Billing background


Core: approval or authorization, billable & billed items, charges, claims, costs, data centres, eligibility, fees, fee schedules, financially responsible agencies (FRAs), invoicing, payees, payers, rates, receivables, remit, remittance, revenues, services, "shadow billing", submission, transmission.

Extra: accounting, activity based costing (ABC), inventory, procurement, supplies, suppliers.

Remuneration - how doctors get paid

A doctor's revenues, as for example in British Columbia Canada, can come from any combination of
  • fee-for-service (FFS), where rates may or may not be set privately or may have been negotiated, and which may or may not be paid directly by the patient, who may or may not be reimbursed by government or other financially responsible agency (FRA) such as an insurer
  • sessional, in which the doctor is paid typically in units of weekly or monthly "half days" of service, with the payer absorbing most overhead (examination space, records management etc.) but the doctor remains a private contractor
  • service contract, where an individual or a group of doctors may form a Physician Association for the purpose of providing a pool of negotiated hours per year (e.g. 1600 to 2400 hours per year) to an Agency such as a hospital or public care body.
  • salaried, in which the doctor is an employee

Most countries feature a mix of systems. Many payers (whether public, or private) demand that the doctors provide varying levels of detail about the patients, their medical conditions, and the services rendered as a condition of payment. Even when doctors would have been salaried, this kind of information may be demanded as statistics to justify the salaries and when there is a loss of 1:1 relationship between what is submitted and what gets paid out, it is sometimes referred-to a shadow billing. This is often achieved by having doctors use the same systems for billing and letting the differences be handled by software, or configuration settings, or codes that are suitable to each of different payment arrangements.

Following are several of the challenges posed to medical billing systems for doctors:
  • it is possible for doctors within one group to subscribe to combinations of all of the above payment systems, and for any one doctor-patient service combination the proper method of billing, allowable fee, and data and routing requirements are determined by a complex set of rules that may not always be clearly specifiable, depending on the nature, time, date, and location of service and other factors
  • each patient may have their fees paid by multiple, nonidentical FRAs... sometimes the same item, for the same patient, has to be submitted to a different FRA, depending on the situation
  • it must be possible at the point of initiatiation, or at any later point in the process, for potentially any charge to be able to cancelled, revised, reversed, directed to a different FRA including a patient or guarantor (like a parent) and/or assigned to a different doctor in the practice.
  • there can be interactions among services when multiple services are delivered within a single visit, and even interactions across patients if the number of services delivered in any one interval exceed a defined amount (sometimes referred to as high volume, low intensity practice)
  • in some situations, even though a proper amount had been billed at the time of service, a contract or legislation that governs a capped budget can result in a "clawback" of fees that had already been paid
  • "Missed" billable items are an Achilles heel for practice revenue, typically arising from failure to reliably record, and pursue, the full range of billable items.

Coding systems and Billing

For medical diseases, the prevailing disease coding systems include ICD9 and ICD10 (WHO) as well as SNOMED (US) and READ (UK, now "NHS Clinical Terms"). An example within ICD9 is the 3-digit code 250 for diabetes mellitus (sugar diabetes), wherein a 4th digit, if it were used, would specify a particular form of diabetes. Not a bad outline of these systems was found at

Although the modified ICD9-CM and SNOMED and READ/NHS-CT support the coding of medical procedure, these systems are insufficient for payment purposes. Payers have therefore developed tables for the administration of payments. In BC Canada, fee codes are negotiated between the provincial government and the doctors' medical association. An example for a family doctor consultation is 00110, office visit 00107 whereas for internal medicine doctors the codes are 00310 and 00307.


Some insight into billing complexity, and suggestions for handling it, can be viewed at

What billing and accounting software do

  • identify all unbilled & unpaid items
  • assist the translation (i.e. completion, conformity, correction, committal) of billable items into claims for submission, guided by payers' requirements
  • initiate (submit) payment requests for "billed" and "rebilled" claims
  • retrieve remittances and refusals, and send status updates back to the EMR
  • guide the handling of unpaid accounts receivable and provides financial analysis to guide decision-making and keep the practice solvent
  • the billing software freeB (see gnumed-devel thread had been under consideration)
  • some people are more recently looking at Simple Invoices
  • SQL-ledger has been under consideration for overall accounting functions
  • contingencies needed
    • when the source data (demographic, clinical, service) and/or the linked billable item, require modification AFTER the initial completion and/or submission of the claim

Features checklist

The following is a checklist of items a computerized medical billing system should offer

  • Automatic pricing of most service codes for the doctor's practice type or specialty
  • A complete list of diagnostic codes
  • Unique identifier for each patient
  • Daily balancing of claims
  • Electronic data transfer (EDT) to and from the payers, via clearinghouse where applicable
  • Automatic processing and reconcilitation of payer's remittance advice
    • Detailed list of all claims paid
    • Partial payment list
    • Rejected claims list
  • Delinquency or stale dated claims report
  • Automatic resubmission of unpaid claims
  • Monthly and yearly revenue/payment/adjustment/write-off summaries
  • Monthly and yearly aged accounts receivable report (ie.,) current, 30-60 days/60-90 days/90-120 days/over 120 days
  • Staff training and support


  • Monthly and yearly analysis reports (ie. total number of services and dollars generated by individual fee schedule code)
  • Ability to link your billing system to an appointment scheduling system to audit that all claims have been billed for confirmed patient appointments
  • Ability to link billing, appointment scheduling, and electronic medical records into an integrated system

This is strictly a guideline to the most common applications that a good medical billing software system offers.
Topic revision: 06 Mar 2009, JamesBusser
This site is powered by the TWiki collaboration platformCopyright © by the contributing authors. All material on this collaboration platform is the property of the contributing authors.
Ideas, requests, problems regarding Foswiki? Send feedback
Powered by Olark