Medical Billing

# Why Is Medical Billing A Nontransparent And Difficult Process?

- January 31, 2025
- Posted by Kristen Edwards

22 Jan

Medical billing is essential to hospital financial viability and efficiency. It helps to pay accurately and in time for the healthcare services delivered – which is critical for the revenue cycle of the hospital. Medical billing efficiency improves cash flow and allows hospitals to invest in human capital, technology, and patient care. Medical billing is the way to ensure a timely reimbursement and no delay or mistake can ruin the healthcare provider’s cash flow and finances.

Coverage, rules, and exclusions are subject to change across health insurance policies. There are three main coverage options for patients: private insurance, government insurance (Medicare, Medicaid), and employee insurance. Each plan has different prices, copays, deductibles, and out-of-pocket maximums that patients may find challenging to decipher when receiving medical charges. Medical billing is not exactly transparent or this lack of transparency in billing has many reasons for this opaqueness. Understanding and executing medical billing is indeed not for patients and health care providers. Let’s explore why is medical billing a nontransparent and difficult process and complexities connected to it.

## Complexity of Healthcare Billing

Healthcare billing is complicated by a number of interrelated factors that make it a difficult process for both the patient, the physician, and the payer. The major factors driving this complexity are as follows:

### Multiple Stakeholders Involved

- Patients: End-users who are usually paid for part of the bill through deductible, copay or coinsurance.
- Medical Providers: Physicians, hospitals, etc. who offer treatment and pay the bills.
- Insurance Companies: The companies who have to pay some of the bill for the patient, but with restrictions, limits and exclusions that can be a hassle to bill.
- Third-Party Billers: Often external billing companies handle provider/insurer claims processing.

### Complex Medical Codes and Terminology

- Diagnosis Codes (ICD-10): These codes are used by healthcare providers to diagnoses and record them. These codes can be specific and multiple, meaning that a patient’s condition might have multiple codes.
- Procedure Codes (CPT and HCPCS): Medical services and procedures have their own codes that need to be applied properly for reimbursement from insurance companies. A patient might have different codes for different tests, therapies, or consultations on the same visit.
- Modifiers & Additional Codes: For more complicated cases, modifiers are used to indicate the difference in procedure, diagnosis or treatment. This causes more error and billing miscommunication.

### Evolving Policies and Coverage Rules

Insurance companies update their coverage terms, co-pays, deductibles and network restrictions periodically. These must be updated on a constant basis, so it might affect how every visit is billable. Pre-authorization may be required for some treatments, in other words the insurance company must pre-authorize the treatment. That can cause additional delays or miscommunications, particularly when medical necessity is disputed.

## Challenges In Medical Billing

### 1. Coding errors

Medical codes include coding the wrong diagnosis or procedure, upcoding (paying for more service than was actually provided) or unbundling (billing for separately coded services that should be billed together). Coding errors can cause claims to be denied, payments to be deferred, and reimbursements to fall short for providers. This issue needs special care, constant education of coders, and the use of technology solutions to improve accuracy.

### 2. Claim Denials Growing

Clam denials can be due to complex and changing regulations, constant change in policy among payers, and bad documentation. Denials need to be reduced by looking for the causes, implementing solid pre-authorization processes, improving documentation, and keeping up with new billing laws.

### 3. Multi claim submission

There are many times where it is just the number of claims and variety of payers’ needs that cause a mistake and you get rejected or delayed submission. Not only does this extend the revenue cycle, it is also a time consuming administrative work and decreases efficiency. This problem requires effective claims management, training of employees, and auditing regularly to catch and correct errors before submission.

### 4. Unqualified billing staff

Medical coding, documentation and working through complex billing standards require special expertise. That shortage causes billing mistakes, delays and more denied claims.

### 5. Incorrect patient information

Incorrect patient information could result in claim rejection or hold-up. Some of these include spelled incorrectly for the patient’s name, a wrong date of birth, or an outdated insurance card. In patient registration, it is important that the front-end team gets all of the patient data that will help in billing and collecting patients.

## Why Medical Billing Is Confusing

Medical billing can be difficult to understand for several reasons:

- Complex Coding Models: Medical billing is based on codes (CPT, ICD-10, HCPCS) to describe diagnoses, interventions and interventions. These codes can be long, complex, and updated often, which is hard for patients, providers, and even insurance companies to navigate.
- Stakeholders: Billing entails multiple parties (patients, providers, insurance companies, and even third-party billing services). Each party has different policies, procedures, and timelines, which can be frustrating when there isn’t agreement or billing information.
- Insurance Coverage Differences: Insurance coverage can differ from one company to the next with regards to coverage, deductibles, co-pays, out-of-pocket maximums, and approved services. You never really know what your specific treatment or procedure will cover when you have different rates from insurance companies and are denied benefits.
- Denial: Claims are rejected by the insurance company due to a few reasons such as omission or misinformation, non-authorization or because the company believes that the service isn’t medically necessary. If claims are refused, patients foot the bill, which leads to unforeseen expense.

