Phase I Foundations Quick Guide

What is Medical Billing?

Medical billing the process of submitting claims to insurance companies and patient to receive payments for the services rendered by provider or any healthcare professional.

What is Medical Coding?

Medical Coding is the process of translating treatment and diseases into standardized codes, known as medical coding language i.e. CPT, ICD codes.

What is Medical Billing & Coding?

Medical billing and coding are the language of healthcare finance. They bridge the gap between clinical care and financial reimbursement, ensuring that the valuable services provided by healthcare professionals are recognized and compensated.
Medical Billing & Coding is divided into following main fields:

• Medical Billers
• Medical Coders

What is Medical Biller and Coder?

Biller:

Medical billers take those coded diagnoses and procedures and converts them into claims that are submitted to insurance companies or patients for payment. This involves verifying patient insurance information, calculating charges based on codes and payer contracts, and managing the submission and follow-up of claims. It's like creating an invoice for the healthcare services provided. Person who does medical billing called medical biller.

Coder:

Medical coding is the process of translating medical diagnoses, procedures, and other healthcare services into standardized codes using specialized coding systems like the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) and the Current Procedural Terminology (CPT) codes. Think of it as assigning a unique financial identifier to each medical event. Person who does medical coding is called medical coder.

Explain term Provider, Patient, & Payer.

• Provider

  Providers are the individuals or organizations that deliver healthcare services, such as physicians, hospitals, nurses, therapists, and home health agencies.

• Payer

  These are the entities responsible for paying for healthcare services provided to patient. They can be public (Medicare, Medicaid) or private (insurance companies)

• Patient

  Patient is an individual who takes healthcare services/treatment. Patient is responsible for any remaining costs not covered by their insurance or a public program.

What is Healthcare Software?

Healthcare providers use specialized software to manage patient care, billing, and communication. These systems help connect providers, patients, and insurance companies, ensuring accurate record-keeping and smooth reimbursement for services.

These software systems are typically grouped into three main categories:

• EHR (Electronic Health Record)
• EMR (Electronic Medical Record)
• PM (Practice Management)

Explain EHR, EMR, & PM Soft wares.

EHR & EMR

EHR (Electronic Health Records) and EMR (Electronic Medical Records) soft wares used to record, store, and access patient's important health details such as diagnoses, treatments, medications, and lab test results. These software systems help ensure that patient information is organized and easily available when needed.

EHR software is designed to store a patient’s complete medical history, including data from multiple doctors, hospitals, and facilities — making it shareable across healthcare organizations.

EMR software is designed to store patient data specific to one doctor or facility, and is mainly used for internal record-keeping.

PM

Practice Management (PM) software Is designed for healthcare clinics and hospital everyday billing tasks like scheduling patient appointments, verifying insurance coverage, submitting claims to insurance companies, recording payments, and generating performance reports.

Explain Facility & Practice.

Practice

A medical practice is an established institution that provides medical advice, care, procedures, and materials to patient.

Facility

In the healthcare industry, a "facility" refers to a physical place or location that provides medical services, diagnosis, treatment, or care. These facilities can range from large hospitals to smaller clinics or specialized healthcare centers.

Explain RCM Cycle.

The RCM cycle represents the entire medical billing and coding field processes from start to finish. Let's walkthrough RCM Cycle steps:

1. Appointment Scheduling
2. Eligibility and Demographic Verification
3. Patient Encounter
4. Medical Coding
5. Claim Creation
6. Claim Validation
7. Claim Submission
8. Insurance Follow-up (AR Follow-up)
9. Payment Posting
10. Patient Responsibility & Payment Collection
11. Reporting & Analysis

What is health insurance / program?

A healthcare program or insurance helps protect people from high medical costs and makes it easier to get the care they need when they need it.

What are Government Insurances?

The Insurances that are worked under Federal, States or Local Government are called Government Insurances like Medicare and Medicaid… These Insurances are funded through taxes and have very low cost for individual’s pocket, whereas these insurances required certain criteria on which individual lays can be covered only. These insurances billing is more complex then private / commercial insurances…

What are Private Insurances?

