Healthcare Billing Best Practices: Better Claims and Patient Payments

For many healthcare professionals, billing and collections may not be a major focus of their daily work. Patients, for their part, may see billing as a source of concern or difficulty or, at best, a necessary but unenjoyable part of the healthcare journey.

Despite this, having a streamlined healthcare billing process is vital for maintaining a steady flow of insurance reimbursements and payments to your organization. Additionally, it can significantly impact the overall patient experience, patient satisfaction and patient retention and referrals. Anything providers can do to make patient billing and collections easier and more effective for staff members — and positive and more transparent for patients — could be highly beneficial for all involved.

What Is Healthcare Billing and Why Is It Important?

While the specifics will vary from organization to organization, the healthcare billing process tends to follow a standard set of steps or stages.

• Insurance verification. To submit claims for any portion to be covered via third-party payment, the patient's insurance details must be collected and confirmed. For existing patients, this information will likely be on file, but it needs to be confirmed regularly (usually annually).
• Coding and claim submission. Once a patient receives (or agrees to receive) treatment, the corresponding charges need to be determined and submitted to the appropriate health insurance company for the services provided. This generally involves two steps: coding and claim submission. Healthcare coding, often handled by a dedicated coder, entails assigning the correct codes, including procedure codes, diagnosis codes and service codes (such as CPT^®, ICD-10-CM and HCPCS Level II codes). This enables charges to be sent to the payer to be processed (claim submission).
• Adjudication. The health insurance company will review the claim details and either accept (pay as requested), reject (flag errors to be corrected) or deny (refuse to pay) the claim. In the case of rejection or denial, providers may submit a revised claim or appeal.
• Patient billing. After adjudication, or in cases where treatments are not covered or a patient doesn’t have insurance coverage, healthcare providers may need to bill patients directly for balances due. This involves preparing a billing statement and sending it to the patient, usually by mailing a printed invoice or emailing a digital statement.
• Collection. At its most efficient, healthcare collection simply means receiving payment as requested, whether via paper check, a credit card on file, an online payment portal or other means. When payment is past due, the focus shifts to pursuing payment by various means, including resending invoices, communicating with patients or eventually enlisting assistance from third-party collections agencies or writing off charges.

The Healthcare Billing Process in an Out-of-Pocket Era

The standard patient billing and collection process has been in place for decades, since employer-sponsored health insurance employee benefits and healthcare coverage in general became more widespread in the mid-20th century. Many healthcare providers aligned their policies, processes, systems and staffing related to clinical billing and collection to this approach, collecting all or most of any payment owed from third-party payers (insurance companies or government payers).

In the 21st century, and especially in recent years, a major shift has taken place, as more patients today are responsible for paying a larger portion of healthcare costs out of pocket. One reason for this payment shift is the prevalence of high-deductible healthcare plans (HDHPs), which surveyed employers said nearly a third of covered employees held in 2024, up from just 13% in 2010 and 4% in 2006.¹ Deductibles in general have risen dramatically as well, increasing 47% in the last decade, and 32% of employees had a deductible of $2,000 or more in 2024.¹

The Impact of Healthcare Consumerism on Patient Payments

In addition to rising deductibles, many patients are confronting increased out-of-pocket healthcare costs in a variety of areas. These include payments collected by payers (insurance premiums), healthcare providers (copays and coinsurance), healthcare retailers (medicine, supplies and equipment) and other health and wellness businesses.

In this environment, traditional healthcare providers may see their billing and collection practices impacted not only by the need to collect more payments directly from patients but also by a general shift in patient preferences and expectations. As patients become responsible for paying more of their healthcare expenses, they start shopping around for health and wellness services as they would for other consumer goods and services.

Meeting Patient Expectations for the Healthcare Billing Process

For many consumers today, the purchase process for a sizable or specialized product or service may involve several stages: conducting online research, reading reviews and ratings, comparing options for where to buy, arranging the purchase, managing payment and possibly following up with service and support staff and/or managing a customer account over time. In the current healthcare environment, all of these same steps are possible, and many patients have begun to explore and embrace them.

For providers, the trend of healthcare consumerism can have many implications. It can impact everything from monitoring websites with reviews of doctors or healthcare facilities to making more detailed information readily available across multiple channels, as well as offering new options for patient communication and invoice payment.

