A Complete Guide to the Medical Billing Process for 2026

Over the last few years, healthcare has evolved rapidly. There has been a decrease in reimbursement and a tightening of the reimbursement process, stricter payer rules and expectations, and a growing expectation of transparency and digital payment options for patients. With all these factors in mind, there is one central driver that will either keep your practice thriving and your patients satisfied, or break it down the medical billing process.

If the medical billing process is running well, then your practice is making money and your patients are happy. When it is broken, then your practice will suffer financially, experience an increase in denied claims, and frustration will spread throughout your staff and your patients.

In 2026, the medical billing process is not a luxury; it is a requirement for survival. Automation tools are becoming smarter and more sophisticated, AI is being used in claim editing and review, CMS continues to issue new regulations and commercial payers continue to revise their policies almost on a quarterly basis. One misinterpreted rule could cost you thousands of dollars.

This guide will walk you through the medical billing process from start to make your medical billing process run smoothly from the perspective of someone who works directly in billing departments every day.

Introduction

The medical billing process represents the process by which healthcare services are converted into revenue. It starts as soon as a patient makes an appointment and does not end until full payment is received and posted.

In 2026, billing is no longer simply about entering data — it is about compliance, technology, analysis and strategy. Today’s automated tools are able to flag coding inconsistencies and identifying potential problem areas.

Clearinghouses reject claims immediately if they are not completed correctly. Payors are using predictive models to assess risk and scrutinize claims that are most likely to be denied.

Additionally, regulatory oversight has increased. CMS audits are now data driven, HIPAA enforcement is increasing, surprise billing laws continue to evolve and practices need to be knowledgeable of current trends.

Understanding the medical billing process provides the control providers require regarding revenue, compliance and patient satisfaction. And, in today’s healthcare environment, having control is what it is all about.

What Is the Medical Billing Process?

The medical billing process is defined as the administrative workflow by which healthcare providers submit claims for services rendered to insurance companies for payment.

The process includes reviewing documentation, assigning CPT codes for procedures, ICD-10 codes for diagnoses and HCPCS codes where applicable, creating and submitting claims, tracking payments, managing denials and collecting from patients. All steps of the process must comply with payer guidelines and federal regulations.

Many individuals equate medical billing with medical coding, however, they are not synonymous. Medical coding is the translation of clinical documentation into standardized codes including CPT codes, ICD-10 diagnoses and HCPCS procedure codes. Medical billing takes those codes and translates them into financial claims.

Billing also plays a large role in RCM (revenue cycle management) and the billing process is the financial core of the RCM process. Without accurate billing, the RCM process will not function efficiently.

To illustrate, coding informs the story, billing delivers the bill.

Key Stakeholders in the Medical Billing Process

A smooth functioning billing process relies upon numerous moving pieces and each player has a vital role.

• Providers provide documentation regarding the services they provided and ensure clinical accuracy. Documentation provided by providers is directly related to the coding assigned and the level of reimbursement the provider receives.
• Medical coders translate the documentation provided by providers into CPT codes, ICD-10 diagnoses and HCPCS procedure codes. The accuracy of coding is essential to determine if the claim will pass payer edits.
• Medical billers prepare and submit claims to insurance companies, track rejections, post payments and manage denials.
• Payers evaluate and settle claims according to contract and policy agreements.
• Patients have become significant financial players as deductibles continue to rise. Communication regarding billing with patients is more important than ever.
• Clearinghouses and billing software serve as gatekeepers. They review claims for errors prior to submission to payers and transmit claims electronically to payers.

When any of the links in the above chain are broken, reimbursement will slow.

Step-by-Step Medical Billing Process (Updated for 2026)

Now let us go through the entire process.

Step 1: Patient Registration and Data Collection

The first step in the medical billing process is patient registration. During this time, the practice collects demographic information, insurance information, and contact information.

Any errors that occur during this initial process will ultimately result in a larger issue further along in the process. For example, if the insurance company identifies a mistake in the patient’s name or the policy number, it could cause the claim to be rejected prior to adjudication.

Properly verifying insurance information during registration will eliminate the possibility of downstream issues.

