Billing
The claim lifecycle
Last reviewed · Educational use only
The revenue cycle for a professional claim, from scheduling to a zero balance. Select a step to see what happens, the transaction or form used, and the common ways it goes wrong.
Front end · step 1 of 16
Scheduling and registration
Capture demographics, insurance cards (front and back) and the subscriber's details exactly as the plan has them. Ask about any other coverage.
Transaction or tool: Registration
Where it goes wrong: Wrong subscriber date of birth or member ID → eligibility rejection (CARC 31, 16).
Read all 16 steps on one page
- Scheduling and registration Front end
Capture demographics, insurance cards (front and back) and the subscriber's details exactly as the plan has them. Ask about any other coverage. Transaction or tool: Registration. Where it goes wrong: Wrong subscriber date of birth or member ID → eligibility rejection (CARC 31, 16). - Eligibility check Front end
Confirm active coverage on the date of service and pull the benefits through the payer portal or clearinghouse. Transaction or tool: X12 270 / 271. Where it goes wrong: Plan terminated, a new plan this year, or Medicare Advantage replacing Original Medicare (CARC 27, 109). - Benefits verification Front end
Confirm network status, deductible and out-of-pocket status, coinsurance or copay, limits and exclusions for the planned codes. Transaction or tool: Phone or portal; record a reference number. Where it goes wrong: Verifying the carrier rather than the exact plan product; verifying the office visit but not the procedure or device. - Prior authorization and referrals Front end
Get approval for services on the payer's list, and referrals for HMO/POS plans. Transaction or tool: X12 278, portal, fax. Where it goes wrong: Service done before approval, or a different code or unit count than approved (CARC 197, 198). - Patient estimate and financial policy Front end
Estimate patient responsibility from the allowed amount and accumulators; collect copays and deposits; give self-pay patients a Good Faith Estimate. Transaction or tool: Estimate / GFE. Where it goes wrong: Quoting from the billed charge rather than the allowed amount; skipping the GFE for self-pay. - Service and documentation Mid cycle
Clinician documents the medical necessity, what was done, time where relevant, and signs the note. Transaction or tool: Clinical record. Where it goes wrong: Documentation that does not support the code level, missing orders or signatures. - Coding Mid cycle
Assign ICD-10-CM diagnoses, CPT/HCPCS procedures, modifiers, units and place of service, linked to each other. Transaction or tool: Code sets. Where it goes wrong: Diagnosis does not support the procedure (CARC 11), missing modifier (CARC 4), unbundling (CARC 97). - Charge entry Mid cycle
Enter charges at the practice's fee schedule, the same for all payers. The payer's allowed amount comes later. Transaction or tool: Practice management system. Where it goes wrong: Missed charges; billing the contracted rate as the charge, which lowers payment from payers that pay the lesser of charge or fee schedule. - Claim creation and scrubbing Back end
Build the claim and run edits for missing fields, NCCI pairs, payer rules and frequency limits. Transaction or tool: CMS-1500 / 837P, UB-04 / 837I. Where it goes wrong: Rendering vs billing provider mix-ups, missing authorization number (box 23), wrong taxonomy. - Submission through a clearinghouse Back end
Send the 837 batch. The clearinghouse returns file and claim acknowledgements and forwards accepted claims to each payer. Transaction or tool: 999, 277CA. Where it goes wrong: Rejections are not denials: a rejected claim never entered the payer's system and the filing clock keeps running. - Adjudication Back end
The payer checks eligibility, coverage, authorization, medical policy, duplicates and COB, prices the claim, and applies member cost-sharing. Transaction or tool: Payer system; X12 276/277 to check status. Where it goes wrong: Pended claims waiting for records or COB information from the member. - Remittance and payment Back end
The payer sends an ERA explaining each line and pays by EFT or check. The member gets an EOB. Transaction or tool: X12 835, EFT (CCD+). Where it goes wrong: ERA and EFT not matched (reassociation trace number), missing ERA enrollment. - Payment posting Back end
Post payments and adjustments line by line by group code: CO to write-off, PR to patient balance, OA by type. Transaction or tool: Practice management system. Where it goes wrong: Writing off PR amounts, or billing patients for CO amounts; posting a denial as a zero payment and moving on. - Secondary and tertiary claims Back end
Bill the next payer with the primary's adjudication. Transaction or tool: 837P loop 2320/2430 or paper with EOB. Where it goes wrong: Sending secondary before the primary pays; secondary timely filing missed. - Denial management and appeals Back end
Work denials by root cause: correct and resubmit, or appeal with documentation, within the deadlines. Transaction or tool: Corrected claim (frequency 7/8), appeal letter. Where it goes wrong: Resubmitting a duplicate instead of a corrected claim (CARC 18); missing the appeal window. - Patient statements and collections Back end
Bill the patient's share after insurance, offer payment plans and financial assistance, follow federal and state collection rules. Transaction or tool: Statements. Where it goes wrong: Billing before insurance finishes; balance-billing where contracts or the No Surprises Act forbid it.
