Healthcare Economics 101: How Medical Billing Affects Patients and Providers

Medical billing is a complex process that involves generating and following up on healthcare claims to ensure that healthcare providers receive payments for the services they render. It is one of the most contentious issues in healthcare economics, which has a wide-ranging impact on healthcare providers and patients in various ways.

While medical billing is integral to any medical practice, whether patients pay bills out of pocket or use insurance coverage, errors in the process can be detrimental. Research shows that around 30% to 80% of all medical bills include mistakes, typically resulting from human errors. Errors in medical billing can lead to problems such as delays in the claims process, potential barriers to patient care, and loss of revenue. Read on to learn in detail how medical billing affects patients and providers.


Inadequate Knowledge of Insurance Coverage

Insurance coverage can be confusing for most patients, as it can change rapidly. Many patients may be unaware of any changes in their deductibles and complete insurance information, which can make them reluctant to make payments.

Having complete knowledge of their insurance coverage would benefit patients and healthcare providers. Patients would have information regarding covered services and changes in deductibles, allowing them to properly schedule payments with the practice and budget for any extra costs in a timely manner.

Lack of insurance knowledge can add to the financial strain a patient faces, as medical expenses can already be costly. This can result in unexpectedly high medical bills, denied insurance claims, and delayed payments.

Potential Barriers to Accessing Care

While medical billing minimizes the time spent on billing-related issues for patients, it can also create potential barriers to a patient’s access to care, especially for those without healthcare insurance. Uninsured patients may be less likely to receive the required quality of medical care.

In some cases, higher deductibles and copayments can even increase the financial burden on insured patients, causing them to forgo necessary medical treatment. Even the slightest billing errors can have a major negative impact on patient care. For example, an error can result in a costly diagnostic code or cause the insurance company to permanently deny a patient’s claim, further creating obstacles in the patient’s path to acquiring the required level of medical care.

Communication Issues

Discussing financial matters can be uncomfortable for both patients and healthcare providers, resulting in frustration and confusion, often leading to incomplete patient information that further creates issues. Medical billing is a complex procedure involving the use of insurance jargon and medical codes, which can be confusing for patients.

Although it can be challenging, providers are required to educate patients regarding their bills to streamline the entire process. This allows the staff or providers to effectively gather complete patient information required for medical invoicing and collecting payments. Faulty information can cause reimbursement delays.

Effective communication between providers and patients regarding financial information also results in transparency and clarity, which helps avoid any surprises. For example, patients do not end up with medical expenses they assumed were covered under the insurance policy.


Administrative Burden

The medical billing process can be time-consuming for healthcare providers, as it involves lengthy administrative tasks such as coding, submitting claims, and following up with insurance providers on those claims. These tasks divert their attention from patient care in the long run and can lead to problems, including duplicate billing, incorrect billing, and patients claiming a lack of authorization or referrals for treatment. Most physicians allow a Medical Billing Company to take over so they can redirect their attention to patient care.

Late Payments

Payment delays can be rather unavoidable in some situations, as the entire system of medical billing relies on the patient or the insurance company paying for the services. One main reason for payment delays can be filing insurance claims late, which can potentially lead to denied coverage or severe penalties. Any errors during claims submission can also result in this problem. In some cases, patients are unable to pay on time, which can result in late payments.

Underpayments and claim denials faced while negotiating fair reimbursement with the insurance company can challenge a healthcare organization’s financial viability. Sometimes, insurance companies may impose prior authorization requirements, which can be time-consuming and even result in denied reimbursement.