The Insurances that are worked under the private or commercial scale level organizations for both profit and non-profit purposes are called private / commercial insurances like BCBS, Aetna and Cigna… These insurances are funded though premiums paid by individuals or employee and have little high to higher cost for individual / employee’s pocket according to the plan they enrolled. But these insurances do not require certain criteria for coverage. These insurances add additional steps for networks and pre-authorization in billing whereas Govt. insurances do not need this.
Private / Commercial Insurances are further divided into two main ownership Types as following:

• For Profit Based Organizations
• For Non-Profit Based Organizations

What do you mean by profit and non-profit based Organizations?

Profit based organizations:

For-profit insurance companies are private businesses that focus on making money. They collect premiums from customers and aim to spend as little as possible on medical claims to maximize profits for their shareholders.

Non-Profit based organizations:

Non-profit insurance companies are also run by private health organizations, but their main goal is to serve their members, not to earn a profit. Any extra funds are reinvested into improving care, expanding services, or lowering costs for members.

What is Insurance Policy?

A health insurance policy is a legal agreement between the insurer and insured.
Insurer: The Company or seller or any entity that provides healthcare coverage. Commonly known as insurance company.
Insured: Buyer or person or group who buys the policy to get healthcare coverage. Commonly known as patient.
This contract defines coverage details (what services are included or excluded, & policy duration), payment obligations, rights and responsibilities for both the insurer and insured. Health insurance Policy also called Health Insurance plan.

Explain term Insurer, Insured and dependent

Policy Holder / Insured:

The individual or group who buys the insurance plan. Also called the subscriber or policyholder or patient or consumer.

Insurer / Insurance Company:

The company or organization selling the health insurance plan. The seller of the policy is responsible for covering part or all of the healthcare costs, as outlined in the insurance agreement.

Dependents

Dependent is the eligible individual or family member covered under a primary policy holder's health insurance plan. Dependents typically include spouses, children, or other qualifying relatives as defined by the insurance company.

Explain insurance card and key points to remember

When individual successfully brought healthcare policy then insurance company issued insurance card. An insurance card is an official document provided by your health insurance company that serves as proof of coverage. You’ll need it when receiving medical care or contacting your insurance provider. It contains important information about your health plan and coverage details.

Key Information found on Insurance Card:

• Member Names
• Member ID Number
• Group Number
• Plan Number or Plan Type
• Insurance Company Name and Contact Information
• Patient Responsibility (PR) Details
• Pharmacy Benefits Information (if included)

What is Premiums?

Premiums are the fixed amounts that the subscriber or policyholder must pay monthly (or annually, depending on the agreement) to the insurance company to maintain their health coverage. In other words, premiums are the cost or price of the insurance policy.

What is PR? Explain components of PR.

Patient responsibility in healthcare refers to the portion of healthcare costs that a patient is responsible and have to pay out of pocket, after their insurance company has paid its share. Patient Responsibility (PR) also known as patient liability, patient obligations, patient accountability, patient financial responsibility (PFR) and patient balance.

Components of Patient Responsibility (PR)

1. Deductibles (PR 1)

   Deductibles are the amount patients must pay out of pocket each year before their insurance starts covering medical costs. For example, with a $500 deductible, the patient pays the first $500 of medical expenses that year.
   Once the deductible is met, the insurance begins to pay its share, often alongside coinsurance or copayments. Deductibles reset annually and vary depending on the insurance plan.

2. Coinsurance (PR 2)

   Coinsurance (cost-sharing) is the percentage of healthcare costs that an individual pays after they have met their deductible, with the insurance company covering the remaining percentage. For example, with 20% coinsurance, the individual pays 20% of the bill, and the insurance company pays the remaining 80%.
   Note: coinsurance percentages can vary, with options like 70/30, 60/40, or even higher percentages for the individual, depending on the specific insurance plan/policy.

3. Co-pay (PR 3)

   A co-pay (copayment) is a fixed amount that patients pay at the time of visit or service rendered, regardless of the total cost of care.
   For example, if an insurance plan determines that a patient has a $50 copay for specialist visits, the patient must pay $50 for each visit to the specialist.

What is Out of Pocket Maximum?

An out of pocket maximum is a cap or limit, on your annual healthcare expenses or the maximum amount you will pay for covered health care services in a plan year. Once you reach this limit, your insurance company pays 100% of the costs for covered care for the rest of that year. Some health insurance companies call this an out of pocket limit. It includes deductibles, coinsurance and copays.

What is self-pay patient?

If a patient has no insurance, they are typically responsible for the full cost of the services rendered, as there is no third-party payer. We called such a patients "Self-Pay Patient".

What is non-covered services?

