November 3, 2026 · Muhammad Azam · 12 min read
The medical billing process is the sequence of steps a practice follows to turn a patient visit into payment, from registering the patient to bringing the account to a zero balance. It has ten steps across three stages: the front end (before the visit), the mid cycle (turning care into a claim) and the back end (getting paid). Most denials start in the first three steps, and most lost revenue sits in the last three.
This guide walks through each step in the order a claim moves, with what your team does, the forms and electronic transactions involved, and the check that keeps the claim from coming back. It's written for practice owners, office managers and billers, and it notes where California payers change the rules. For the full California picture, see our complete guide to California medical billing.
The 10 steps at a glance
| Stage | Step | Who usually owns it | What it produces |
|---|---|---|---|
| Front end | 1. Patient registration | Front desk | Accurate demographics and insurance on file |
| Front end | 2. Eligibility and benefits verification | Front desk or billing | Confirmed coverage, payer and patient responsibility |
| Front end | 3. Prior authorization and referrals | Authorization coordinator | Approval number for services that need one |
| Mid cycle | 4. Documentation and medical coding | Provider and coder | ICD-10-CM, CPT and HCPCS codes the chart supports |
| Mid cycle | 5. Charge entry | Biller | Charges in the practice management system |
| Mid cycle | 6. Claim scrubbing, submission and adjudication | Biller and clearinghouse | A clean claim accepted by the payer |
| Back end | 7. Payment posting | Payment poster | Payments, adjustments and balances recorded |
| Back end | 8. Denial management | Denial specialist | Corrected or appealed claims |
| Back end | 9. A/R follow-up | A/R specialist | Unpaid claims moved to payment |
| Back end | 10. Patient billing and collections | Patient billing team | Patient balance collected, account at zero |
In a small practice one or two people may own every step; that's when billing work most often falls behind.
Front End: Steps 1–3 (Before the Visit)
The front end decides whether a claim can be paid at all. A perfectly coded claim still denies if it goes to the wrong payer, for an ineligible patient, or without a required authorization.
Step 1: Patient registration
Registration captures everything the claim will need later. Collect the patient's legal name, date of birth, address and phone; a copy of the front and back of every insurance card; the subscriber's name and relationship to the patient; and any secondary coverage. Have the patient sign the financial policy, assignment of benefits and HIPAA acknowledgment.
The most common registration errors are small: a misspelled name, a transposed member ID, a missing group number or an outdated card. Each one produces a rejection or denial weeks later. Ask returning patients to confirm their insurance at every visit, not just once a year.
✓ Check before moving on: does the name and member ID match the card exactly?
Step 2: Eligibility and benefits verification
Eligibility verification confirms that the patient's coverage is active on the date of service and tells you who will pay and how much the patient owes. Most practices run an electronic 270/271 eligibility inquiry and response through their practice management system or clearinghouse, one of the standard transactions under HIPAA Administrative Simplification. Payer portals and phone calls fill the gaps.
A complete check answers six questions:
Is coverage active on the date of service?
Which payer pays: the plan, a delegated IPA or medical group, or Medicare?
Is the provider in network?
What are the copay, coinsurance and remaining deductible?
Does the service need prior authorization or a referral?
Is there other coverage that pays first (coordination of benefits)?
For uninsured and self-pay patients, the federal No Surprises Act requires a Good Faith Estimate before scheduled care. Our eligibility verification services team runs these checks before every visit.
✓ Check before moving on: is the verification saved with the visit, with a reference number?
Step 3: Prior authorization and referrals
Prior authorization is the payer's approval before a service is performed. Imaging, many procedures, specialty drugs, durable medical equipment, therapy visits beyond a set number and inpatient stays commonly need one. HMO plans may also require a referral from the patient's primary care physician before a specialist visit.
Request the authorization once the service is ordered, not on the day of the visit. Record the approval number, the approved codes, the number of units or visits and the date range. A claim that bills more units or a different code than the authorization approved will deny even with a valid number on it.
See how our prior authorization services track approvals by code, unit and date.
✓ Check before moving on: do the planned codes and units match the approval?
Mid Cycle: Steps 4–6 (Turning Care into a Claim)
The mid cycle translates what happened in the exam room into a claim the payer's system can read and pay.
Step 4: Documentation and medical coding
The provider's note is the source of every code on the claim. Coders assign:
ICD-10-CM codes for diagnoses, which establish medical necessity. Code to the highest specificity the documentation supports.
CPT codes for procedures and services, including evaluation and management (E/M) visits, chosen by medical decision-making or total time.
HCPCS Level II codes for supplies, drugs, equipment and some Medicare-specific services.
