What are Medical Claims and How Do They Work?

Updated on August 9, 2019

The US health sector is complex. Most healthcare facilities are owned by private sector businesses and healthcare is paid for by insurance providers. People either buy their own healthcare insurance or use state-funded programs. In this article, we are going to delve deeper into the world of medical claims. 

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How Medical Claims Arise

Medical claims arise when a person enters the healthcare system. Every aspect of treatment you receive generates a bill, from an X-ray carried out in the ER to a routine pap smear in your OBGYN’s office. The bill is essentially a claim against your insurance company, which is then processed, and the cost of your treatment is refunded to the healthcare provider. 

Every healthcare provider you see charges for their time. This includes nurses, therapists, and counselors. Equipment used and medications given are also chargeable. So, if you need an IV or you are advised to use a wheelchair while you recover from an accident, it’s all included on your bill. 

Healthcare Providers Generate Bills

Each healthcare provider submits its own bill. Not surprisingly, it can get a bit complicated, and insurance companies have a huge amount of data to sift through when dealing with medical claims. There is also a lot of specialized medical terminology to get to grips with, most of which is indecipherable to the average Joe. 

Everything is coded on a medical claim, so that huge amounts of information can be reduced to a series of precise codes. This makes it easier to input the data into a computer, so it ends up on your electronic healthcare record. People who handle medical claims are familiar with these codes, but there are information textbooks available if you want to learn how to decipher your medical bills.

Insurance Companies Process Medical Claims

Insurance companies process medical claims, but to do so, they need the patient’s medical records. There are companies like American Retrieval that can expedite the retrieval of medical records; this helps insurance companies to save time when processing claims. Once all the information has been received, the insurance company will analyze the medical bills and cross-reference them with other records to make sure the claim is not fraudulent and the patient was covered for the procedure or treatment.

Medicare Fraud

Medicare fraud is a huge problem in the US, with millions of dollars in fraudulent claims every year. In 2015, 243 people were charged with participating in fraudulent Medicare schemes. These included doctors, nurses, and other frontline staff. False billings were reported to be in the region of $700 million. In 2019, another Medicare fraud scheme was busted by the FBI. This one had generated more than $1 billion in claims.

Unfortunately, Medicare fraud is partly the reason why healthcare in the US is so expensive. If there were no fraudulent claims, the cost of obtaining healthcare would plummet overnight. 

You can protect yourself from fraudulent medical claims by not giving personal information such as your social security number to anyone claiming to be from Medicare.

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