What is the Medical Billing Process?

The medical billing process contains seven essential steps. These steps trace the entire claims journey from the moment a patient checks in at a healthcare facility, to the moment they receive a bill from their insurance provider.


Patient registration is the first step in the medical billing process. Registration occurs when a patient gives their provider personal details and insurance information.

Insurance Eligibility Verification

After a patient has registered, the provider must verify the patient's insurance. This helps to confirm that the patient has adequate coverage for the care that they will receive. Verification helps care providers determine coverage and eligibility, and assess the following:

  • What the patient's policy benefits are
  • Whether the patient has accumulated co-pay, deductible or out-of-pocket expenses
  • Whether the patient's insurance provider requires pre-authorization

Medical Coding

Medical coding is a critical step that occurs after care has been administered. Care providers transcribe their notes and other clinical documentation into standardized medical codes. Some of the most common medical coding systems include:

  • Diagnosis-related group (DRG)
  • Current procedural terminology (CPT)
  • Healthcare common procedure coding system (HCPCS)
  • International classification of diseases (ICD-10)
  • National drug code (NDC)

Care providers use these codes to describe which medical diagnoses, procedures, prescriptions and supplies they administered and why. The specificity of medical codes also helps providers describe the patient's condition.

Charge Entry

Charge entry is the last step before care providers submit their claim for payment. Providers or medical billing specialists list the charges that they expect to receive.

Claims Transmission

Claims transmission is when claims are transferred from the care provider to the payor. In most cases, claims are first transmitted to a clearinghouse. The clearinghouse reviews and reformats medical claims before sending them to the payor.

In some cases, healthcare providers send medical claims directly to a payor. High-volume payors like Medicare or Medicaid may receive bills directly from providers. This helps to reduce the time that it takes to receive reimbursement.


Adjudication occurs once the payor has received a medical claim. The payor evaluates the claim, then decides whether the medical claim is valid and how much of the claim they will reimburse.

If the claim is accepted, the payor will issue provider reimbursement and charge the patient for any remaining amount. The payor may deny the claim if the patient has insufficient coverage or did not get pre-authorization for a service. If a payor denies a medical claim, the patient may have to submit an appeal to gain coverage for the care costs.

The payor may also reject a claim. This happens when the claim does not meet formatting requirements or contains an error in medical coding. Rejected medical claims can be resubmitted for payment once the errors have been corrected.

Patient Statement

Patient statement is the final step in the medical billing process. Once the payor has reviewed a medical claim and agreed to pay a certain amount, they bill the patient for any remaining costs.

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