Modifiers such as 25, 59, 26/TC or telehealth modifiers, which explain special circumstances to the payer.
A code the chart doesn't support is a compliance risk, not just a denial risk. Under-coding is a problem too: it leaves earned revenue unbilled. Code sets update every year (ICD-10-CM on October 1, CPT on January 1), so coding references and payer edits need annual review. Our medical coding and audit services review documentation before claims go out.
✓ Check before moving on: does every code trace to a statement in the signed note?
Step 5: Charge entry
Charge entry puts the coded visit into the practice management system: date of service, place of service code, rendering and billing provider, codes, modifiers, units and charge amount. A superbill or encounter form often carries this from the visit.
The key measure here is charge lag, the days between service and charge entry. Aim for one to two days. Every day of lag delays payment and shortens the time left before the payer's filing deadline.
✓ Check before moving on: are all visits from yesterday entered today?
Step 6: Claim scrubbing, submission and adjudication
Before submission, a claim scrubber checks the claim against payer rules and national edits, such as the NCCI procedure-to-procedure and medically unlikely edits, missing fields, invalid code pairs and frequency limits. Fixing an error here costs minutes; fixing it after a denial costs days.
Professional claims go out as the 837P electronic transaction (the paper equivalent is the CMS-1500 form maintained by the NUCC). Facility claims use the 837I (paper UB-04). Most practices send claims through a clearinghouse, which returns two kinds of reports:
Acceptance or rejection reports (the 999 and 277CA acknowledgments). A rejected claim never reached the payer's adjudication system; fix and resend it right away.
Claim status, available through the 276/277 transaction or the payer portal.
The payer then adjudicates the claim: it checks eligibility, benefits, authorization, coding edits and medical necessity, and decides to pay, deny or pend it. Keep every acknowledgment; it's your proof of timely filing.
✓ Check before moving on: did the claim receive a payer acceptance, not just a clearinghouse acceptance?
Back End: Steps 7–10 (Getting Paid to Zero)
The back end is where submitted claims become cash, and where unattended claims quietly become write-offs.
Step 7: Payment posting
Payment posting records what the payer paid, what it adjusted and what the patient owes. Payers send this on the 835 electronic remittance advice (ERA) or a paper explanation of benefits (EOB), with the money arriving by electronic funds transfer (EFT) or check. Most systems auto-post ERAs; paper EOBs are posted by hand.
Each line on the remittance carries Claim Adjustment Reason Codes (CARCs) and often Remittance Advice Remark Codes (RARCs) that explain any difference between the charge and the payment. Both code lists are maintained by X12. Good posting does three things beyond recording money:
Compares each payment to the contracted rate, so underpayments get caught.
Separates contractual adjustments (which you write off) from denials (which you work).
Moves the patient's share to their account and bills any secondary payer.
✓ Check before moving on: does the deposit match the posted total for the day?
Step 8: Denial management
A denial is a processed claim the payer refused to pay in full; a rejection is a claim that never entered processing. Work every denial, starting with the highest value and nearest deadline:
Read the CARC and RARC to find the reason.
Decide whether to correct and resubmit (a fixable error) or appeal (you disagree with the payer's decision).
Fix the root cause at the step where it started, so the same denial doesn't repeat.
Track appeals to their decision dates.
The most frequent causes trace back to the front end: eligibility, authorization, registration errors and timely filing. Our denial management and appeals team tracks denials by cause, not just by payer.
✓ Check before moving on: is the root cause logged, not just the claim fixed?
Step 9: A/R follow-up
Accounts receivable (A/R) follow-up chases claims that haven't been paid or denied. Billers check claim status, call payers, resend missing claims and escalate stalled ones. A/R is grouped in aging buckets (0–30, 31–60, 61–90, 91–120 and 120+ days) so older, harder-to-collect balances stay visible.
Follow up on a fixed schedule rather than when someone has time. In California, health plans must pay complete claims within 30 calendar days, so day 31 is the natural trigger. See our AR follow-up and recovery services.
✓ Check before moving on: does every open claim have a next-action date?
Step 10: Patient billing and collections
Once insurance has paid, the remaining patient responsibility (copay, coinsurance, deductible or non-covered services) is billed to the patient. Collect copays and known balances at check-in, send clear statements, offer payment plans and accept online payment.
Bill only what the remittance assigns to the patient. Balance billing a patient for amounts the payer or network contract covers can violate state and federal law.
The account reaches zero balance when every charge has been paid, adjusted per contract or properly written off. Small credit balances also need resolving: refund overpayments promptly.
✓ Check before moving on: does the patient balance match the remittance exactly?
