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Updated Feb 12, 2024

Guide to Electronic Claims in Medical Billing

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Max Freedman, Business Operations Insider and Senior Analyst

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Electronic claims in medical billing are rapidly becoming the industry standard. Surely you’ve noticed this, and if you’re not already submitting most or all of your claims electronically, you might be thinking of making the switch. This guide to electronic claims can help you make the transition. Read on to learn why electronic claims might be right for you and how to get started.

What is an electronic claim?

An electronic claim is any medical claim created entirely via digital means, without any paper or printing, usually within medical software that includes a medical practice management system (PMS). You can create and file them yourself or outsource the process to medical billing services. Once you’re set up with the right service, you can submit your claims electronically to payers rather than sending paper Health Care Financing Administration (HCFA) forms by mail.

TipTip

Looking for medical software to create electronic claims? Read our guide to choosing medical software; then consider our picks for the best medical software to learn about some of the top solutions on the market.

Benefits of submitting claims electronically

Here are some key benefits of electronic claims:

  • Time savings: Printing and completing manual forms is a painstaking process that can’t be automated. Your medical billing service can compile electronic claims in a fraction of the time through automation processes that minimize errors. It can then submit these error-free claims almost immediately. Fewer errors, of course, mean fewer claim rejections, which could improve your cash flow.
  • Resource savings: It requires a lot of front-office staff’s time, not to mention a budget for postage, to create and submit medical claims manually. These conditions do not apply to electronic claims.
  • Claim scrubbing: Even the most experienced medical billers and coders are bound to miss errors when double-checking claims. After all, they’re human. Computers and machines are much more accurate. Claim scrubbers, which are fully automated, rapidly catch claim errors and flag them for correction before payer submission.
  • Integrated clearinghouses: Sending claims via mail introduces all kinds of potential delivery errors. Your claims could get lost, or you could send them to the wrong address. The integrated clearinghouses that drive the online medical billing process instead direct your claims exactly where they should go in just seconds. As a result, you can submit your claims to payers almost immediately.
  • Claim tracking: If you send claims by postal mail, you won’t know they’ve reached the insurer unless you pay extra for tracking. Even if you do pay for tracking, you won’t know your claim’s status after delivery until the payer sends you an acceptance, rejection or denial in the mail. With electronic claims, you can instead see your claims’ real-time status every step of the way through a detailed audit trail.
  • Faster payer reimbursement: Postal mail can take several days to reach its destination. If you’re sending a claim or awaiting reimbursements via postal mail, the process can add unnecessary delays to the billing cycle. Conversely, electronic claims go through instantly, and payers can reimburse you the moment they approve your claims. Any billing cycle delays will be eliminated.
  • More accurate accounts receivable: You’re probably well aware that a substantial amount of your practice’s potential revenue and cash are held up in accounts receivable (AR). You’re also probably familiar with the frustrations that come with keeping accurate tabs on your AR. Because electronic claims accelerate the reimbursement process and track all claims, they streamline and improve AR.
Did You Know?Did you know

Properly tracking accounts receivable involves regularly communicating with your patients and payers and solidifying your internal processes. You should also confirm that your payers have received your claims and that your patients have received their statements, all while keeping robust documentation.

How to submit electronic claims

You have two options for submitting electronic claims in medical billing:

Self-service electronic claims

If you handle your electronic claim creation and submission in-house, your process is self-service. Your choice of a medical billing partner can determine whether your claims process is self-service. For example, if your billing partner requires you to keep a medical biller in-house, your process will be at least partially self-service.

For self-service electronic claims, either practitioners like you or, more commonly, your front-office staff will create and submit the claims in question. The self-service model is often straightforward if your practice works with relatively few payers. In this case, each payer likely has specific software you can use to create and file your claims. Things get slightly more complicated if you work with several payers. 

Multipayer practices typically turn to integrated clearinghouses to reduce their billing complexity, but doing so leaves you with a choice: Do you submit files you’ve created, or do you enter data directly into the clearinghouse? File submission can be a viable choice if your PMS can easily compile claims into a single file. Data entry is better if you lack a PMS or you prefer to fill out electronic claims yourself.

Of course, file submission and data entry somewhat de-automate the electronic claim filing process. However, using these methods can be considerably less costly than fully outsourcing your medical billing. That said, they can get expensive if you add functions for insurance information checks, electronic remittance advice (ERA) statements and other things. Many practices find it worthwhile to pay for the full service that comes with outsourced medical billing.

Full-service electronic claims

Full-service electronic claims are virtually synonymous with outsourced medical billing. Third-party medical billing companies typically need just your patients’ basic information and a summary of the services you provided to create electronic claims. They can then quickly convert this information into properly formatted and coded claims. Before submitting these claims to payers, the billing service will run them through claim scrubbers to maximize accuracy.

Most medical billing services will also oversee everything that happens between when your claim is submitted and when you’re reimbursed. If claims are rejected or denied, these medical billing services will handle resubmission or seek patient payment. For transparency throughout the process, you can keep track of your claims’ real-time progress through the medical billing company’s software. The more user-friendly this software is, the easier time you’ll have navigating the muck and mire of what’s often a convoluted process.

Medical billing services result in an extremely hands-off approach to your electronic claims. For thinly spread practices, this is especially helpful, even with the cost. Most medical billing companies retain a percentage of your practice’s monthly collections — typically 2 to 9 percent — for their work.

FYIDid you know

Most third-party medical billers charge 2 percent to 9 percent of your practice’s monthly collections for their services.

You might be worried that outsourced medical billing could quickly become unaffordable. However, a broader view of medical billing shows that outsourcing is worth the cost. Think about the money lost to the errors you or your small staff often make when rushing through claims. That alone can exceed the cost of outsourced medical billing. The upfront costs of outsourced medical billing services often pay for themselves in the long run.

The best medical billing software for electronic claims filing

These are our picks for the best medical billing services for electronic claims filing:

  • Tebra: The online dashboard you’ll get access to as a Tebra medical billing client resembles a social media feed, making it easy to navigate. Within this software, you can track Tebra’s medical billers in real time as they work to electronically file your medical claims. Learn more in our Tebra medical billing review.
  • AdvancedMD: After your in-house team handles charge coding and entry, AdvancedMD scrubs and files your claims electronically. From there, the service handles all of the follow-up on denied claims. Read more about this service, whose billers are often certified medical coders, in our AdvancedMD medical billing review.
  • CareCloud: When payers don’t acknowledge your claims, CareCloud follows up as aggressively about these claims as it does with your denials. The same is true when your approved claims go unpaid. Check out our CareCloud medical billing review to learn more about this vendor’s services.
  • athenahealth: This medical billing vendor takes a data-focused approach, so it’s easy to see your quantity of unpaid claims within the software. You can also compare your data to those of the hundreds of thousands of other medical practices in athenahealth’s network. Our athenahealth medical billing review further details how this company uses data to improve the processes behind your electronic claims.
  • DrChrono: The average DrChrono client submits between 100 and 1,000 claims per month, so this vendor excels at electronic claims management for smaller practices. Rather than just following up on your denied and rejected claims, DrChrono analyzes them to make future improvements. Learn more via our DrChrono medical billing review.

Claims right from your computer

Electronic claims are the industry standard, and the extensive streamlining of your electronic claim processes justifies the cost of hiring a medical billing service. You’ll send far fewer erroneous claims and get paid sooner, thereby improving your cash flow. Plus, you’ll get time back for what matters the most: providing the best possible patient experience.

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Max Freedman, Business Operations Insider and Senior Analyst
Max Freedman has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
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