How Has Medical Billing Changed Over the Years?

In the rapidly evolving digital age, industries worldwide are undergoing significant transitions, and the healthcare sector is no exception. One notable change in healthcare is the transition from traditional paper-based medical billing methods to more efficient and accurate digital billing systems.

However, the shift was NOT sudden. It happened gradually, and with the popularity of advanced technologies like generative artificial intelligence (GenAI), it is expected to evolve in the coming years.

This guide will be your trip down memory lane as we dive into the history of medical billing, its current state, and its future.

So, without further ado, let’s dive right into it!

The Timeline – Medical Billing Over the Years

Feeling overwhelmed is a common reaction while reviewing history and developments in any industry. We don’t want you to doze off while reading the blog. So, to make things more digestible, below is a detailed timeline explaining developments in medical billing in chronological order.

The Evolution of Coding
1960s	Electronic health record (EHR) systems first appear.
1970s	The Regenstreif Institute created the first electronic medical record (EMR) in 1972. Hospitals and physician practices began to use “minicomputers” for billing and other financial purposes.
1980s – 1990s	In 1992, the Institute of Medicine set a goal for all physician’s practices to use computers by 2000. As PCs, LANs, and Internet connections become more affordable, their use in healthcare increased. The PC includes the “mouse interface” and the simplicity of drop-down menus. Encoder software was widely used in healthcare, improving search speed, accuracy, and coding efficiency.
Mid-1990s	Computer integration into clinical processes automated tasks, including order entry, results reporting, and nursing applications.
1999	The Leapfrog statement mandated that physicians use computers for order entry or risk being “blackballed” by the authorities. Practice management vendors developed EMR solutions to automate physician clipboards and give patient treatment histories within the office.
Early-2000s	Computer-assisted coding (CAC) solutions gained popularity because of their capacity to provide codes for diagnoses that may have been overlooked in documentation, accelerating the coding process.
2004	The Office of the National Coordinator of Health Information Technology was established, and a call for nationwide EHR adoption by 2014 was issued.
2009	The American Recovery and Reinvestment Act (ARRA) was passed, which included the HITECH Act and Meaningful Use standards.
2015	EHR systems were more widely used. It led to increased acceptance of electronic documentation and networking for inpatient orders. Patient data management solutions automated record maintenance and integrated with bedside monitoring devices to transmit data directly into EHRs. Department-wise interfaces, such as surgery, radiology, pharmacy, infectious diseases, laboratory, etc. were built. The popularity of cloud-based technologies gained traction.
2010 – 2020s	CAC incorporated natural language processing (NLP) to evaluate EHR notes, apply logic, and categorize DRG codes based on diagnostic words and phrases. CDI technologies helped improve provider documentation and align with ICD-10’s increased specificity criteria. Cloud-based CAC and audit solutions integration enabled collaboration among coders, providers, auditors, and CDI staff. Chart analysis was automated using NLP and AI for CAC and CDI. Predictive analytics helped healthcare firms identify performance gaps and coding/documentation patterns affecting reimbursements.
2020 and Beyond	Coding alert technology scans documents against a database of processes and terminologies, alerting coders to potential opportunities and directing them back to the record where the information was located. Autonomous coding is a promising approach that can quickly and reliably code charts without human interaction by “understanding” unstructured clinical notes. Clinical Language Understanding (CLU) integrated with CAC and other technologies to evaluate clinical paperwork and extract relevant data for healthcare applications, such as coding. Robotic Process Automation (RPA), commonly known as Bots, is gaining popularity in healthcare. AI is being used to automate repetitive, rules-based tasks like ensuring bundled procedures have all necessary codes and modifiers.

Now that you understand how the events unfolded in the past few decades, comprehending the rest of the blog will become easier.

The Early Days – Paper and Pencil

In the early days of healthcare, medical billing was a time-consuming procedure that involved handwritten notes, ledgers, and paper claims. It was a time-consuming, error-prone, and inefficient process. 

Patients received paper statements, and claims were sent to insurance companies via regular mail. This age lacked the connectivity and rapidity that modern healthcare requires.

Document Storage Issues

Throughout the 1980s, medical coding and billing specialists would handwrite patient documentation or utilize typewriters to handle insurance claims. Billing and coding were time-consuming since most patient files containing sensitive information, including test results and provider notes, had not been digitized and were stored in big folders.

Inefficient Approach and Communication Gap

Besides, medical coding was carried out using a chargemaster (or superbill), and medical coders would deliver printed copies of claims to insurance companies by mail or fax. This paper-based approach caused issues and inefficiencies, such as erroneously charging patients and miscommunication between healthcare institutions and insurance companies.

A Decentralized Process

During this time, the entire process was highly decentralized. Different insurance companies had different standards and documents, making the procedure more difficult for healthcare practitioners working with multiple insurers. The lack of consistency in the system frequently resulted in confusion and inefficiency, as coders had to be conversant with the complexities of each insurer’s system.