Errors occurring at the front-end of the billing process are one of the leading causes of denied claims.

Step 2: Insurance Eligibility and Benefits Verification

Next, the practice verifies the patient’s insurance eligibility. This involves confirming that the patient is currently covered, their copay/deductible, coverage restrictions, and prior authorization requirements.

Electronic real-time eligibility verifications have become the norm in 2026. However, the accuracy of the eligibility verification will only be as good as the information entered into the system.

Failure to properly verify the patient’s benefits will result in services that are not covered and/or claims that are denied.

Eligibility is not simply about completing paperwork; it is about protecting the patient and the practice.

Step 3: Medical Coding (CPT, ICD-10, HCPCS)

The clinical documentation that was collected from the provider is now transferred to coding. The coder assigns CPT codes for procedures, ICD-10 codes for diagnoses and HCPCS codes when necessary.

Accurate coding is crucial to ensuring that the claim demonstrates the medical necessity for the service. Undercoding results in lost revenue, while overcoding results in an audit.

Increasingly, payers are using artificial intelligence (AI) to detect coding discrepancies. Therefore, documentation must clearly support each code that is assigned.

Step 4: Charge Entry and Claim Creation

Once the coder completes coding, the services are moved to charge entry. The biller enters the codes, provider information, location of service, modifiers and fee schedules into the billing system.

The billing system then generates a medical claim in a format that is acceptable to the payers (i.e., CMS-1500 or UB-04).

Checks for compliance are performed at this point in the process. Incorrect modifiers. Missing NPIs. Wrong diagnosis pointer. Each error has the potential to increase the risk of rejection of the claim.

Accuracy is paramount.

Step 5: Claim Scrubbing and Submission

Prior to submitting the claim to the payers, the billing system performs claim scrubbing. Automated tools review the claim for coding inconsistencies, missing or inaccurate data, and any payer-specific rules.

Clean claims are transmitted to the payers through clearinghouses. Electronic transmission is now the standard method for claim submission. Claims submitted via paper are less common and generally take longer to process.

Submission of clean claims will significantly reduce the amount of time required to receive reimbursement.

Step 6: Insurance Adjudication

Once the claim is submitted, the payer reviews the claim through the claim adjudication process. During adjudication, the payer will determine if the service is covered, if the coding meets the policy requirements and how much reimbursement is owed to the provider.

Claims may be approved, partially paid, denied, or rejected. Understanding the adjudication process will allow the billing team to identify areas of concern and make adjustments to the workflow accordingly.

Step 7: Payment Posting and ERA Processing

Once payment is received from the payer, it comes with an ERA (Electronic Remittance Advice) or EOB (Explanation of Benefits).

When applying the payment, the biller applies the correct amount of the payment, adjusts for any contractual allowances and identifies any underpaid amounts.

Even small errors in the application of payment will result in distorted financial reporting.

Accurate reconciliation will maintain the transparency of the revenue cycle.

Step 8: Denial Management and Appeals

Claims do not always process without incident. Claims may be denied for a variety of reasons including errors in coding, missing documentation, errors in eligibility, or failure to meet the timely filing requirements.

Effective denial management involves analyzing the reason(s) for the denial, resolving the errors that resulted in the denial and appealing the denied claim to the payer prior to the deadline for appeal.

Denials left unaddressed will result in lost revenue.

Prompt response to denied claims will recover the lost revenue.

Step 9: Patient Billing and Collections

Once the insurance company has paid their share of the claim, any remaining balance is referred to patient billing. Clear communication with the patient, providing access to online portals for easy payment, and offering flexible payment plans will improve patient collections.

As deductibles rise, so does the importance of communication with the patient. The clearer you communicate with the patient, the faster the practice will be able to collect.

Transparency builds confidence.

Common Challenges in Medical Billing in 2026

Every year, healthcare becomes more complex.

Challenges in medical billing in 2026 include higher denial rates, payer edits changing frequently and payers requiring documentation to be reviewed more thoroughly.

With the annual revisions to CPT and frequent revisions to ICD-10 codes, coding has become more complicated.

Federal and state regulation changes require ongoing vigilance.

