A Guide to Coding for Medical Billing (with an Example of Medical Coding)
July 24, 2023
Medical billing and coding are two of the most complicated but essential aspects of maintaining a financially healthy medical practice. Every year, millions if not billions of dollars are lost to medical coding errors and unsound medical billing practices.
We created this article to help you navigate the basics of medical billing. We will define medical billing and coding and discuss the difference between medical billing and coding, as well as the role coding plays in billing. And we’ll also include an example of medical coding, so you can see exactly what it does for a medical practice.
What is medical coding and billing?
Medical coding and billing are crucial processes within the healthcare revenue cycle that ensure healthcare providers are accurately reimbursed for the services they provide. While closely related, they perform distinct roles:
Medical Coding Definition
Medical coding means translating the healthcare services provided into universal codes. These include diagnoses, procedures, medical equipment, and more.
There are several types of codes used, including:
- ICD-10 (International Classification of Diseases, 10th Revision): These codes are used to represent a patient's diagnosis and reason for the visit.
- CPT (Current Procedural Terminology): These codes represent the specific procedures and services performed by the healthcare provider.
- HCPCS (Healthcare Common Procedure Coding System): These codes, which include a range of additional codes not covered by CPT, are used mainly for billing Medicare and Medicaid.
- Modifiers: These are additional codes appended to CPT codes to provide more information about the service, such as whether it was a bilateral procedure or if more than one procedure was performed during the same session.
Medical coders are healthcare professionals who perform this task. They review patient information for pre-existing conditions, translate medical record information into codes, and often work closely with the billing team to ensure accuracy and proper reimbursement.
Proper medical coding is essential to the healthcare industry. It ensures fair and accurate payment, facilitates statistical tracking of diseases and treatments, enables reliable nationwide data comparison, and serves many other functions that contribute to quality care. When it’s all said and done, correct coding directly affects how much a healthcare provider is reimbursed by insurance companies.
Medical Billing Definition
Medical billing means creating and submitting claims to insurance companies to receive payment for services provided. The medical bill, or claim, includes the codes created during the medical coding process along with the patient's insurance information and other relevant data. The goal of medical billing is to accurately and promptly submit claims to insurance companies to secure revenue for healthcare providers.
After the claim is submitted, the insurance company processes it and returns with an approval or denial. If approved, the healthcare provider receives the reimbursement specified in their contract with the insurance company. If denied, the claim goes through a process to correct any issues and is then resubmitted.
Here's a breakdown of the main steps involved in medical billing:
- Patient Check-In: The process begins when a patient checks in for a medical visit. The patient's insurance information is collected and verified.
- Medical Service: The healthcare provider conducts the patient examination, procedure, or consultation.
- Medical Coding: Once the service is provided, medical coders translate the services rendered, diagnoses, and equipment used into universal medical codes. (As you can see, medical coding is one part of medical billing.)
- Charge Entry: The medical coder's work is reviewed and the appropriate charges are entered into the system.
- Claims Submission: The medical bill, or claim, is then submitted to the insurance company. This claim contains all of the coded information about the patient's visit and the services provided.
- Payment Posting: If the claim is approved by the insurance company, the payment is posted to the patient's account. If the claim is denied, it may be corrected and resubmitted, or appealed.
- Patient Statement: Any balance not covered by insurance is billed to the patient.
Medical billing ensures healthcare providers are reimbursed for their services. It requires knowledge of healthcare procedures, medical codes, insurance policies, and patient advocacy. It also demands meticulous attention to detail and strong organizational skills to manage a large volume of patient files and keep track of many claims at different stages in the billing process.
It's important to note that medical coding and billing both require specific expertise. Many healthcare providers employ dedicated medical coders and billers, although in smaller practices, the same person may perform both roles.
Medical coding vs medical billing
While they're often mentioned together and may even be performed by the same person in smaller healthcare facilities, medical coding and medical billing are two distinct things. The difference between medical billing and coding is subtle but important.