## Hidden Costs in Healthcare Billing

Healthcare is a big ecosystem and billing systems are the core. As patient care is most likely the prime concern, medical practices’ financial condition is just as much of an issue. Hidden costs in medical billing for healthcare : hidden costs in healthcare medical billing are expenses patients incur as a result of not knowing. These costs are less obvious, and can come for several different reasons. A few of the typical healthcare hidden fees:

### 1. Out-of-Network Providers

You could end up paying much more when you get care from a facility or provider that is not on your insurance plan. This happens if you visit a doctor you do not know is in-network, or attend an out-of-network hospital. Emergency room visits may be out-of-network even if you were transported to the hospital by ambulance and did not control this.

### 2. Unexpected Medical Tests and Procedures

There are also additional tests or procedures, sometimes at a consultation or procedure, which were not discussed in advance. These can result in costs you didn’t anticipate. Your annual checkup could also involve blood work, imaging or screening that you weren’t informed of ahead of time, or that may not be covered fully by your insurance.

### 3. Facility Fees

There are “facility fees” for hospitalizations and even some clinics that supplement a physician’s visit. These are for the facility itself (administration, operating room) and are usually not communicated in advance. Visit an outpatient surgery center, which could have an additional facility fee for using the centre, depending on the procedure.

### 4. Balance Billing (Surprise Billing)

If a medical provider accepts your insurance but is not in-network, they may bill you for the difference between your insurance and their fee. This is called “balance billing.” There might be an out-of-network anesthesiologist who comes and performs your in-network procedure and you get to pay the rest that insurance doesn’t cover.

### 5. Out-of-Pocket Costs

Insurance coverage can still be very expensive if your deductible or co-pay is very high or certain services are covered only part of the way. Or you may think a procedure is included with your plan, but you have such a high deductible that you are leaving a huge portion of the bill on the table.

### 6. Prescription Drug Markups

Prescription drugs can be much more expensive than you’d expect when you’re on a brand-name medication instead of a generic one or there are other costs not covered by your insurance formulary. Medications may be covered by insurance, but only with a higher co-pay if it’s a “non-preferred” medication, which means an increase in fees that you’re not aware of.

## Medical Billing Loopholes

Loopholes in medical billing are lapses, gaps, or gray areas in the healthcare billing system that could be repurposed, intentionally or unintentionally, by providers, insurers, or patients. Such loopholes could lead to overbilling, underpayment, or incorrect charges that advantage one party over the other. Here are some medical billing loopholes:

### 1. Upcoding

What It Is: actually performed. This is rewarded by the insurance or patient paying more for the treatment. A provider, for instance, could coding an ordinary office visit as a more costly consultation or a small operation as a large surgery. That means more expensive bills for patients or more money from insurers, which could incur penalties should it be discovered.

### 2. Unbundling

Unbundling is the decoupling of services or operations that are meant to be paid by one “bundled” code. With unbundling, operators can charge customers for the service in a separate bill and make the total price go up. A physician can divide the charges for pre- or post-operative testing, surgery and recovery time into individual fees, when these ought to be covered by the same bill. This drives up the overall cost of care and increases patients’ out-of-pocket expenses or insurance co-payments.

### 3. Balance Billing (Surprise Billing)

Balance billing when the provider charges the patient less than what their insurance covered and what the provider charged, often when the patient had no choice about the provider (eg, emergency care or out-of-network specialists). Even when a patient has insurance, the out-of-network doctor may bill the patient for any non-insured part of the charge. This is an invasive practice that can take patients by surprise if they didn’t expect to be seeing an out-of-network provider. It can create major unplanned expenses for patients who don’t know the provider is out-of-network.

### 4. Upcoding for Emergency Services

Emergency care can be expensive and some providers may profit from this by making an everyday visit or non-urgent care an emergency service. A provider might underestimate a patient’s condition or report the treatment as an emergency, and bill for the more expensive emergency care. This could mean higher claims and out-of-pocket expenses for the patient, who might not be aware that their treatment was not considered an emergency.

## Final Thoughts

If the medical billing is outsourced, then patients can have access to transparent and detailed billing statements. This transparency enables patients to visualize the breakdown of costs, insurance benefits and cost-share, which increases financial literacy and allows for better choices when it comes to healthcare expenses. The eligibility screening that a medical billing company does on your behalf for insurance could eliminate claim denials and rejections. Health professionals have more time and focus to devote to patient care if the administrative side of things is outsourced. They can be used to focus on providing better care, a better patient experience and building stronger connections with patients. Outsourcing reduces the costs in a way that may indirectly benefit patients by making providers compete.

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