In healthcare, non-covered services refer to medical treatments or procedures that are not included in a patient’s health insurance plan. Because these services are explicitly excluded from the policy’s list of benefits, the patient is fully responsible for paying any non-covered services.

What is claim?

claim is a formal request submitted by health care provider to the patient's insurance company in order to get reimbursed for the medical services provided to the patient. A claim is a document / form that contain info about the diagnosis, treatment, patient's insurance information, provider & facility and patient itself information along with medical records (if needed).
In short, it can be called a bill generated by a healthcare provider towards a patient or patient's insurance company.

Explain term In & Out of Network, PCP, Specialist, & Referrals.

In-Network

In-Network provider, often called a Par-Provider (participating provider) is a healthcare professional or a facility that has a contract with insurance company. This contract is an agreement that includes negotiated rates for services, meaning that patient who utilized in-network provider will generally pay less out of pocket compared to out of network.

Out of Network

An Out-of-Network provider, often called a Non-Par-Provider (non-participating provider) is a healthcare professional or facility that does not have a contract with a specific insurance company or with a particular insurance plan offered by that company. Because there is no negotiated agreement, the cost of services from an out-of-network provider is typically higher for the patient who utilized out of network services.

PCP

PCP stands for Primary Care Physician. It refers to the main health care provider (like a family doctor) who manages the overall patient's health which includes regular checkups, identify and resolve common health care problems, preventive care checkups, and referring to specialists if needed. In medical billing PCP is crucial and recommends to choose one.
In short, the doctor who checks the patient at first before starting any treatment or going to any other doctor is called PCP.
Examples: A family medicine, internal medicine, pediatrician, general practitioner, nurse practitioner can be a PCP.

Specialist

A specialist is a medical doctor who has received advanced training and expertise in a specific area of medicine known as a specialty. They focus on a particular organ system, disease, or patient population, offering more specialized care than general practitioner.
Examples: cardiologist (heart), dermatologist (skin), neurologist (brain / nerve system), podiatrist (foot & ankle), etc. are all called specialists.

Referrals

In context with medical billing a referral is a formal recommendation from PCP to a specialist, or for specific medical services. Actually it is an authorization, often required by the insurance company, allowing patient to see specialist or receive certain treatment and ensuring the service is covered under the patient's plan. Referral also helps to reduce cost and prevent unnecessary treatments or unapproved services.

Example:
If a patient needs to see a cardiologist, their PCP could first need to evaluate the condition and issue referral accordingly. The cardiologist visit could be then billed to the insurance company with referral on file.

Explain provider roles.

In the US health insurance system different types of provider roles exist and each should have its own place which is required for claim submission, coverage, and compliance In short, the provider types have an essential impact on claims. so let's break it down:

There are five types of provider roles:

1. Rendering/ Servicing Provider

   The doctor or health care professional who actually performed the services or procedure, in other words, who give the treatment to the patient.

   Example: Dr Mariana performs a knee surgery. as she gives the treatment, so she's the rendering / servicing provider.

2. Billing Provider

   The entity (person or organization or facility or group) responsible for submitting the claims to the insurance company and receiving payments.

   Example: Dr Mariana performs knee surgery under hospital facility, so in this case hospital facility is a billing provider.
   		So, keep in mind that the billing provider is not the same as rendering in most cases but the doctor can do both rendering and billing like if Dr. Mariana works for her clinic and bill solo.
       Common billing providers are hospital, physician group, facility or solo practitioner (doctor works independently and billing on its own name).

3. Supervising Provider

   Supervising provider is a senior doctor/healthcare professional overseeing the care delivered by another doctor or health care professional (often - mid-level providers like nurse, practitioners, or physician's assistant).

   Example: PA (Physician Assistant) sees the patients, while Dr Mariana (MD) supervises the care and sign off. So in this case PA is rendering provider while Dr Mariana is supervising provider.

4. Referring Provider

   The provider (doctor) who sends a patient to another provider for services / treatment.

   Example: A PCP diagnose the patient having a heart problem and refers to a cardiologist. In this case PCP can be a referring provider.

5. Ordering Provider

   The ordering provider is the healthcare professional who decides a patient needs a specific test, supply, or service and formally requests it.

   • They are not necessarily the one who performs or bills for the service.
   • Their role is to document medical necessity like showing that the service ordered is appropriate for the patient’s condition.
   • This is important for insurance coverage, especially for things like labs, imaging, and durable medical equipment (DME).

