Medical Billing and Reimbursement
Billing and reimbursement is the revenue cycle: eligibility verification, charge capture, claim submission, adjudication, payment posting, denial management, and patient collections. Candidates must understand the difference between the charge (what the practice bills), the allowed amount (the contracted rate), and the payment (what the payer actually pays). Know the patient responsibility components: deductible, coinsurance, and copay. Understand clean-claim rules, the CMS-1500 form, electronic claim submission, remittance advice (ERA/EOB), and the appeal process.
Traps to watch
- Confusing copay (fixed dollar amount) with coinsurance (percentage of allowed amount).
- Forgetting that the deductible applies before coinsurance in most plans.
- Assuming the billed charge equals reimbursement - it rarely does under a contract.
- Missing timely filing deadlines, which cause denials that are often not appealable.
- Posting a payment without applying contractual adjustment, which overstates revenue and patient balance.
Rule of thumb
Allowed amount = payer payment + contractual adjustment + patient responsibility. If those three do not add up to the allowed amount, something was posted wrong.
Worked example
Allowed amount $200; deductible met; coinsurance 20%. Payer pays 80% = $160; patient owes 20% = $40. If the practice billed $300, the $100 difference is a contractual adjustment, not patient debt. A candidate who bills the patient $140 has confused the charge with the allowed amount - a very common exam distractor.