Understanding Medical Billing Methodologies

The Cash Conversion Cycle

[By Staff Reporters]

Most patients and financial advisors don’t have a clue about how doctor’s get paid in our current system; but it’s not by magic. Yet, a number of different steps occur during the processing of a medical claim that can be seen in a flow chart. Each step in the process can be mapped out and each is subject to claim payment-or-claim rejection. A payment time line for a typical FFS or PPO can also be subjected to a number of variables, depending on different factors including staff competency, time, outside vendors, information management, management decisions in general, or regulatory requirements. The total transit times may take weeks for electronic claims or up to two-years for some paper based claims.

First Make the Diagnosis

• ICD-9 alpha numeric code for disease classes, not billing.

• HHS offers ICD-9 [CM] for MDs and facilities.

• WHO-1900, updated every 3-10 years, e-ICD-10 [2013].

• Diagnostic Statistical Manual Mental Disorders, 4th Edition [DSM-IV].

Then Select the Current Procedure Terminology® Code

Medical, surgical and diagnostic task & service billing code numbers [5-digit] of AMA used by payers:

• Thousands updated annually

• Secretive with registered mark ®

• Office Visits: [brief, inter, extended, etc]

• # 99214 physical exam

• # 90658 H1N1 flu shot

• # 12002 one-inch laceration suture

• CDT® and HCPCS codes, too!

Document the Visit in Patient Progress Notes


“I was gardening and noticed my wrist was swollen and itched like crazy”


A 4 inch linear red rash with circular oozing papules and swollen skin is present. Patient is wearing a small tennis bracelet which was tight.


Rule out rues dermatitidis versus nickel allergy.


Soap soaks, with OTC calamine lotion with Rx oral diphenhydramine or [benadryl].

Submit the “Super Bill”

Not a “big bill” or expensive medical invoice; just an invoice

• Official standard billing form used by doctors submitting MC/MD claims.

• Also used by some private insurers and managed care plans.

• Contains patient demographics, diagnostic codes, CPT®, HCPC codes, etc.

• Generic billing form, like the generic HCFA 1500 claim form.

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4 Responses

  1. Cash Flow Squeeze: 2012 IRS Rule Will Withhold Some Medicare Pay

    A little-known provision tucked into a 2005 tax bill requires the Internal Revenue Service, starting in 2012 at the earliest, to withhold 3% of payments to any contractor doing work for federal, state or local governments. The Medicaid program is excluded because it provides services based primarily on patient need.

    But Medicare, which is age-based, is not exempt.

    That means physicians, hospitals and others who bill the government could receive only 97% of what they are owed from Medicare, starting in 2012. That 3% hit would be on top of any across-the-board cuts required by the Medicare physician payment formula.

    Source: Chris Silva, AMNews [12/7/09]


  2. Billing

    Thanks for providing information about medical billing. It is always a good to know more about such services.

    Henry Mark


  3. Claim 1500 Forms

    CMS confirms that providers who currently submit paper claims to Medicare must use the new CMS-1500 form (02/12) for paper claim submissions RECEIVED on or after April 1, 2014. The grace period for submitting the “old” CMS-1500 forms ended midnight March 31, 2014.

    Dr. Harry Goldsmith DPM
    [Cerritos, CA]
    via PMNews #5,028


  4. When redesigning your superbill you want to take a 3 step approach:

    1. Locate your most commonly billed ICD-9 codes: Knowing those ICD-9 codes that you bill the most goes a long way to helping you decide which codes should go on the new superbill for ICD-10. This information is critical to ensuring the appropriate codes are included on the updated superbill.

    2. Convert those ICD-9 codes into ICD-10 codes: There are several tools on the market some that have costs associated with them and others that are FREE! My favorite tool to use for converting ICD-9 codes to ICD-10 codes is http://www.icd10data.com. It is absolutely FREE! Not only can you use it for converting your codes – it is also an awesome coding tool!

    3. Conduct a documentation audit: This is not a regular evaluation and management documentation audit. It is an audit to assess if current documentation standards support the new ICD-10 codes that will be used.

    I know this sounds like a tedious task but with planning it can be a walk in the park. I found two amazing resources HERE from BCBS and you can find this awesome sample superbill HERE — it may not fit for your specialty but I am sure you will get some great ideas from it.

    Dr. Sloan-Kelly MD
    via Ann Miler RN MHA


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