Forms, code sets and transactions
| Item | Used for |
|---|---|
CMS-1500 / 837P | Professional claims: physicians, therapists, dentists billing medical, DME suppliers, ambulatory services. |
UB-04 (CMS-1450) / 837I | Institutional claims: hospitals, skilled nursing, home health, hospice, facility side of outpatient care. |
ADA claim form / 837D | Dental claims to dental plans. |
| ICD-10-CM | Diagnosis codes: why the service was needed. |
| CPT (HCPCS Level I) | Procedures and visits by physicians and other professionals. Maintained by the AMA. |
| HCPCS Level II | Supplies, DME, drugs, ambulance and services not in CPT (for example E0486, a custom oral appliance for sleep apnea). |
| CDT | Dental procedure codes. Maintained by the ADA. |
| Modifiers | Two characters that change a code's meaning: 25 separate E/M service, 59/XE/XS/XP/XU distinct service, 26 professional component, TC technical component, LT/RT side, 95 telehealth, GA/GY/GZ Medicare liability, KX requirements met, NU/RR new or rental DME. |
| Place of service | 11 office, 12 home, 02 telehealth (not in home), 10 telehealth in home, 19/22 outpatient hospital, 21 inpatient, 23 emergency department, 24 ambulatory surgery center. |
270/271 | Eligibility and benefits inquiry and response. |
278 | Prior authorization request and response. |
276/277 | Claim status inquiry and response. |
999 / 277CA | File-level acceptance, then claim-level acknowledgement from the payer or clearinghouse. |
835 | Electronic remittance advice: what was paid, adjusted and why. |
834 / 820 | Enrollment and premium payment (between employers, exchanges and plans). |
Before the first claim: enrollment and credentialing
- NPI. Type 1 for each individual clinician, Type 2 for the organization. Each carries a taxonomy code describing the specialty.
- Tax ID (EIN) of the billing entity, matching the W-9 the payer has on file.
- Credentialing verifies licenses, education, malpractice and history. Most commercial plans pull from the CAQH ProView profile; keep it attested every 120 days.
- Payer enrollment / contracting links the clinician to the group and sets the fee schedule. Medicare uses PECOS (form CMS-855); Medicare DME suppliers enroll separately and meet supplier standards. Medicaid enrollment is state by state.
- Revalidation is periodic (Medicare every 5 years, DME suppliers every 3). A lapsed enrollment makes every claim deny.
- EDI and ERA/EFT enrollment with each payer and the clearinghouse, so claims go out and payments come back electronically.
Dental practices billing medical plans
Dental sleep medicine and TMD treatment are often billed to the patient's medical plan, not the dental plan. It works like any medical claim, with a few extra requirements:
- CMS-1500 / 837P with CPT, HCPCS and ICD-10-CM codes, not CDT on an ADA form.
- A diagnosis from a physician (for obstructive sleep apnea, a sleep study interpreted by a physician) and a prescription or order for the device.
- Network status with the medical plan, which is separate from dental network status. Many dentists are out of network with medical plans, which is where gap exceptions and single case agreements come in.
- Prior authorization for oral appliances is common. Medicare covers custom oral appliances (E0486) as DME under a DME MAC local coverage determination, and only through an enrolled DMEPOS supplier.
- Medical benefits for DME often fall under the deductible and coinsurance, so verify the DME benefit specifically.