file for that claim.

Once your claim has been accepted by the clearinghouse, it then passes the EDI file along to the insurance payer. At this point, the insurance payer is going to process the claim and look at a myriad of things, including client eligibility, which refers to what insurance plan the client has, if it is active, and what portion of the claim is insurance or client responsibility. If the claim is accepted by the insurance payer, they will then remit payment back to the billing entity (your practice).

The insurance payer will also send an ERA for each claim. ERA stands for Electronic Remittance Advice, and it is the file that communicates back to TheraNest what was and wasn’t paid on the amount that you billed. The ERA is sent by the insurance payer to your clearinghouse. If your practice management system has the capability to take those ERAs and populate them back into the system, then those ERAs are going to show up there. Otherwise, you’ll need to retrieve them from the clearinghouse. TheraNest, by the way, does pull those ERAs in for you in order to eliminate a step for you.

Once the ERA has made its way back to TheraNest, you will have an explanation of what the insurance payer has paid on the invoice you submitted. From here you can make the necessary adjustments and corresponding write offs to your invoice.

I’ll pause here for just a moment to talk about the difference in TheraNest between an adjustment and write off. An adjustment is a way for you to keep a record of what adjustments were made by the insurance payer on the claim, or in other words the reasons why the insurance payer didn’t pay the billed amount in full. Common adjustments are “Billed Amount Exceeds Contracted Rate”, meaning that the amount you billed for the service types on your claim were higher than your contracted rate with that payer, and “Patient Responsibility”, meaning that a portion of the billed amount will become your client’s responsibility to pay. When you enter in adjustments for your invoices, this will not affect the balance due for the invoice. In order to affect the balance due, you will need to create a write off. A write off is a way for you to reduce the amount due on the invoice, and these write offs are informed by the insurance adjustments. For example, if you bill $100 for a service and the insurance payer pays $80 on the claim and adjusts the remaining balance for $20 with the “Billed Amount Exceeds Contracted Rate”, you will write off the remaining $20 of that invoice.

If the client has secondary insurance, you will essentially repeat the entire submission process to send the claim over to the secondary insurance payer. In this case you will not want to put in any write offs, because the secondary insurance may pay on the remaining balance due that was not covered by the primary payer. For secondary insurance claims, it is very important that you enter in the adjustments provided by the primary payer, because will communicate to the secondary payer why there is a remaining balance on the invoice.

Once you have received an ERA back from the primary payer, and secondary if applicable, then your insurance billing cycle is complete! Your next step will be to bill any client responsibility balance to your client.

Conclusion:

Hopefully this bird’s eye view of the insurance billing cycle has cleared up some of the confusion you may have had surrounding the billing process as a whole. TheraNest prioritizes our customers’ success above all else, and we recognize that knowledge is power. The more you understand about the ins and outs of your billing cycle, the more empowered you will be to confidently bill and be compensated for the services you provide for your clients.

Here at TheraNest, we are dedicated to helping our customers find billing success. Our Billing Specialist team, myself included, are here to support your insurance billing cycle through every step, from invoice creation to payment received. We are here every business day to answer your questions and help you work through any issues that may arise as you embark on your insurance billing journey.

If you are not yet a TheraNest subscriber but would like to change that, you can start by signing up for a free 21 day trial here. If are already part of the TheraNest family and want to start electronically billing through TheraNest, simply send us a message saying “Get Started with Billing” via the “Get Help” button in your account.  

Thank you so much for listening to this episode of Billing Breakthroughs. I wish you all the best in your practice management! This is Sage from the Billing Specialist team and you have been listening to Billing Breakthroughs, a podcast devoted to helping you find billing success. Bye for now!