   Example: A cardiologist diagnoses the patient and orders a cardiac MRI for further evaluation. In this case, the cardiologist is the ordering provider, and the laboratory or imaging facility is the billing provider when it submits the claim for the MRI.

What is Managed Care Plans? Also explain its types.

The term "Managed Care Plan" is used to describe a type of healthcare focused on helping to reduce costs while keeping quality of care high.

In other words, a manage care plan is a healthcare delivery model used by insurance companies to design various types of health plans that aim to control costs, improve care quality, and tailor coverage to meet different individual's needs.

Managed Care Plan Types

Here are the basic types of manager organizations or plans.

1. Health Maintenance Organization (HMO)

   HMO is a low cost plan (typically lower monthly or annually premium and out of pocket cost) with some restrictions. HMO manages care by requiring patients to see in network providers and also have to choose PCP within the network for care coordination. Patients have to see a PCP first and can go to in network specialist or other health care professionals with PCP referral only and out of network providers care is not covered except in emergence. Preventive Care services are covered at 100%
   In short, HMO requires PCP must, can go to in network specialists with PCP referral. Cost less but offer less flexibility.

2. Preferred Provider Organization (PPO)

   PPO is high cost plan (typically higher premiums per month and deductibles) with more flexibility without restrictions like HMO. In PPO patient can go to both in and out of network providers, no PCP required nor referral. Patient can go directly to any specialist or healthcare professional. But note, if a patient goes to out of network provider, the patient may have to pay higher cost sharing as compared to in-network. Preventive Care services are covered at 100%
   In PPO, insurance companies will provide a list of doctors (including specialists) that are in network with the insurance to patients, such a list called provider directory.
   In short, PPO is high cost plan with higher flexibility, no PCP nor referral required and patient can go to any in-network provider directly as well as out of network if benefits are available.

3. Exclusive Provider Organization (EPO)

   EPO is a mid-range plan typically higher cost than HMO but lower than PPO. Like HMO, patients can go to in-network providers, hospitals and specialists and not covered out of network services / visit except in emergency but like PPO patient do not need to choose PCP nor obtain referral for specialists. With EPO, patients can see any provider (including specialists) within the network directly.
   In short, patient can go any in-network provider directly no PCP nor referral required but out of network services are not covered except in emergence.

4. Point of Service (POS)

   POS plans are the combination of both HMO and PPO. Patient can go to both in and out of network providers, hospitals, and facilities but often required to choose a PCP who will manages care and provide referrals for specialist.
   Note: Patient have to pay higher cost share if use out of network care and also POS requires referral for covering specialist care. The POS has typically higher premiums and deductible then HMO but lower than PPO.

What is MCO?

A MCO is indeed a healthcare company or health care plan that utilizes a managed care model to manage health cost while striving to maintain or improve the quality of care. These organizations work to coordinate and manage health care services for their members, often through networks of contracted providers (In-network providers).

Explain Medicare, Medicaid, Tricare, CHAMPVA and Rail Road Medicare

Medicare

Medicare is a federal health insurance that is administrated by CMS (Center for Medicare and Medicaid Services). President Lyndon B. Johnson signed the Medicare and Medicaid Act, also known as the Social Security Amendments SSA of 1965, into law on July 30, 1965. This act established two healthcare programs, Medicare & Medicaid. These programs are funded by a taxes.

Eligibility Criteria:

• Medicare covers individuals who has age of 65 or older.
• It also covers individuals under 65 if they have any certain disabilities or suffering from end-stage renal disease.

Medicare Parts / Plans / Episodes

• Part A (Hospital Insurance (HI))

  This part covers Hospital Services (Ex. Bed Charges, & equipment charges). It cover inpatient care in hospital, skilled nursing facility and some home health cares. Claim will be submit through UB-04 or CMS-1400 Form.
  In short, Part A covers institutional billing.

• Part B (Supplemental Medical Insurance (SMI)

  This part covers outpatient medical services like doctor visits, durable medical equipment, preventive services, lab tests, and more. In other words, it covers all medical related service except hospital, drugs, dental, hearing or routine eye care or long term care like services. Typically Medicare pays 80% of Medicare approved amount and 20% will be paid by yourself for medical services. Patient usually pay a monthly premium for Part B. Claim will be submit through CMS 1500 Form.
  In short, Part B covers professional billing.
  Deductibles: The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025, an increase of $17 from the annual deductible of $240 in 2024. 

