What is an EOR in Medical Billing? [Easiest EOR Guide]

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In medical billing, EOR is Healthcare reimbursement, It is defined as the process by which private health insurers or government agencies pay for healthcare providers’ services.

What Is Healthcare Reimbursement?

Healthcare reimbursement plans are often referred to as healthcare reimbursement arrangements to differentiate them from traditional employer-sponsored health insurance plans.

Employers finance health reimbursement plans to a set amount, rather than choosing and managing their workers’ health insurance plans themselves, as Investopedia explains. This fund reimburses employees for their actual medical expenses.

How Does Healthcare Reimbursement Work?

The way healthcare reimbursement works is the source of many questions about healthcare costs. Depending on whether private or public payers bear the bills, the process differs.

Private Payers:

Employer-based coverage and individually purchased health insurance are also included in the private payer category. Private payers typically require the patient to pay a copay, coinsurance, or deductible directly to the provider.

Public Payers:  

The US government is the largest single-payer in healthcare, accounting for 25% of all payments by Medicare and Medicaid. As per the American Academy of Pediatrics, Medicare has a significant impact on medical treatment payment levels.

Payments are made after the service is completed in the healthcare sector. Customers in other sectors pay for goods and services when they receive them, making the payment process more complicated. CareCloud, a telehealth service, defines the five-step healthcare reimbursement model.

Consider the following five steps that insurers must take when charging insurance to collect and maintain healthcare reimbursement:

5 Steps of EOR in Medical Billing

1. Enter Initial Information in E-Health Record

In the Electronic Health Record, enter the patient’s diagnostic and treatment information.

Healthcare providers must collect all necessary information to complete the payment, including data from the patient’s electronic health record (EHR). Describe the patient’s medical history as well as the condition with which the patient presented.

Keep a record of the examination results, as well as the diagnosis and treatment plan.

To prove the need for the service delivered, securely save the information in the patient’s medical record.

2. Enter Medical Codes

In the Electronic Health Record, enter the relevant medical codes.

The certified medical coders of the healthcare provider enter the appropriate medical codes for payment in the patient’s EHR. To automate coding input, certain payment processing systems propose the corresponding codes.

The codes convert the provider’s narrative treatment description into the specific terms used by payers to describe the provider’s health services.

The International Classification of Diseases (ICD-10) codes have been revised for the ninth time. The National Center for Health Statistics (NCHS) in the United States has developed an ICD-10 browser to search the code database and obtain information about the codes.

CPT code is an abbreviation for Current Procedural Terminology. The American Medical Association (AMA) outlines how doctors and healthcare professionals use CPT codes to improve the accuracy and efficiency of healthcare reimbursement.

The costs paid to providers vary depending on the payer contract and the fee schedule of the provider. The charges take into consideration expenses connected to the provider’s practice, such as malpractice insurance charges. Private contracts allow physicians to negotiate healthcare reimbursement rates, but Medicare bases fees on the provider’s location.

Groups for diagnostic purposes. Diagnostic related groups (DRGs) are used to pay hospitals on a per-hospital-stay basis. Hospitals make money when their expenses are less than the DRG rate and lose money when their expenses exceed the DRG rate.

Models of payment based on value. Value-based reimbursement models pay providers based on the quality of services provided rather than the quantity. These initiatives incentivize clinicians based on patient outcomes and cost containment for the quality of their care.

3. Submit the Claim

Electronically submit the claim. Providers can submit claims directly to payers or submit electronically and employ a clearinghouse as an intermediary, checking claims for any errors.

When mistakes arise, the clearinghouse often rejects the claim, allowing providers to make adjustments and submit a “clean claim” to the payer.

These clearinghouses also convert claims into a common format that is compatible with the software used by payers to facilitate healthcare reimbursement.

4. Claim Evaluation

The payer’s reaction should be interpreted. A payer evaluates a claim after successfully passing through the clearing house and adjudicates entirely towards the authorized amount or rejects all or a portion of the claim. Payers use remittance advice codes with brief explanations to convey healthcare reimbursement rejections to providers.

Providers must analyze these codes to decide whether and how they may fix the claim and resubmit it or bill the patient. Payers, for example, will occasionally reject services that should not be invoiced together during a single visit.

Other times, they reject services because of a lack of medical need or occur within a certain time frame following a related procedure. Rejections might also be due to a lack of coverage or a variety of other factors.

Healthcare reimbursement is frequently a joint responsibility of payers and patients. Many consumers eventually owe a copayment, coinsurance, and deductible amount to the physician, paying directly to the provider.

This price fluctuates according to the patient’s health insurance. With 80/20 insurance, the physician receives 80% of the permitted amount, and the patient pays the remaining 20%.

5. Post Payment Audits

Get ready for post-payment audits. Although providers can take measures to find and prevent errors on the front end, they must still contend with post-payment audits, in which payers request documentation to ensure that claims were paid appropriately.

If the documentation does not support the services invoiced, providers may be required to refund the healthcare reimbursement.

Each of these steps requires some time and resources, two of the most scarce commodities in today’s provider settings.

As the healthcare sector shifts toward value-based payments, health information technology will be essential in streamlining processes and enhancing efficiency in healthcare reimbursement.