Medical Coding: This is the process of translating the details of healthcare services into codes from a universal medical coding system. These codes represent everything from a diagnosis to a specific medical procedure to a piece of medical equipment. The main types of codes used are ICD-10 (for diagnoses), CPT (for procedures and services), and HCPCS (for equipment and certain services not covered by CPT). Medical coding requires a detailed understanding of these coding systems, medical terminology, disease processes, and more.
Medical Billing: This is the process of submitting and following up on claims with health insurance companies to receive payment for services rendered by a healthcare provider. It begins after the medical coding process is complete. The medical biller uses the codes provided by the medical coder to create a claim, which is then sent to the insurance company. Medical billing requires a strong understanding of health insurance policies, regulations, and claim submission procedures.
In summary, medical coding involves translating healthcare services into universal codes, while medical billing involves using those codes to submit claims to insurance companies for reimbursement. Medical coding is one essential part of medical billing, but it’s not the whole process. Both are crucial for the healthcare revenue cycle, ensuring that healthcare providers are accurately paid for their services.
An example of medical coding in action
Here's a simplified example of how medical coding might be used during a typical patient visit to a primary care physician:
Let's say a patient visits their doctor because they've been having persistent headaches and bouts of dizziness. The doctor performs an examination and orders a blood test and an MRI of the brain to rule out serious conditions.
In this case, the diagnosis and procedures might be coded like this:
- Diagnosis: The doctor suspects the patient is suffering from migraines. The ICD-10 code for migraines is "G43.909" which stands for "Migraine, unspecified, not intractable, without status migrainosus".
- Examination: The doctor's time spent evaluating the patient could be coded as "99213" (Office or other outpatient visit for the evaluation and management of an established patient).
- Blood Test: The blood test ordered may be coded as "85025" (Blood count; complete (CBC), automated (Hgb, Hct, RBC, WBC and platelet count) and automated differential WBC count).
- MRI: The brain MRI could be coded as "70551" (Magnetic resonance (eg, proton) imaging, brain (including brain stem); without contrast material).
This is a very simplified example, and real-life medical coding can be much more complex. Factors such as the patient's medical history, other existing conditions, and more specific details about the procedures and services can all affect the final coding.
Please note that the mentioned codes are representative and for illustration purposes only. The actual codes used can change based on updates to the ICD-10, CPT, and other coding systems, as well as specific circumstances of the patient's condition and the healthcare services provided.
The benefits of medical coding for medical billing
Medical coding provides numerous benefits for the medical billing process and overall healthcare revenue cycle management:
- Standardization: Medical coding provides a standardized language for describing medical services and procedures. This ensures clear communication between healthcare providers and insurance companies about the services provided to a patient.
- Accurate Reimbursement: Correct coding is essential to receive accurate payment from insurance companies. Errors in coding can lead to underpayment, overpayment, or outright denial of claims.
- Efficiency and Speed: Proper coding helps speed up the billing process. Claims with accurate codes are less likely to be rejected or require additional clarification, allowing for faster reimbursement.
- Statistical Tracking and Research: Codes can also be used for statistical purposes to track the prevalence and spread of disease, the effectiveness of treatments, and other public health data.
- Facilitate Auditing: Coding makes it easier for audits and reviews to occur. Auditors can quickly review codes to assess the appropriateness of billing, check for compliance, or review for potential fraud or abuse.
- Quality of Care: Accurate medical coding also supports quality care. By correctly coding diagnoses and procedures, healthcare providers can ensure that a patient's medical history is accurately recorded, which supports future care decisions.
- Regulatory Compliance and Reporting: Medical coding allows healthcare providers to meet reporting requirements for programs like Medicare's quality payment program and other payer-based quality initiatives.
- Benchmarking and Performance Improvement: Medical coding data can be used by healthcare providers to benchmark their performance against peers and identify areas for improvement.
In summary, medical coding is a critical part of the healthcare revenue cycle and plays a vital role in ensuring the efficiency, accuracy, and success of the medical billing process. If you’re considering outsourcing your medical billing to a group of trained professionals, SuperBill may be just the fit for your practice.
SuperBill takes care of all your revenue cycle management needs, including medical billing. All you have to do is sign up, and we’ll handle everything from there, from patient registration all the way until the payment is in your hands.