Increased financial burden on patients resulting in delayed payments to practices is another challenge.

Practices that do not adapt to the changing landscape of medical billing face decreased profitability.

Best Practices to Maximize the Efficiency of the Medical Billing Process

• Establish strong processes will minimize stress and maximize revenue.
• Implement automation will streamline the process and reduce errors.
• Perform regular coding audits will identify vulnerabilities prior to the payer identifying them.
• Continuing education of billing personnel will ensure that staff are aware of regulatory changes.
• Track KPIs (key performance indicators), such as AR days and denial rates, will enable early identification of potential issues.

Some practices find it beneficial to outsource some or all of the billing process to experts in medical billing.

These medical billing best practices will produce consistent cash flow and fewer unexpected events.

Compliance and Regulation of the Medical Billing Process (2026 Update)

Compliance with the medical billing process is a non-negotiable aspect of doing business.

HIPAA dictates that the protected health information of patients be maintained in a secure manner at all times. From the moment the patient’s information is obtained and processed, the protected health information must be maintained confidentially.

CMS regulates coding, documentation, and reimbursement for Medicare and Medicaid.

In addition to CMS regulations, state regulations also impose additional requirements.

Conducting internal compliance audits will assist in detecting potential areas of risk prior to external auditors.

Maintaining compliance with the medical billing process will protect both the revenue and the reputation of the practice.

How Technology is Changing the Medical Billing Process

Technology is revolutionizing virtually every aspect of the medical billing process.

Automated technologies are now capable of performing eligibility verification, validating coding assignments and notifying the billing team of potential denials.

Artificial Intelligence (AI) in healthcare is helps predict the likelihood of a claim being denied prior to submitting the claim.

Robotics Process Automation (RPA) and medical billing automation is reducing the amount of manual effort required to perform repetitive tasks.

Modern billing software enables seamless integration with EHR systems for data exchange.

While technology is not intended to replace personnel, it is designed to empower billing professionals to focus on strategic decision-making rather than manual tasks.

In-House vs. Out-Sourced Medical Billing: Which is More Effective?

While some practices prefer to have the billing process handled internally, they prefer to handle the billing process internally in order to retain control of the process. However, the costs associated with staffing, training and implementing and maintaining billing software can be prohibitive.

Out-sourced medical billing offers practices access to highly skilled and trained billing personnel, advanced technology and scalable solutions. Out-sourcing the billing process often results in reduced AR days and lower denial rates, particularly for smaller to medium-sized practices.

Ultimately, the determination of which option is better is dependent upon the volume of claims processed, the complexity of the specialty and the internal knowledge of the billing process. There is no “one-size-fits-all” solution.

Frequently Asked Questions

How long does the medical billing process take?

The length of the medical billing process will vary based on the type of payer involved, the complexity of the claim and the quality of the submission. Clean electronic submissions will typically process in a matter of weeks, whereas denied or appealed claims may take several months. The efficiency of the billing process will significantly reduce the amount of time required for reimbursement.

What causes claim denials?

Claim denials most commonly occur due to errors in coding, lack of proper eligibility verification, missing documentation, and/or the failure to obtain prior approval. Errors in meeting timely filing deadlines and the use of incorrect modifiers are other common reasons for claims being denied. Identifying patterns of denial will enable the billing team to prevent future similar errors.

How can providers expedite reimbursement?

Expediting the reimbursement process can be achieved by submitting clean claims, conducting eligibility verification prior to the submission of the claim, monitoring the rejections reported by the clearinghouse, and promptly addressing any request for additional information from the payer. Utilizing automation tools and proactively addressing denied claims will also expedite the reimbursement process.

Conclusion

The medical billing process is the financial heartbeat of every healthcare practice. From patient registration to final payment posting, each step must function with precision.

In 2026, technology, compliance requirements, and payer scrutiny continue to evolve. Practices that stay informed, embrace automation, monitor performance metrics, and maintain strict compliance will thrive.

Now is the time to review your workflows. Audit your claims. Analyze your denials. Strengthen your systems.

Because in modern healthcare, efficient billing is not just administrative work.

It is financial survival.