What Changes for California Practices
The ten steps are the same nationwide, but California payers and laws change what happens inside six of them.
| Step | California difference | What to do |
|---|---|---|
| 2. Eligibility | Medi-Cal eligibility is granted month by month, and most members belong to a managed care plan assigned by county | Verify Medi-Cal at every visit; bill the plan, not DHCS, for plan members |
| 2–3. Payer and authorization | Many HMO and Medicare Advantage members are assigned to an IPA or medical group that pays the claim under a Division of Financial Responsibility (DOFR) | Confirm the IPA and check the DOFR before authorizing or billing |
| 3. Authorization | Medi-Cal fee-for-service uses Treatment Authorization Requests (TARs); plans and IPAs use their own processes | Check the right payer's authorization list |
| 4. Coding | Medicare medical necessity in California is set by Noridian's Local Coverage Determinations | Check the LCD before ordering services it covers |
| 6. Timely filing | Medi-Cal fee-for-service pays in full only within six months after the month of service | Submit Medi-Cal claims within days of the visit |
| 9. A/R follow-up | Under AB 3275, plans and insurers must pay complete claims within 30 calendar days, with 15% interest after that | Follow up on day 31 and check late payments for interest |
| 10. Patient billing | SB 1061 bans reporting medical debt to credit bureaus; payment plans need required disclosure language | Update financial agreements and collection vendor contracts |
Read more in our Medi-Cal billing guide, our California medical billing laws guide and our guide to the AB 3275 prompt pay law.
KPIs That Show Whether Each Step Works
Track one or two numbers per stage every month. The targets below are common industry goals for a well-run practice; your specialty and payer mix will shift them.
| KPI | Measures | Formula | Common target |
|---|---|---|---|
| Charge lag | Step 5 | Days from date of service to charge entry | 1–2 days |
| Clean claim rate | Steps 1–6 | Claims accepted on first submission ÷ claims submitted | 95% or higher |
| Denial rate | Steps 1–6 | Claims denied ÷ claims submitted | Under 5% |
| First pass resolution rate | Steps 1–7 | Claims paid on first submission ÷ claims submitted | 90% or higher |
| Days in A/R | Steps 6–9 | Total A/R ÷ average daily charges | Under 40 days |
| A/R over 90 days | Step 9 | A/R older than 90 days ÷ total A/R | Under 15% |
| Net collection rate | Whole process | Payments ÷ (charges − contractual adjustments) | 95% or higher |
A falling clean claim rate points to the front end or coding. Rising days in A/R with a stable denial rate points to slow follow-up. Reading them together tells you which step to fix first.
Where the Process Breaks, and How to Fix It
Most revenue problems are a step that's skipped, rushed or owned by no one. These are the breakdowns we see most often when we review a practice's billing.
| Symptom | Step where it starts | Fix |
|---|---|---|
| Eligibility and "patient not found" denials | 1–2 | Verify at every visit; scan cards each time |
| Authorization denials | 3 | Request at ordering; track approved codes, units and dates |
| Medical necessity and bundling denials | 4, 6 | Pre-bill coding review; update scrubber edits each January and October |
| Claims missing their filing deadline | 5–6 | Keep charge lag under two days; work rejections daily |
| Underpayments nobody notices | 7 | Load contracted rates and flag payments below them |
| The same denial every month | 8 | Log root causes and fix the front-end step |
| A/R over 90 days keeps growing | 9 | Fixed follow-up schedule by value and deadline |
| Patient balances that never get paid | 2, 10 | Estimate and collect at check-in; offer payment plans |
If three or more of these sound familiar, the problem is usually capacity, not knowledge: billing work depends on one or two people who are also handling the front desk or each day's new claims.
Let Us Run All 10 Steps for Your Practice
California Billing manages the whole medical billing process for California practices, from eligibility checks before the visit to the final zero balance, inside the EHR you already use. Take one step off your team's plate, or hand us the entire cycle:
Medical billing services: charge entry, claim scrubbing, submission and payment posting
Revenue cycle management: all 10 steps, with monthly KPI reporting
Eligibility verification and prior authorization: the front end that prevents most denials
Denial management and A/R follow-up: the back end that recovers what's stuck
Find out where your claims are getting stuck. Book a free 20-minute revenue review with a California billing specialist, and we'll show you which steps are costing your practice money. Or call (631) 652-3106.
Frequently asked questions about the medical billing process
The medical billing process has ten steps: patient registration, eligibility verification, prior authorization, documentation and coding, charge entry, claim scrubbing and submission, payment posting, denial management, A/R follow-up and patient billing. The first three happen before the visit, and the last four turn submitted claims into payment.
Can't find what you're looking for? Contact our billing specialists