Medical Coding and Billing

Medical Coding and Billing

The very first US Insurance firm was founded in 1850. This firm only provided coverage in case of accidental coverage. The first employer-provided health coverage was in 1928. Since then, health insurance has gone through a series of changes and innovations to become the US health insurance system we see today.

To know more about the health insurance system in the United States, check our article, Health Insurance: How to choose better?

Payments in the health insurance systems follow a revenue cycle that starts with the patient visiting a healthcare provider in a healthcare facility and ends with the healthcare provider receiving the payment for medical services rendered, in full. Medical Coding and Billing are vital steps in this process.

In short and simple terms, medical coding is a process in which medical coders match the diagnosis and procedures to nationally accepted codes for standardization of the process. Whereas, medical billers, in a process called medical billing, then take these codes, develop a bill of services to be presented to payers (insurance companies or departments) and/or patients, and make sure that the bill is paid in full to the healthcare provider. As stated earlier, these steps are a part of the revenue cycle. We have discussed this revenue cycle in detail according to the responsibilities of key professionals involved in the process.

Healthcare Provision

When a patient visits a healthcare facility, the front-desk staff notes down the patient’s details including biodata and insurance information as mentioned on the health insurance card provided to the patient by the payer (insurance company or department). In most cases, the facility staff informs the payer and takes preauthorization for certain procedures. The patient is then seen by a general practitioner or a registered nurse, who takes a record of signs and symptoms and orders preliminary tests. After the tests are done and the lab reports are in, the Physician examines the patient, makes a diagnosis, and prescribes medical or surgical treatment. As soon as the patient leaves, physician notes are finalized and forwarded to medical coders.

Medical Coding

Medical coding starts with the medical coder receiving patient notes from the healthcare provider. A medical coder has a period of two to five days to encode the patient’s notes into standardized codes. There are two types of medical codes:

  • International Classification of Diseases-tenth revision (ICD-10)Codes
    •  Healthcare Common Procedure Coding System (HCPCS) Codes I & IICurrent Procedural Terminology Codes (HCPCS I)
    •  HCPCS II Codes

International Classification of Disease (ICD-10) Codes

International Classification of Disease Codes is a universally accepted codes that keep track of diseases among a population. There are more than 70, 000 identifiers in ICD-10 codes and each identifier is assigned to a specific disease and diagnosis. These codes have been developed and maintained by World Health Organization (WHO). Though these codes were developed for international use and were thought to provide statistical data on the presence or absence of certain diseases and consequently the deaths caused by those diseases (mortality and morbidity), the US Healthcare system has widely adopted these codes in the process of medical coding to bring standardization. ICD codes not only provide the nature, severity, and extent of disease but also transcribe information regarding a patient’s visit concerning that specific disease. Code modifiers have been developed and are used to provide information regarding these parameters.

ICD-10-CM (Clinical Modification) codes are used in all healthcare settings while ICD-10-PCS (Procedural Coding System) are used specifically in in-patient settings in hospitals. To learn more about these coding systems in detail, keep a look out for our upcoming article in Healthcare & Medicine Category.

Healthcare Common Procedural Coding System (HCPCS) Codes

There are two levels of HCPCS Codes, HCPCS Level I codes better known as Current Procedural Terminology (CPT) Codes. CPT codes describe the procedures performed by healthcare providers in clinical settings and have modifiers that describe specific attributes of these procedures performed, such as the number of procedures performed, the location of the procedure with respect to anatomy, or the reasons associated with those procedures. CPT codes were produced by the American Medical Association (AMA) and the AMA published annual updates for the codes.

HCPCS Level II codes were developed by the Centers for Medicare and Medicaid Services (CMS). CMS and some third-party health insurance providers require the use of HCPCS Level II codes. Though there is an overlap between CPT and HCPCS codes, HCPCS codes go a step further in describing healthcare services by involving non-physician services such as ambulance services, medical equipment, and prescription drugs.

Charge Capturing

Charge capturing is a process in which medical coders use charge capturing codes to match the data between the physician notes and the Chargemaster (A list of healthcare services, procedures, and usable items with standardized rates, displayed by the hospital publicly. These charge capture codes contain the necessary information that helps medical billers negotiate a suitable reimbursement for the medical services provided to the patients.

Medical Billing

Once the coding process is finished, and the relevant codes are entered into a system (mostly software these days), medical billers take over. Medical billers make sure that medical coders did a satisfactory job of coding the physicians’ notes as the insurance company may reject a claim or may write off the claim altogether if coding is done incorrectly. Medical billers then use the data provided by the medical codes and the physician’s notes to form a superbill. A Superbill is a form used to file claims by healthcare providers to CMS and other medical insurance companies. To read more about superbills and their implementation, click here. Sometimes, medical billers will forward their bills to a Clearinghouse. A Clearinghouse is a company that forwards medical claims from healthcare providers to the payers. Though they are most commonly used by clinics and simple healthcare setups, clearinghouses can also prove beneficial in the case of large healthcare setups by verifying and proofreading the medical coding and billing process already performed by the medical coders and billers so that there is less chance of claim rejection.

