THE BILLING PROCESSES

Providers and billing companies can submit claims to Medicare that cause payment errors. However, errors on claims can occur long before an actual claim is produced. Providers, their employees and subcontractors may add, delete or modify potential claim information at several points in the billing process. Vulnerabilities inherent in billing processes affect claim accuracy. 

Data Origination 

“It is important to establish control of the data as close to the point of origination as possible, since the remainder of ...[the processing steps] depends upon the accuracy of source data.”

For some patients, the billing process begins when they schedule an office visit. Some medical providers have integrated their patient appointment software with their billing software. In these systems, the billing software system is prepared to execute a claim for each patient scheduled, using information already in the billing system, unless the appointment is canceled. In these instances, patients who fail to keep their appointment may still be billed for services.

For most patients, the billing process begins after a physician or other medical supplier provides services to them. Information about a patient visit and services provided is recorded in the patient’s medical chart by the physician usually during the visit. Nearly all physicians make notes in the patient’s chart during a patient visit. Many physicians use their handwritten notes as reminders and as a guide when dictating patient visit information for transcribing. Diagnostic and service information about the patient visit is very rarely coded directly into medical billing software by physicians and other medical service providers.2 This information is usually conveyed to the person or entity responsible for preparing a bill via a “source document” completed at the end of the patient visit. 

Source Documents  

“Special purpose forms should be used to make sure the preparer initially records a transaction correctly and in a uniform format.”

Source documents help promote accurate initial recording of information that will be used to generate claims. Missing or inaccurate entries exposes physicians and other medical suppliers to payment errors. These errors could result in an overpayment or under payment to the provider. 

Source documents can be preprinted forms completed by the physician or handwritten notes made by the doctor or notes made by other office staff for a physician. Whether formal or informal, all source documents provide information needed for billing. The source document conveys information from the doctor or other medical supplier to the person responsible for entering information about the patient encounter into the billing system. The quality and completeness of this information varies from physician to physician. We have attended billing seminars where billing personnel expressed frustration at their inability to get their physicians to provide diagnostic information.

Source documents are usually tailored to meet specific physician and medical supplier needs. This is usually done by listing only the most common procedures and services provided to patients. The physician simply checks off the procedure or service provided or hand enters services not on the preprinted form in space provided for this purpose. While most physicians use preprinted forms, some do not. These physicians jot down the information on a piece of paper or verbally inform office staff as to what services were provided to a patient. In rare cases, physicians may enter their own claim information directly into their own computer system. 

Source documents are used to prepare the actual bills submitted to Medicare. Their design can influence billing decisions, possibly steering the user to procedure codes that have higher payment. Source documents may be ambiguous, leaving the user uncertain as to actual diagnosis and treatment provided to a patient. If improperly completed, documentation in the patient’s medical file will not support the services billed and the resulting claim will be incorrect. 

Improperly designed source documents that limit coding options, fragment procedure codes or otherwise affect the services billed to Medicare also contribute to billing error. Recent action by the Justice Department seeks recovery of millions of dollars in overpayments arising out of source documents that limited procedure code selection to higher valued codes. A number of cases involving improperly designed source documents that fragmented services, added services or upcoded services have also been successfully pursed by the Justice Department in recent years.