Medical Billing: Claims, Reimbursement, and the Revenue Cycle
What the exam tests
Billing questions focus on the revenue cycle as a chain: registration and eligibility, coding, charge capture, claim submission, payer adjudication, and patient responsibility. You should be fluent in the CMS-1500 claim form fields, the difference between clean claims and claims requiring correction, and the vocabulary of reimbursement: allowed amount, contractual adjustment, coinsurance, copay, deductible, and write-off.
Concepts to master
- Payment methodologies: fee-for-service, capitation, and prospective payment; know that Medicare physician payment historically ties to the resource-based relative value scale (work, practice expense, malpractice components).
- Coordination of benefits: primary versus secondary payer rules, and how a secondary payer considers the primary's payment.
- Denials and appeals: timely filing limits, the difference between a denial and a rejection, and the role of remittance advice (ERA/EOB).
- Patient financial responsibility: calculating what the patient owes after the allowed amount and payer payment.
Common traps
A classic distractor is confusing the billed charge with the allowed amount. Payers pay on the allowed amount, not on what you billed. Another trap: treating a rejection (claim not accepted for processing, often a formatting or eligibility error) the same as a denial (payer processed and refused payment). Also watch for questions that assume the patient owes the full balance; the contractual adjustment must be removed first.
Rule of thumb
Allowed amount − payer payment − patient responsibility = contractual adjustment (write-off). Never bill the patient for the write-off.
Worked example: Billed charge $400; allowed amount $250; patient coinsurance 20% of allowed = $50; payer pays $200; the remaining $150 is a contractual adjustment written off, not billed to the patient.