When starting to work on Medical Billing in a medical office, it can be very confusing to understand how the doctor actually gets paid for the services they provide.

Over the years, the process has become more complicated as health insurance companies, government departments and health reform have added layers of payment options.

Currently, there are 5 different ways that Doctors can receive payments for their services.

1) In-Network Medical Billing

When the doctor bills a patient’s health insurance company, that they have an existing contracted payment agreement in place. This process is typically more straightforward than billing out-of-network as the guidelines and coverage are clear.

2) Out-of-Network Medical Billing

When the doctor bills a patient’s health insurance company, that they do not have an existing contracted payment agreement in place. When billing out-of-network it is advisable to let a patient know that there may be some remaining amount owed that will be sent via invoice to them at some stage.

3) State and Federal government Medical Billing

When the doctor bills a government agency on behalf of the eligible Medicare, Medicaid, TriCare are examples of these and have varying degrees of payment eligibility. This area can become complicated unless you know what each area of coverage entails.

4) Medicare Advantage payers

When the doctor bills a private health insurance plan that has agreed to offer more affordable rates to Medicare eligible patients. This is often know as Part C of Medicare, this an additional payment plan that is payed for by the patient.

5) Patients paying directly (also called fee for service)

This is where the patient pays the full service fee (sometimes known as the each fee) to the doctor directly. This may also happen in the form of a deductible co-pay amount, or the patient may be billed the remaining amount owed after the insurance company has paid.

Understanding each of these different methods, and the mix that your practice chooses to participate in will help you to know how to explain the process to patients.