From Paper to Digital: The Birth of EMR/EHR System and Integration with Medical Software

The 1st EMR  

The Regenstrief Institute supposedly invented the first electronic medical records (EMR) in 1972. It was a great advancement in the healthcare sector. Experts believed it would transform the way medical facilities operate. However, the cost was prohibitively high at the time. As a result, it did not catch on. 

Medical facilities began digitizing their records when former US President Barack Obama established incentives for using EMRs through the American Recovery and Reinvestment Act of 2009.

By 2021, approximately four out of five office-based physicians (78%) and virtually all non-federal acute care hospitals (96%) had adopted a certified EHR. It represents a significant 10-year progress from 2011 when 28% of hospitals and 34% of physicians had implemented an EHR.

HealthIT.gov

The Rise of Medical Billing Software  

The real breakthrough occurred with the creation of specialized medical billing software. This software can manage the intricacies of medical billing, such as coding, claim submission, tracking, and follow-up. It enabled more efficient claim processing, better payment and denial tracking.

Realizing the Power of Integration 

Integrating medical billing software with EHR was another big step forward. This interface enabled the smooth connection of patient data and billing information, assuring correct billing that reflected the services given.

Reaching Cloud Nine with Cloud Technology

Besides, the introduction of cloud-based billing tools has significantly simplified the medical billing process. Cloud-based solutions have numerous benefits, including remote access, improved security, and real-time upgrades. These solutions have made it easier for healthcare practitioners to manage billing from anywhere, resulting in increased efficiency and lower overhead expenses.

In terms of revenue, the worldwide healthcare cloud computing market was valued at $39.4 billion in 2022 and is expected to be valued at $89.4 billion by 2027, growing at a 17.8% CAGR during the forecasted period.

Markets and Markets

Here’s how medical billing software has helped the medical industry:

Reduced Paperwork and Errors

Remember when there were filing cabinets, enormous stacks of paperwork on every workstation, and landlines that rang constantly? Yes, we do, but we cannot say we miss those times. We cannot blame ourselves for working this way in the past—after all, we were doing our best with the resources we had at the time. 

However, many new inventions make working efficient. When you convert to an automated billing solution, you will not have to worry about keeping tons of sensitive papers around the workplace. It saves you time, reduces billing errors, and improves the overall workflow.

Improved Access to Patient Data

Every day, billers face dozens of circumstances requiring quick access to patient data. If they have to move across the room and search through papers for five minutes to obtain the relevant information, the process needs optimization. Many people may think digitizing patient data is a security risk. However, billing platforms are HIPAA compliant and have security mechanisms to prevent data leaks.

Furthermore, storing your data on-premises poses a greater security risk. Hypothetically, anyone could stroll to a filing cabinet and begin browsing through data, resulting in a HIPAA violation. 

There are layers of security in software, both when logging on to a computer and accessing the platform. It allows you to access data whenever needed while providing peace of mind that all information is safely stored.

Claim Tracking

Nothing is more worrying than sending a claim and not being able to track its status. It is upsetting for billers who have not received their payment on time or who discover later that a piece of information is wrong. 

Billing software eliminates the possibility of being unaware of the status of your claim. The software allows you to trace the status of your claim from beginning to end, so as soon as you click ‘ submit,’ you can follow along to ensure you get paid.

Error-Free Claim Filling

If you work with insurance companies around the US, you are probably aware that each state has its own Medicaid codes that must be used when filing claims. Besides, it can be daunting to remember which codes are required in different states. 

However, billing software maintains this information and automatically enters the state-based codes into the claim. This procedure eliminates doubt and helps you submit clean claims.

Simplified Payment Process

Billing software simplifies the payment process for healthcare facilities and patients. If your patient owes a copay or is paying for treatment out of pocket, he/she may pay with cash, credit card, or even a check through your system. 

On the commercial side, the software enables you to accept all payments and reimbursements electronically. These secure transactions ensure you receive the funds for your rendered care services without interruption. Besides, you can also avoid going to the bank by using electronic payments.

The Current State of Medical Billing

Medical billing requires assigning standardized codes to medical operations, diagnoses, and other relevant information. These codes help in healthcare reimbursement, insurance claims, and research. 

Traditional medical coding and billing have primarily relied on manual methods that are time-consuming, error-prone, and susceptible to human biases.

Here are some major issues linked with the current state of medical coding and billing. 

• Inefficiency –  Manual coding might take longer, causing claims to be processed and reimbursed late. 
• Error-prone – Human coding errors can lead to claim denials and inaccurate medical billing. 
• Limited Scalability – As healthcare professionals manage more patient data, manual coding techniques become increasingly impractical. 
• Complexity – The healthcare industry’s coding standards are continually shifting, making it difficult for coders to keep up.

