What is an Entity Code in Medical Billing?

Introduction

There are various entities involved in the healthcare services, and each entity has its own unique number to ensure that the correct entity is being billed. Entity codes are used to guarantee that the appropriate entity is billed. Entity codes may be assigned by the provider, billing office, or payer. It is an important element of medical billing that can affect healthcare providers, patients, insurance companies, and the overall efficiency of the system. Healthcare providers encounter various errors and challenges in medical billing, in which the most common error is related to wrong billed entity codes. As a result, claims are denied by the insurance companies.

In this blog, we will go through a basic understanding of entity codes, their importance, errors associated with them, and ways to avoid entity code errors.

Basics of Medical Billing Entity Codes 

The word “entity” refers to a person, place, or thing that possesses an independent existence. In medical billing, the patient, the provider, or even the medical billing service can be an entity. Thus, an entity code is used to identify and differentiate between various participants in the healthcare system.

When dealing with claim submission and denials, entities can cause confusion for medical billers. If a biller discovers an error in the entity code, it could be in any of the entities participating in services. As a result, suppliers and billers must understand all entities and entity codes. 

What is an entity code in insurance claims? 

An entity identification number (ID)  is a unique number given to a single entity within a system or organisation. In the healthcare process, an entity ID number may refer to a unique number assigned to various entities involved. These entities may include healthcare providers, medical facilities, insurance companies. This number can be alphanumeric, numeric, or a combination of letters and numbers.

Common entity codes in healthcare billing

Health Plan Identifier: 

A unique code number for health plans, including insurance companies, in electronic healthcare transactions.

National Provider Identification (NPI): 

It is a form of entity ID number used in the United States by healthcare providers. Individual healthcare providers and organisations are granted 10-digit numeric entity codes and a National Provider Identifier (NPI).

Tax Identification Number: 

Another type of entity ID number used for tax purposes is provided to organisations such as healthcare facilities.

Employer Identification Number: 

It is used to identify businesses, including healthcare organisations, for tax purposes.

Facility ID: 

Healthcare facilities may have their own internal identity, or facility ID, for billing purposes.

Billing provider vs rendering provider codes

• The person or group in charge of sending the medical claim to the insurance company is known as a billing provider. 
• The billing provider is responsible for filing the claim for payment, while the rendering provider provides the care to the patient.

For Instance

• When a surgeon operates on a patient in a hospital, the hospital or its billing department is the billing provider, but the surgeon is the rendering provider. 
• The billing provider can be a health care system, a third-party billing company, 

The differences between rendering and billing provider codes are essential for accurately submitting and receiving payment for medical claims, which guarantees that healthcare services are processed accurately.

Reasons for entity code claim rejections

Wrong member ID number

This error occurs when there is incomplete information on the patient. For instance, if the patient’s insurance changed or if they were not covered when they received the service. Such a type of error can occur when a claim is sent to the incorrect insurance company because the patient’s ID did not match.

Entity Code Required

This occurs when the biller fails to clearly state an entity in the claim. To ensure that everything is clear, the biller must review all aspects of the claim, including the patient, provider, and any other doctors involved.

 Health insurance claim number (HICN)

 When a claim has been submitted after correction, this error appears. The payer is the entity in this instance, and the biller must make sure that the claim number that the payer assigned to the initial claim is used.

Non-compliance with coding rules

Errors caused by entity codes that do not meet the coding criteria established by payers or regulatory agencies.

 Zip Code error

This mistake concerns the provider’s location. The biller should enter the last four numbers of the zip code, not just “0000.” If this mistake occurs, it indicates that the zip code is incomplete.

How to fix entity code errors in claims

By following best practices, healthcare providers can greatly reduce the entity code claim denial reasons. Here are a few steps to consider:

Errors in patient demographics

Patient demographics include personal information such as the patient’s address, member ID, medical history, and other related data. Healthcare staff should carefully collect patient demographics before providing medical treatments.

Verify the insurance of the patient

Confirm the patient’s insurance information when they visit the healthcare office. Check if the insurance plan of the patient has changed or he is enrolled in a new insurance plan in order to avoid any denial. 

Align with other Entity Information

Always verify that the other entity-related data on the claim form is in accordance with the entity code. Understanding entity codes in EDI transactions ensures accurate data sharing processes, complying with HIPAA regulations for safe and precise electronic claim processing.

Payer ID verification

The payer ID number must be checked while submitting the claim. Billers should double-check the details before submitting the claim and adjust any inaccuracies.

Regular Training of  Staff

Billing staff should receive regular training to ensure they are familiar with the proper procedures for managing entity codes. Educate employees about any updates or changes in coding standards.

Use of reliable  medical billing software 

Software that includes verification checks for entity codes. Choose software that smoothly connects with coding standards and alerts concerning possible problems.

Conclusion

For smooth processes between insurance companies and healthcare providers, the correct use of entity codes in medical billing is essential. By avoiding entity code errors and using accurate coding procedures, healthcare providers can reduce claim denials, ultimately boosting the efficiency of the medical billing process. Errors in entity codes might result in claim denials and delayed payments. Practices can avoid claim rejections by using the correct entity code in medical billing and adhering to compliance. The positive aspects of contracting EmdeonMD to manage billing and revenue cycle management (RCM) are demonstrated by our client stories, and we are pleased to address any queries you may have.

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