When you visit a doctor, a lot happens behind the scenes before your medical bill is finalized. One important concept that appears early in the billing cycle is pos 23 medical billing, an example of a place-of-service code used to show where a patient received care. For beginners, the entire medical billing process may seem complicated, but understanding the steps makes everything clearer. This guide breaks down how medical billing works—from the moment you check in to the time your payment is processed.
What Is Medical Billing?
Medical billing is the process of submitting and following up on claims with insurance companies to ensure healthcare providers get paid for their services. It involves converting medical services into standardized codes, preparing claims, sending them to insurance payers, and managing payments or denials. Medical billing connects patients, providers, and insurance companies in a structured financial workflow.
Step 1: Patient Registration
The first step in medical billing is registering the patient. When a patient arrives at a clinic or hospital, their personal information, insurance details, medical history, and contact information are recorded. Accurate registration ensures that there are no mistakes later when the claim is submitted. Even a small error—like a wrong spelling or missing digit in an insurance ID—can lead to claim denials.
Step 2: Insurance Verification
Before providing treatment, the provider’s billing staff verifies the patient’s insurance benefits. They check:
• Whether the insurance is active
• What services are covered
• Copayment or deductible amounts
• Referral or authorization requirements
This step prevents billing issues and helps patients understand their financial responsibility before care begins.
Step 3: Patient Check-In and Check-Out
During check-in, the front desk updates any missing or outdated information. At check-out, the medical coder reviews services provided during the visit. This is where the billing process truly begins. Providers also document diagnoses and procedures performed, which coders later translate into billing codes.
Step 4: Medical Coding
Medical coding is the heart of the billing process. Coders take the healthcare provider’s notes and convert them into standardized codes:
• ICD-10 codes for diagnoses
• CPT codes for procedures
• HCPCS codes for equipment and supplies
These codes ensure that insurance companies clearly understand what services were provided. Correct coding prevents claim rejections and ensures providers receive accurate reimbursement.
Step 5: Creating the Medical Claim
After coding, a medical claim is generated. This claim includes all essential details:
• Patient information
• Provider information
• Codes for diagnoses and procedures
• Charges for each service
• Place of service codes
• Provider’s National Provider Identifier (NPI)
This step prepares the claim for submission to the insurance company, either electronically or on paper.
Step 6: Claim Submission
Most claims today are submitted electronically through specialized billing software. Electronic claims are processed faster and have fewer errors. The claim is sent either directly to the insurance company or through a clearinghouse, which checks for formatting errors before forwarding it to the payer.
Step 7: Claim Processing by the Insurance Company
Once the insurer receives a claim, they review it step-by-step. This process is called adjudication. The insurance company decides:
• What amount they will pay
• What portion the patient must pay
• Whether any services are denied
Insurance companies follow strict rules, and even minor mistakes in coding, dates, or place of service can cause denials.
Step 8: Receiving the Explanation of Benefits (EOB)
After processing the claim, the insurance company sends an Explanation of Benefits (EOB) to both the provider and the patient. The EOB explains:
• What the insurance covered
• What amount was paid
• Why certain services were denied (if any)
• What the patient owes
This document helps both sides understand how the claim was handled.
Step 9: Patient Billing and Payment Posting
Once the provider receives payment from the insurance company, they post the payment to the patient’s account. If any balance remains, the billing office sends a statement to the patient. Patients may owe deductibles, coinsurance, or copayments.
At this stage, it is important for providers to accurately track payments to ensure that every service is properly reimbursed.
Step 10: Handling Denials and Appeals
Not all claims are accepted on the first try. Many claims are denied due to:
• Incorrect coding
• Missing documentation
• Invalid insurance information
• Place of service mistakes
• Lack of authorization
Billing specialists must correct the errors and resubmit the claim. Sometimes, they must file an appeal with additional documentation to justify why the service should be covered.
Why Place of Service Codes Matter
Place of service (POS) codes indicate where a patient received medical care. They help insurance companies differentiate between facility-based and office-based charges. For example, place of service 11 is used for office visits and affects how much the provider gets paid. These codes ensure accurate billing and prevent misunderstandings during claim processing.
Conclusion
Medical billing may seem complicated, but each step has a clear purpose. From patient registration to sending claims and handling payments, the system ensures healthcare providers are paid correctly for their services. Understanding the basics helps patients, beginners, and even new billing professionals navigate the process more confidently.
FAQs
1. What is medical billing?
Medical billing is the process of submitting claims to insurance companies so providers get paid for services.
2. What is the difference between medical billing and coding?
Coding translates medical services into standardized codes, while billing uses those codes to create and submit claims.
3. What happens if a claim is denied?
Billing staff correct errors, gather documentation, and resubmit or appeal the claim.
4. What is an EOB?
An Explanation of Benefits is a document explaining what insurance covered and what the patient owes.
5. Why are place of service codes important?
They show where the service happened and directly affect reimbursement.