• Part C (Medicare Advantage (MA), Medicare Health Plans)

  Medicare Part C also known as Medicare Advantage (MA) plan, is an alternative to original Medicare. It is offered by private insurance companies approved by Medicare and these insurances follow rules set by Medicare. However, each plan can have different out of pocket costs and rules for how you get services.

  Coverage:

  It bundles the benefits of Medicare Part A (hospital insurance) and Part B (medical insurance), and often includes Part D (prescription drug coverage). Additionally, it may offer extra benefits like vision, hearing, dental, and wellness programs.
  In short, Part C covers all three parts A, B, D with other benefits through private insurances on the behave of Medicare.

• Part D (Prescription Drug Coverage (PDC)

  Part D covered with drug program (supply for medicines). It helps cover the cost of prescription drugs, including both brand-name and generic medications. Each plan has a list of covered drugs, known as a formulary, which can vary from plan to plan.
  Note: For this part you must be enrolled in either part A or Part B.
  In short, Part D covers pharmacy billing.

Medicaid

Medicaid is a joint federal and state program that helps cover medical costs for some people with limited income and resources such as children, pregnant women, older adults, needy families, etc. People who receive Medicaid have most or all of their health care services paid for by US federal, state, and local governments. The federal government has general rules that all state Medicaid programs must follow, but each state runs its own program. Medicaid is also known as Public Health Insurance Program.

Eligibility Criteria:

Medicaid covers peoples whose income is lower than property set by their state or local government.

Rail Road Medicare

Railroad Medicare is a government insurance program that covers healthcare coverage for workers of railroad departments or any worker works in the transportation departments that are for railroad are covered under the Railroad Medicare. The eligibility criteria and benefits are the same as of regular Medicare.

Military Insurance

Military insurances are federally funded health benefit programs designed to provide care for active duty, veterans, retirees and their dependents. There are two main categories of Military Health System:

• Tricare
• CHAMPVA

Tricare

Tricare is a military health insurance program administrated by Defense Health Agency (DHA) under the department of defense, a part of the Military Health System. Tricare provides comprehensive healthcare coverage for Active duty (Uniform services), and retired service members of US defense forces, as well as their families and survivors, worldwide. Tricare older/former name was CHAMPUS (Civilian Health and Medical Program for Uniform Services). CHAMPUS was transitioned into TRICARE in the mid-1990s to modernize the military healthcare system and offer more plan options to service members and their families.

CHAMPVA

CHAMPVA (Civilian Health and Medical Program of the Department of Veterans Affairs) is a VA health benefits program designed for the spouses, dependents, and survivors of Veterans who meet certain service-connected disability requirements.

Does Medicare made PR 3 (Copay)?

No, Original Medicare (Part A, B, & D) does not made PR3 (Copay). However, Medicare Advantage plan (Part C) can make PR 3 accordingly

What is COB?

COB stands for coordination of benefits. COB is the process where multiple insurance plans work together to determine how they will pay for a patient's medical expenses. This process ensures that the payment from all plans doesn't exceed the actual cost of care, preventing overpayments and duplicate entries. COB also known as an insurance sequence. Normally, COB occurs when patient has coverage through more than one insurance plan.
In short, COB determines which plan pays first and how much each plan pays by categorizing the plans into sequence like primary, secondary, and tertiary.

What is Medicaid Managed Care Plans?

A Medicaid managed care plan is a healthcare program where a state contracts with a private insurance company to manage and deliver Medicaid benefits to its beneficiaries. Instead of the state directly paying healthcare providers, it pays a set amount to the managed care organization (MCO), which is then responsible for providing or arranging for the necessary medical services. This approach aims to control costs and potentially improve care coordination for Medicaid recipients.

In short: If person is poor, Medicaid will cover it and if person is 65+ or have any disability then Medicare will cover it. Also these programs help out the government to insure that no tax filer will be escape.

What is COBRA?

COBRA stand for the Consolidated Omnibus Budget Reconciliation Act of 1985. It is a federal law that provides temporary extension of health insurance coverage (usually from 18 to max 36 months) to employees and their dependents who lose their employers sponsored health plan due to certain qualifying events. In other words, COBRA is a federal law that allowed employees temporarily continue their employers sponsored group health insurance coverage after losing coverage due to certain events occurs like job loss. However, COBRA continuation of coverage is usually at the individuals expense. Also note, COBRA is a temporary coverage mean there is time limit on coverage.
Think of it like a bridge plan between losing job based insurance and getting a new coverage elsewhere by allowing you to continue your employer sponsored insurance coverage for limited time but you have to pay for it yourself.

