Guide to Electronic Claims in Medical Billing


  • Electronic claims are any medical claims you create and submit digitally, with no paper or postage trail.
  • Electronic claims submission can save medical practices invaluable time and money while improving claims quality and tracking.
  • You can submit electronic claims through either self-service or outsourced full-service models.
  • This article is for medical practice owners interested in learning more about electronic claims in medical billing.

Electronic claims in medical billing are rapidly becoming the industry standard. Surely you’ve noticed this, and if you’re not already submitting most or all of your claims electronically, you might be thinking of making the switch. This guide to electronic claims can help you transition. Read on to learn why electronic claims might be right for you and how to get started.

What is an electronic claim?

An electronic claim is any medical claim created entirely digitally without any paper or printing, usually within a medical software solution that includes a medical practice management system. You can create and file them yourself or outsource the process to medical billing services. Our medical billing best picks page can point you to the service best for your practice’s needs. Once you’re set up with the right service, you can submit your claims electronically to payers rather than sending paper HCFA forms by mail.

TipTip: Looking for a medical software to create electronic claims? Consider our medical software best picks page for reviews of some of the top solutions on the market.

Benefits of submitting claims electronically

In 2013, the American Medical Association and the Connecticut State Medical Society published a joint paper detailing the benefits of using electronic claims in medical billing. The two healthcare authorities indicated these key benefits of electronic claims:

  • Time savings: Printing and completing manual forms is a painstaking process that just can’t be automated. Your medical billing service can compile electronic claims in a fraction of the time through automation processes that minimize errors. It can then submit these error-free claims almost immediately. Fewer errors, of course, means fewer claim rejections, which could improve your cash flow.
  • Resource savings: Creating and submitting manual medical claims requires lots of front-office staff time, not to mention a budget for postage. Neither of these conditions applies to electronic claims. In fact, the research found that switching from manual to electronic billing can lead to annual cost savings as high as 60%.

Did you know?Did you know? Ditching manual processes in favor of submitting electronic claims can cut your costs by up to 60%.

  • Claim scrubbing: Even the most experienced medical billers and coders are bound to miss errors when double-checking claims. After all, they are human. Computers and machines are much more accurate. Claim scrubbers, which are fully automated, rapidly catch claim errors and flag them for correction before payer submission.
  • Integrated clearinghouses: Sending claims via mail introduces all kinds of potential delivery errors. Your claims could get lost, or you could send them to the wrong address. The integrated clearinghouses that drive the online medical billing process instead direct your claims exactly where they should go in just seconds. As a result, you can submit your claims to payers almost immediately.
  • Claim tracking: If you send claims by postal mail, you won’t know they’ve reached the insurer unless you pay extra for tracking. Even if you do pay for tracking, you won’t know your claim’s status after delivery until the payer sends you an acceptance, rejection or denial in the mail. With electronic claims, you can instead see your claims’ real-time status every step of the way through a detailed audit trail.
  • Faster payer reimbursement: Postal mail can take several days to reach its destination. If you’re sending a claim or awaiting reimbursements via postal mail, the process can add unnecessary delays to the billing cycle. Conversely, electronic claims go through instantly, and payers can reimburse you the moment they approve your claims. Any billing cycle delays will be eliminated.
  • More accurate accounts receivable: You’re probably well aware that a substantial amount of your practice’s potential revenue and cash are held up in accounts receivable (AR). You’re also probably familiar with the frustrations that come with keeping accurate tabs on your accounts receivable. Since electronic claims accelerate the reimbursement process and track all claims, they streamline and improve all things AR.

How to submit electronic claims

You have two options for submitting electronic claims in medical billing:

1. Self-service electronic claims

If you handle your electronic claim creation and su `bmission in-house, your process is self-service. Your choice of medical billing partner can determine whether your claims process is self-service. For example, since athenahealth’s revenue cycle management services require that you keep a medical biller in-house, your process will be at least partially self-service.

For self-service electronic claims, either practitioners like you or, more commonly, your front-office staff will create and submit the claims in question. The self-service model is often straightforward if your practice works with relatively few payers. In this case, each payer likely has specific software you can use to create and file your claims. Things get slightly more complicated if you work with several payers. 

Multi-payer practices typically turn to integrated clearinghouses to reduce their billing complexity, but doing so leaves you with a choice. Do you submit files you’ve created, or do you enter data directly into the clearinghouse? File submission can be a viable choice if your practice management software (PMS) can easily compile claims into a single file. Data entry is better if you lack PMS or prefer to fill out electronic claims yourself.

Of course, file submission and data entry somewhat de-automate the electronic claims filing process. However, they can be considerably less costly than fully outsourcing your medical billing. That said, they can get expensive if you add functions for insurance information checks, electronic remittance advice (ERA) statements and other things. Many practices find it worthwhile to pay for the full service that comes with outsourced medical billing.

2. Full-service electronic claims

Full-service electronic claims are virtually synonymous with outsourced medical billing. Third-party medical billing companies typically need just your patients’ basic information and a summary of the services you provided to create electronic claims. They can then quickly convert this information into properly formatted and coded claims. Before submitting these claims to payers, the billing service will run them through claim scrubbers to maximize accuracy.

Your medical billing service will also oversee everything that happens between when your claim is submitted and when you’re reimbursed. If claims are rejected or denied, your medical billing service will handle resubmission or seek patient payment. For transparency throughout the process, you can keep track of your claims’ real-time progress through your medical billing company’s software. User-friendly options such as Kareo are especially helpful for navigating the muck and mire of what’s often a convoluted process.

Medical billing services result in an extremely hands-off approach to your electronic claims. For thinly spread practices, this approach is invaluable – well, until you consider the cost. Most medical billing companies retain a percentage of your practice’s monthly collections – typically as low as 2% and as high as 9% – for their work.

Key TakeawayFYI: Most third-party medical billers charge 2% to 9% of your practice’s monthly collections for their services.

You might be worried that outsourced medical billing can quickly become unaffordable. However, a broader view of medical billing may show that outsourcing is worth the cost. Think about the money lost to the errors you or your thinly spread staff often make when rushing through claims. That alone can exceed the cost of outsourced medical billing. The upfront costs of outsourced medical billing services often pay for themselves in the long run.



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