Medical billing errors are a prevailing issue in the US healthcare system, costing an estimated $935 million weekly. According to studies, around 80% of medical invoices contain errors, with typos accounting for more than 25% of these inaccuracies.

Gitnux

The Role of Emerging Technologies on Medical Billing

As healthcare firms acknowledge the limitations of manual coding, they are looking at emerging technologies to help improve the process. Let’s look at some of the cutting-edge technologies altering medical coding practices:

Artificial Intelligence (AL) & Machine Learning (ML)

AI and ML technologies are changing medical coding by automating monotonous operations, increasing accuracy, and minimizing coding errors. AI-powered coding systems can optimize coding operations by analyzing massive volumes of data. 

The global AI in healthcare market is estimated to increase at a compound yearly growth rate of 36.4% between 2024 and 2030, reaching USD 208.2 billion in 2030.

Grand View Research

The key benefits of AI and ML in medical coding and billing include: 

• Increased Efficiency – Automated coding systems process medical data faster than manual billing systems.
• Reduced Errors – AI-powered coding systems greatly minimize the likelihood of human error, resulting in higher medical coding accuracy. 
• Improved Compliance – AI algorithms can guarantee that codes adhere to the most recent industry standards and laws, reducing non-compliance.

“AI will be most effective when technology allows physicians to devote their full attention to the patient by changing their responsibilities away from transactional activities and toward customized care, which is at the heart of human healing.”

Steven Lin, MD, and Vice Chief for Technology Innovation at Stanford University

Natural Language Processing (NLP)

NLP technology helps computers interpret and analyze human language. In medical billing, NLP is critical for retrieving useful information from unstructured clinical papers. Healthcare workers can use NLP to convert free-text clinical notes into structured codes more efficiently. 

The global NLP market in healthcare and life sciences was valued at $4.98 billion in 2023 and is expected to grow to $32.14 billion by 2030, with a CAGR of 30.5%.

Globe Newswire

The major advantages of NLP in medical billing are: 

• Enhanced Accuracy – NLP algorithms may extract useful information with great precision, lowering the likelihood of coding errors. 
• Time-saving – Automated extraction of coding information from clinical papers speeds up the coding process, allowing for speedier claim submissions. 
• Improved Documentation – NLP technology allows healthcare providers to gather detailed patient information, improving clinical documentation quality.

The Human Edge in a Technological Age: Why MediBill MD is Your Ultimate Billing Solution

Technology has transformed medical billing, but even the most sophisticated software cannot replace the human expertise required for maximum efficiency and revenue capture. Here’s why MediBill MD, your trusted medical billing and RCM partner, is still the best answer for healthcare institutions in this age of rapid technological innovation.

The medical billing outsourcing market was valued at $13.16 billion in 2022 and is expected to increase from $14.65 billion in 2023 to $31.78 billion by 2030, with a CAGR of 11.7% between 2023 and 2030.

Fortune Business Insights

Expertise Beyond Automation 

Although billing software automates activities, complicated coding, and regulatory compliance still require human expertise. Our certified coders and billing specialists with comprehensive knowledge of medical jargon and coding requirements ensure accurate claims and maximum payments.

Effective Denial Management

Denials are an ongoing challenge. Our team of RCM experts goes beyond automated denial management solutions. We leverage the data and investigate the reasons for denials, collaborate with payers to expedite resolutions, and adopt tactics to reduce future rejections. It is a feat that goes beyond the capability of pure automation.

Human Touch for Patient Interaction

Billing queries can be frustrating for patients. Our devoted staff responds to issues in a sensitive manner. It promotes positive patient experiences that technology alone cannot provide.

Cost-Effective Efficiency

Establishing and maintaining an in-house billing system can be costly. Outsourcing to MediBill MD saves money. You gain access to our experienced staff without incurring overhead costs such as salary, benefits, infrastructure, and software maintenance.

Focus on Your Core Mission

Managing billing in-house requires time away from patient care. You free up your staff and clinicians to focus on providing quality healthcare by working with MediBill MD. We handle the difficulties of invoicing, allowing you to direct your efforts to create excellent patient experiences.

Technology is a GAME CHANGER! But it cannot replace human skill and strategic advice. MediBill MD bridges the gap by harnessing technology for efficiency while offering the personal touch and in-depth knowledge required to navigate the ever-changing healthcare industry. We manage the billing complications so providers focus on their primary responsibility to care for patients.

Bottom Line

As we look back over the years of medical billing technology, a pattern emerges regarding the catalysts for change, i.e., technology. Technological advancements were driven by the need to enhance coding accuracy and productivity. Besides, it improved the revenue cycle by lowering denials and audit risk.

For improvement, change is constant, and embracing it is necessary to survive. However, medical billing is complex, and providers are occupied with growing healthcare demands. Therefore, outsourcing this intricate process to a professional medical billing company will help you survive in the competitive healthcare landscape.