The Basics of Medical Coding and Billing

The Basics of Medical Coding and Billing _ Patsy Gallian

Many people are completely unaware of the intricacies and behind-the-scenes work that happens after visiting the doctor. There’s a whole world, and basically a different language, that enables payers and patients to reimburse service providers. That world consists of medical billing and coding.

In essence, medical coding transmutes billable information from a patient’s medical record and medical billing uses the codes to make insurance claims and bills.

This backstage process occurs after a patient registers with a doctor or service provider, and can sometimes take only a few days or multiple months. The length medical coding and billing takes to process is contingent on the complexity of the services received, whether or not there were claim denials, and how the provider is paid by their patients.

But let’s take a step back and break down medical coding and billing a bit further. Understanding the process can help you understand your bills and become more literate in the healthcare language.

Medical Coding

Medical coding begins when a patient goes to a doctor, hospital, or any other healthcare service provider. Then, the provider writes notes of the service(s) given in the patient’s record. Notes can include why a patient received a certain service, product, or procedure. If a service isn’t detailed in a patient’s medical record, it should not be coded. Providers could find themselves facing a healthcare liability or fraud investigation if they bill patients for services that were documented incorrectly or missing from the patient’s record.

Once the patient leaves the medical facility, a professional medical coder begins their work. First, they review and analyze the notes taken during the appointment and find their respective code. There are many different types, such as diagnosis, charge, professional/facility code, and procedure codes.

Diagnosis Codes

These codes are essential to categorize a patient’s health condition or injury. They also factor in social determinants and patient characteristics. Currently, the medical billing industry utilizes the International Statistical Classification of Diseases and Related Health Problems, Tenth Revision (ICD-10) for diagnosis codes.

There are two aspects of diagnosis or (ICD-10) codes. The first are clinical modification (ICD-10-CM) codes, which are used to identify diagnostic codes. The ICD-10-CM code set contains over 70,000 identifiers. The second consists of the procedure coding system (ICD-10-PCS), used to relay inpatient procedures that occur at a hospital.

Procedure Codes

Working hand-in-hand with diagnostic codes, procedure codes show what a provider performed during an appointment with a patient. There are two coding systems for procedure codes: the Healthcare Common Procedure Coding System (HPCPS) and the Current Procedural Terminology (CPT). A lot of the codes overlap between the two systems, but HCPCS codes cover non-physician services (think medical equipment used and ambulance rides) whereas CPT does not.

At the moment, the American Medical Association (AMA) is using the CPT system, which tells private payers which services a patient received during a healthcare appointment. Used with ICD-10 codes, private payers have a clear picture of what occurred during an appointment and why it occurred at all.

Though the AMA prefers the CPT coding system, CMS and many third-party payers will require HCPCS codes. HIPAA, the Health Information Portability and Accountability Act also requires claims to contain HCPCS codes.

Charge Capture Codes and Professional/Facility Codes

Medical coders and revenue cycle managers will regularly attach certain services and order entries with a “chargemaster” code. A chargemaster lists an organization’s prices for their offered services. They will then use the prices in claim reimbursement rate negotiations with payers and charge patients with any remaining balance.

Professional/Facility codes are exactly what they seem to be. They are organization-specific codes that are used by hospitals or physicians to factor in the cost and overhead of providing services. These codes cover the use of equipment, prescription drugs, space, and supplies.

Medical Billing

Much of the medical billing process starts to occur prior to the work medical coders perform. This is known as front-end medical billing. While a patient is checking in, billers and facility financial staff have them fill out related forms and confirm their personal information like their address and insurance provider. Sometimes a co-payment will be collected at check-in, other times it will be collected at check-out.

On the back-end, medical coders and billers are working in tandem to combine the codes and patient information. This collaboration forms what is known as a “superbill,” an itemized form that allows providers to create a claim. A superbill will included provider information, patient information, and visit information. The superbill essentially forms a master sheet that medical billers can pull information from to develop claims.

Medical billers typically encounter the same few forms: the Medicare-created CMS-1500 form, used for non-institutional health facilities (private practices), and the federal program’s CMS-1450 or UB-04 for institutional facility claims. There are other forms used by third-party payers, private payers, or Medicaid, but many have begun to use the CMS forms.

While the claims are being written, medical billers go through them once more to make sure that all codes can be accounted for and are accurate, and that patient information is correct.

Once a thorough check is performed, medical billers will send the claims to payers. They must be sent in accordance with HIPAA standards which requires providers to electronically transmit Medicare Part A and Part B claims and use the ASC X12 format, also known as HIPAA 5010.

Billers can send claims straight to a payer or opt to use a third-party organization, most often referred to as a clearinghouse. These organizations send claims from the provider to the payer, and can be very helpful for smaller providers who may not have a thorough practice management system.

Now, adjudication begins once the claim gets to the payer. At this time, the payer analyzes the claim and discerns whether they will pay the provider and how much they’ll pay. Claims can be rejected, denied, or accepted by the payer. They notify the provider of their decision through an Electronic Remittance Advice (ERA) form.

Once the claim is settled and paid correctly, a medical biller will create a statement for the patient. The charge is typically the difference between what the payer reimbursed and the rate on their chargemaster.

Finally, medical billers process patient payments and send the revenue to accounts receivable management.

The world of medical billing goes on behind the scenes, and few know how complex and complicated a process it is. Medical coders and billers need to be thorough, analytical, and extremely careful in their jobs to ensure codes and claims are accurate.

Originally posted on PatsyGallian.com on May 24, 2019.

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