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Inpatient medical billing, from service to payment
Inpatient medical billing turns a specialist's hospital attendances into payments. It covers recording each service, preparing and lodging the claim, following it through assessment, and matching the payment when it arrives. This guide sets out each part and links to the detail.
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The six steps of an inpatient claim
Lodgement is one step of six. Most lost income sits in the steps around it.
- Service recorded. The doctor records the patient, items and hospital.
- Claim prepared. Patient, health fund, referral and item rules are checked, and the fee is priced to the fund’s schedule.
- Lodged. The claim goes to Medicare, the health fund or DVA through ECLIPSE.
- Assessed. Medicare or the health fund pays, part pays or rejects it.
- Paid. Medicare and the health fund deposit in bulk, with many patients in one deposit.
- Reconciled. Each deposit is matched to the patients and claims it covers.
A rejected claim goes back to step 2 to be investigated, corrected and lodged again. Whether that happens, and who does it, is the biggest difference between billing arrangements.
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Who pays a private inpatient's medical bill
Up to three sources pay, in order. Medicare pays 75% of the MBS fee. The health fund pays at least the remaining 25%, and more if the doctor bills under the fund’s no-gap or known-gap scheme. The patient pays whatever is left, and how the doctor charges decides how much that is.
Some basic policies pay only the minimum 25% and have no gap scheme. The same fee can leave one patient with nothing to pay and another with an out-of-pocket amount.
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What every claim needs
An ECLIPSE claim is built from six elements: patient identity, referral, provider, item numbers, item specifics and assignment of benefit. An error in any one of them can stop the claim being paid.
Referrals have their own rules: when one is needed, how long it lasts, and what to do when it is missing.
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What ECLIPSE covers, and what is invoiced instead
ECLIPSE is designed to receive Medicare, DVA and health fund payments directly into the doctor’s bank account, on both no-gap and known-gap claims. It handles those benefits only.
The patient’s out-of-pocket amount on a known-gap claim, patients billed directly, TAC, WorkCover and hospital accounts are invoiced separately. Each needs its own follow-up and reconciliation.
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Rules that vary by specialty
The six steps are the same in every specialty. The rules that price each claim are not.
- Anaesthetists. Fees are derived from base units, time units and modifiers rather than fixed in the MBS. How to bill for anaesthetic services · Billing for anaesthetists
- Surgical assistants. The assistant fee is derived from the surgeon’s items under the multiple operation rule, through items 51300 and 51303. Surgical assistant billing guide · Billing for surgical assistants
- Proceduralists and surgeons. The multiple operation rule reduces the fee for the second and later items in one episode. Billing for proceduralists and surgeons
- Physicians and psychiatrists. A high volume of attendance items, each depending on a valid referral. Billing for physicians · Billing for psychiatrists
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Where inpatient billing loses income
Every attendance ends in one of four outcomes: paid promptly, paid late, never paid, or never lodged. Only the first costs nothing beyond the billing fee.
Claims that are never lodged do not appear on an aged-debtors report, so most practices cannot see them. Rejections are easier to see. When we tested conventional billing platforms, around 15 percent of claims failed first submission, and each one takes 5 to 30 minutes to correct and lodge again.
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In-house or outsourced
In-house billing works well while volumes are low and one person knows every claim. It stops working when claims wait for someone to have time, rejections and unmatched payments build up, or billing depends on a single administrator.
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Before your first claim
Private inpatient billing starts with a provider number for each hospital, registration with each health fund, and access to ECLIPSE.
Billing with FreshClaim
How FreshClaim handles inpatient billing
You send each claim from the app in under 10 seconds. We check it, price it to the health fund’s schedule and lodge it through ECLIPSE the same day. If it is rejected, we correct it and lodge it again. When Medicare or the health fund pays, we match the payment to the claim. You can see every claim’s status in the app.
2.85% + GST on Medicare, DVA and health fund payments through ECLIPSE. 5% + GST on patient, TAC, WorkCover and hospital invoices. Nothing until the claim is paid, no setup fee and no lock-in.
99.8%
of submitted claims paid
64 hours
median from sending to payment
Same day
lodged through ECLIPSE
Frequently asked questions
- What is inpatient medical billing?
The recording, preparation, lodgement, follow-up and reconciliation of a specialist's services to patients admitted to hospital, through to payment.
- Who pays for a private patient's inpatient medical services?
Medicare pays 75% of the MBS fee and the health fund pays at least the remaining 25%, more under its no-gap or known-gap scheme. The patient pays any amount left after both.
- Is inpatient billing done through ECLIPSE?
Medicare, DVA and health fund claims are, and ECLIPSE pays those benefits directly to the doctor. The patient's out-of-pocket amount, TAC, WorkCover and hospital accounts are invoiced separately.
- What happens when an inpatient claim is rejected?
It should be investigated, corrected and lodged again, then followed until the payment is matched to the claim. Some billing services return rejections to the practice or charge per correction. FreshClaim corrects and re-lodges them as part of its fee.
- Should I outsource my inpatient billing?
In-house billing works while volumes are low and one person knows every claim. The case for outsourcing grows when claims wait to be lodged, rejections go unfixed, or billing depends on one administrator.