A Step-by-Step Guide to the Medical Billing Process for Small Practices

Quick Answer: What is the Medical Billing Process for Small Practices?

The medical billing process for small practices involves 10 essential steps:

1. Patient registration and data collection
2. Insurance verification and eligibility checks
3. Charge capture during the visit
4. Medical coding (ICD-10, CPT, HCPCS)
5. Claim generation and submission
6. Claim adjudication by the payer
7. Payment posting
8. Patient billing and statements
9. Denial management and A/R follow-up
10. Compliance checks and performance reporting

Each step requires accuracy and consistency to ensure timely reimbursements and reduced denials.

Introduction: Why Billing Efficiency Matters

For small and independent practices, the billing process directly affects financial stability. Even minor mistakes can lead to claim denials, cash flow delays, and compliance risks. According to the AAPC, the medical billing process involves multiple interconnected steps — from patient registration and insurance verification to coding, claim submission, and collections — all of which must be carefully managed to maintain a healthy revenue cycle. (AAPC – What is Medical Billing)

This guide breaks down the step-by-step medical billing process, providing practical actions and best practices tailored for small practices.

Step 1: Patient Registration and Data Collection

What happens here?

The process starts when a patient schedules an appointment. Staff must collect accurate demographic and insurance information.

✅ Full name, date of birth, address

✅ Insurance policy and group numbers

✅ Contact and guarantor details

Why it matters: Errors at registration are among the top causes of denials.

Step 2: Insurance Verification and Eligibility

What is it?

Before the visit, practices confirm whether the patient’s insurance is active and covers the required services.

✅ Verify coverage is active

✅ Confirm co-pays, deductibles, and co-insurance

✅ Check prior authorization requirements

Step 3: Appointment Scheduling and Charge Capture

Providers must accurately document the services provided during the encounter.

✅ Document diagnoses

✅ Record procedures and services

✅ Include modifiers when needed

Why it matters: Missing or incomplete documentation leads to underbilling or overbilling.

Step 4: Medical Coding

What is coding?

Coding translates medical services into standardized codes that insurers use for processing.

✅ ICD-10 for diagnoses

✅ CPT/HCPCS for procedures

✅ Modifiers for additional details

Challenge for small practices: Keeping up with updates requires ongoing training. Outsourcing coding helps reduce risk and errors.

Step 5: Claim Generation and Submission

Once charges are coded, claims are created and submitted.

✅ Include patient demographics and provider details

✅ Verify all codes are accurate

✅ Submit electronically through clearinghouses

Fact: Roughly 20% of claims face denials or delays, often due to data errors (KFF). Clean claim submission is critical.

Step 6: Claim Adjudication

The payer reviews the claim to decide:

• Approved: Paid according to coverage.
• Denied: Rejected due to errors or policy rules.
• Returned: Requests for more information.

Tip: Tracking adjudication timelines helps small practices spot payer-related delays.

Step 7: Payment Posting

Payments are received and posted in the billing system.

✅ Record payer payments and adjustments

✅ Post patient responsibility amounts

✅ Reconcile with EOB/ERA

Best Practice: Automating ERA posting saves staff time and reduces human error.

Step 8: Patient Billing and Statements

Any remaining balance is billed to the patient.

✅ Provide clear, simple statements

✅ Offer online payment portals

✅ Set up flexible payment plans

Why it matters: Transparent billing improves patient trust and increases payment rates.

Step 9: Denial Management and A/R Follow-Up

Not all claims are paid the first time. Denial management ensures lost revenue is recovered.

✅ Identify denial reasons

✅ Correct and resubmit quickly

✅ Track denial trends

The Kaiser Family Foundation found that insurers denied nearly 1 in 5 in-network claims in 2023 on ACA marketplace plans, underscoring how critical it is for small practices to follow each billing step accurately to minimize preventable denials. (KFF – In-Network Claim Denials)

Step 10: Compliance and Reporting

The final stage involves compliance checks and ongoing performance monitoring.

✅ Review HIPAA safeguards

✅ Track KPIs: clean claim rate, denial rate, days in A/R

✅ Conduct annual audits

The American Medical Association (AMA) highlights HIPAA compliance as a cornerstone of billing workflows (AMA HIPAA Guidance).

Why Many Small Practices Outsource Billing

The medical billing process requires staff, software, training, and compliance expertise. Many practices lack the resources to manage it all. Outsourcing medical billing services for small practices provides:

• Certified coders and billers
• Real-time eligibility verification
• Denial management systems
• HIPAA-compliant technology
• Cost savings vs. hiring in-house staff

Quick Recap: The 10 Steps of Medical Billing

1. Patient Registration
2. Insurance Verification
3. Charge Capture
4. Medical Coding
5. Claim Submission
6. Claim Adjudication
7. Payment Posting
8. Patient Billing
9. Denial Management
10. Compliance and Reporting

Conclusion

The medical billing process is a complex but essential workflow for every practice. For small providers, accuracy and efficiency are vital to ensure timely payments and compliance.

By understanding these 10 steps, providers can reduce denials, increase collections, and keep their focus where it belongs—on patient care.

FAQs

1. What is the medical billing process in healthcare?

It is the 10-step workflow that starts with patient registration and ends with compliance reporting and collections.

2. Why is eligibility verification important?

It ensures services are covered, prevents denials, and clarifies patient financial responsibility upfront.

3. How do small practices reduce claim denials?

By verifying patient info, using accurate coding, and outsourcing billing to experienced providers.

4. Is outsourcing billing cost-effective?

Yes—outsourcing eliminates staff salaries, training, and software costs while improving denial management and revenue cycle efficiency.

5. What KPIs should be tracked in medical billing?

Denial rate, clean claim rate, and days in accounts receivable (A/R) are key metrics for financial performance.

Related Resources

• Medical Billing Services for Small Practices
• Denial Management Solutions
• Credentialing Services
• A/R Recovery Services
• Staying HIPAA Compliant: A Guide for Small Practices
• Decoding Denials: Common Reasons for Rejected Claims
• Top Medical Billing Challenges for Small Practices

About the Author

Hasnain Ali is the Founder & CEO of Global Tech Billing LLC, a U.S.-registered medical billing and revenue cycle management company serving 50+ specialties. He helps independent providers and private practices reduce denials, improve collections, and streamline the revenue cycle.

Connect with Hasnain on LinkedIn