What is Capitation?

In medical billing, capitation is a healthcare payment model where providers receive a fixed, predetermined payment per patient (per member, per month) for a defined set of healthcare services, regardless of how many services the patient actually uses. This shifts the financial risk from the payer to the provider, who must manage the costs and utilization of services to remain profitable.

There are two type of Capitation:

1. Fixed Capitation:

   Insurance company pays fixed amount monthly or annually depending on contract regardless of patients. i.e. provider gets fixed amount monthly no matter how much patients he / she checked or provide treatment.

2. Rolling Capitation:

   Insurance company pays fixed amount per patient depending on contract regardless of treatment and services provided. i.e. provider gets fixed amount per patient no matter how many services provider provides to patient.
   Note: Capitation based on patients not on CPTs / treatment services.

What is Indemnity Plans?

An indemnity health plan, often called a fee-for-service plan, pays a set portion of the cost of medical care regardless of which doctor or hospital the individual chooses. It's also known as the oldest form of health insurance plan in the U.S. but now a day a large amount of indemnity plans are replaced by managed care plans due to their cost effectiveness however, many still exist and serve people.

Explain UCR Charges

UCR (Usually Customary and Reasonable) charges are the maximum amount that insurance companies consider acceptable for a specific medical service or procedure in a given geographical area. Health plans use UCR to set the allowed amount as well as determine how much the plan pays and how much is patient responsibility.

What is Allowed Amount?

The UCR amount is used to determine the allowed amount, which is the total payment the health plan will cover for the service.

Provider Charges vs. UCR (formation of Allowed Amount):

If a provider's charge is at or below the plan's UCR amount, the provider's charge becomes the allowed amount.

If a provider's charge is higher than the plan's UCR amount, the UCR amount will be the allowed amount, and the patient may be responsible for the difference (if provider is out of network) or otherwise difference will be adjusted.

In short, we can say "Allowed amount is the maximum allowable UCR amount that insurance company considered to pay for specific service according to geographical area and provider type, it includes insurance paid amount + patient responsibility (deductibles, coinsurance & copay)

What is Adjustment?

The difference between provider charge amount and insurance's UCR (allowed amount) is called a adjustment. If provider is in-network with insurer, then amount will be adjusted otherwise provider has right to bill adjustment amount to patient under certain circumstances.

What is QMB plan?

A QMB (Qualified Medicare Beneficiary) plan is a federal and state-funded Medicare Savings Program that helps low-income individuals pay for their Medicare premiums, deductibles, copayments, and coinsurance for services covered by Medicare through Medicaid.
In short, patient is dual eligible, he / she is eligible for Medicare as well as Medicaid and also note that QMB plans are administrated by Medicaid programs.

What is Authorization?

In medical billing, authorization (or prior authorization) is a process where an insurance company reviews and approves a healthcare provider's request to perform a medical service, procedure, or provide a medication before it is carried out. This approval verifies the service's "medical necessity" and confirms it is covered under the patient's insurance policy, helping to prevent wasteful spending and ensure proper payment for the provider.

	Prior / Pre Authorization: Takes authorization before performing the procedure or service.
	Retro Authorization: Takes authorization After performing the procedure or service.
	

What is Payer ID?

Healthcare providers use payer IDs to submit insurance claims electronically to the appropriate insurance company. It consist on 5 digits, can be letters or numbers or both.

What is Clearinghouse?

In medical billing, a clearinghouse is a third-party intermediary that receives electronic health claims from healthcare providers, checks them for errors, formats them into a standardized way, and then submits them to the appropriate insurance payers.

What is rejection and denials?

A rejection in medical billing occurs when an insurance claim is returned for administrative or technical reasons before being processed for payment, often due to issues like incorrect patient information, missing or invalid codes, lack of prior authorization, or data entry errors. These are distinct from denials, which are rejections based on the medical necessity or coverage of services. Rejections can usually be corrected and resubmitted, whereas denials may require a more complex appeal process.
Rejected claims are comes through clearinghosues while denied claims comes after being processed by insurance company i.e. decision.