Claim Adjudication

During this step of the process, payers will study the claim and make decisions as to what they are supposed to cover. Payers then send Electronic Remittance Advice (ERA) form back to the medical billers which includes one of three types of information, additional inquiry, total payment against the claim, and the reason for claim rejection.

Explanation of Benefits

After receiving the reimbursement from the payers, medical billers prepare an Explanation of Benefits (EOB) for the patient which states the total benefits covered and paid for by the payer and any difference between claim reimbursement and chargemaster. This difference between the medical bill prepared according to the chargemaster and the claim reimbursement received from the payer then comes out of the patient’s pocket. If a patient visits a healthcare provider outside the network of his or her insurance provider, it was the patient’s responsibility to negotiate the claim reimbursement with the payer. But recently, the Biden administration passed a No Surprise Act, which makes it mandatory for healthcare providers to submit a claim for out-of-network providers on behalf of the patient. This rule gives medical billers and payers 30 days, in which they have to come to terms with the total claim reimbursement amount or the matter will be resolved by independent dispute resolution.

Collection from Patients

As stated earlier, EOB lets patients know what medical costs were covered and paid by the payer. Medical Billers ask the patients to pay the rest of the costs. Patients usually have a 30-day time period to pay the remaining costs to the healthcare provider. If the patient fails to make the necessary payment, medical billers can contact the recovery agents for the collection of pending bills. Medical billers submit the funds received to Accounts Receivable (A/R) management for the closure of the revenue cycle. In case of delay of payment from the patient, the case lands in Aging A/R, to be processed through recovery agents or other methods deemed necessary.

Ways to Improve Medical Coding and Billing

Medical coding and billing first started in the later part of the 20th century after the development of medical codes. Since then it has evolved to bring improvements in the revenue cycle for the healthcare providers and the health insurance payers. There are several ways to bring further improvements in the process and make it streamlined so that fewer resources are spent, more time is saved and this overall process puts less strain on the economy.

Automation through digital technology:

By making the medical coding and billing process automated, human resources can be saved and the costs can be cut down. Moreover, automation through software and computerization can reduce the number of errors in the coding and billing process. Many software companies have come up with easy-to-use software that aids this process. These pieces of software called Computer Assisted Coding (CAC) solutions can read physicians’ notes and assign codes automatically to the relevant terminology. A big edge of CAC solutions over human resources is their ability to automatically update their memory with the latest update of codes and modifiers.

Regular Auditing of the system:

Regular audits of the medical coding and billing process can put a check on various errors and incorrection in the process itself. This reduces the cost and time spent on the process by reducing the risk of rejection of a claim and saving to-and-fro negotiations as a result of those denials. A huge number of cases face rejection due to a lack of clinical documentation, improper coding, and improper billing. By improving the standards in the process, the whole process can be streamlined, and additional resources can be saved and better spent somewhere else.

Training and Education:

Training and education are a necessary part of every system and process and help the industry and its professionals to be better at their jobs. In the medical coding and billing industry, various programs (virtual and on-campus) offer training and education to candidates, but there are only two primary certifying bodies in the United States.

1. The American Health Information Management Association (AHIMA)

AHIMA offers the following certifications in this field:

  • Certified Coding Associate (CCA®)
  • Certified Coding Specialist (CCS®)
  • Certified Coding Specialist – Physician-based (CCS-P®)

To learn more about these certifications and associated programs, click here.

2. The American Academy of Professional Coders (AAPC)

AAPC offers the following certifications in this field:

  • Certified Professional Coder (CPC®)
  • Certified Outpatient Code (COC™)
  • Certified Inpatient Coder (CIC™)
  • Certified Outpatient Coder (COC™)
  • Certified Professional Biller (CPB™)
  • Certified Risk Adjustment Coder (CRC™)
  • Specialty Medical Coding Certification

To learn more about these certifications, click here.

By employing these three primary strategies, we can further develop the medical coding and billing process and bring improvements in it. Medical Coding and Billing is a booming industry and will require additional human resources for a considerable future. An average individual in this field earns a starting salary of $55000. This salary varies from state to state and is influenced by other factors too. You can contact us, and a member of our team will assist you in helping you plan your journey in this field. You can also visit our community forum at to start a discussion.

We can help you choose and utilize your healthcare coverage plan efficiently and save you thousands of dollars every year through our Personal Health Coordinator Services.

To learn more about this topic and similar topics, browse through our categories. If you need particular assistance, please contact us. Comment below your thoughts on this article and let us know about any queries or suggestions that you may have.

Dr. Muhammad Hussain
Dr. Muhammad Hussain

MD, Entrepeneur & Administrator. Six years of experience, working in the field of clinical care, medical administration, and healthcare business.

Articles: 29

Leave a Reply

Your email address will not be published. Required fields are marked *