For healthcare billing and collection specifically, patients may welcome having more flexible options and avenues for payment, including:

• Getting billing notifications via text message
• Paying balances due through an online portal
• Receiving medical bills via email
• Taking advantage of promotional financing or payment plans rather than paying the full amount all at once
• Using a digital payment platform or mobile payment app

Patient Billing and Collection Best Practices

To make the clinical billing process a win-win for providers and patients, it's worthwhile to lay the groundwork for success well before billing patients for any balances due. In fact, many patient billing and collection best practices depend on integrating financial considerations throughout the entire healthcare journey to deliver a better end-to-end patient financial experience.

Every healthcare organization is likely to have specific challenges and opportunities, and some general success strategies may be worth considering.

1. Define and document financial policies

While every healthcare organization has financial policies, they may or may not be comprehensive, well-defined, documented in detail and communicated and implemented consistently. In addition, policies related to billing and collections may need to be revisited in light of new market dynamics, patient preferences, regulatory updates, technological advances and organizational priorities.

2. Provide targeted training and tools

Simply sharing relevant policies and processes with internal stakeholders may not be enough to ensure full understanding and alignment. For frontline staff in particular, implementing financial policies can be challenging, especially if they involve conversations with patients to discuss costs and copay collection policy, request payment or field questions related to patient payments. Talking about money can be uncomfortable for anyone, and healthcare professionals may not feel prepared for these conversations or consider them a priority.

Focused training and on-the-job tools can help overcome this hesitation and enable staff members to see that financial conversations can benefit patients by providing them with the information they need and want and offering solutions to help them prepare for and manage the costs of their care.

3. Communicate early and often

Once internal stakeholders are on the same page, a crucial next step is sharing relevant information with patients. This can include cost estimates, payment requirements (timing and amount), payment methods accepted and options such as promotional financing and payment plans. While some of this information will be most actionable at various stages, sharing as much as possible at every stage of the journey can be helpful.

For example, consider adding information about appealing payment methods and financing availability on general website pages for patients conducting initial research. Include payment expectations on appointment booking pages or in on-hold phone messages, and highlight digital payment channels and payment plans on invoices. You can even go the extra mile and provide patients with tools like a healthcare budget worksheet, empowering them to better understand and pay for their out-of-pocket expenses.

4. Double-check details to streamline health insurance claims

Submitting accurate insurance claims is crucial for timely reimbursement. Errors — even minor ones like misspelled names — can result in claim denials and long delays, creating a frustrating cycle of resubmissions. Common mistakes include incorrect patient or provider information, missing payer details and illegible documentation. When appealing a denied claim, ensure claim number references are included. Meticulous attention to detail not only prevents delays but also improves the patient collections process.

5. Offer transparency and convenience

While it may not be possible to change healthcare costs or financial policies, giving patients a clear understanding of these details — and offering helpful and convenient options for payment — can make the billing and collections experience much more positive. Cost transparency, while often tricky, is becoming easier with the availability of free or low-cost online estimators such as FAIR Health Consumer Cost Lookup and Clear Health Costs, which could be helpful for both staff and patients.

In terms of convenience, accepting digital and mobile payments has also become easier through a growing number of technology platforms and solutions that may be straightforward to integrate with legacy systems or offer as standalone resources. Third-party healthcare financing, such as CareCredit, a health and wellness credit card, can also make it easy for patients to pay for their healthcare expenses over time* while reducing the time and effort required for billing and collections (and without the risk and responsibility of in-house payment plans).

6. Review your progress on patient billing and collections

Many healthcare organizations evaluate their financial performance using high-level metrics like total payments or claim denials. While these data points are important, taking time to review your patient billing process more closely, highlight successes and identify areas for improvement can unlock greater insights and ultimately lead to better financial stability for your organization.

A Patient Financing Solution for Health and Wellness Providers

If you are looking for a way to connect your patients with flexible financing that empowers them to pay for the care they want and need, consider offering CareCredit as a financing solution. CareCredit allows cardholders to pay for out-of-pocket health and wellness expenses over time while helping enhance the payments process for your practice or business.

When you accept CareCredit, patients can see if they prequalify with no impact to their score, and those who apply, if approved, can take advantage of special financing on qualifying purchases.* Additionally, your practice or business will be paid directly within two business days.

Learn more about the CareCredit credit card as a patient financing solution or start the provider enrollment process by filling out this form.

Author Bio

Ilima Loomis is a freelance writer with more than 18 years of experience in journalism and B2B content marketing. With a background in writing about science and technology, she has a knack for taking on complex subjects and helping readers understand not only what is going on but why it relates to them. She specializes in writing about healthcare, health tech and medical research.

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