Exploring the Fundamentals of Medical Billing and Coding

Medical billing and coding translate a patient encounter into the languages healthcare facilities use for claims submission and reimbursement.

Billing and coding are separate processes, but both are necessary for providers to receive payment for healthcare services.

Medical coding involves extracting billable information from the medical record and clinical documentation, while medical billing uses those codes to create insurance claims and bills for patients. Creating claims is where medical billing and coding intersect to form the backbone of the healthcare revenue cycle.

The process starts with patient registration and ends when the provider receives full payment for all services delivered to patients.

The medical billing and coding cycle can take anywhere from a few days to several months, depending on the complexity of services rendered, claim denial management, and how organizations collect a patient’s financial responsibility.

Ensuring healthcare organizations understand the fundamentals of medical billing and coding can help providers and other staff operate a smooth revenue cycle and recoup all the allowable reimbursement for quality care delivery.

WHAT IS MEDICAL CODING?

Medical coding starts with a patient encounter in a physician’s office, hospital, or other healthcare facility. When a patient encounter occurs, providers detail the visit or service in the patient’s medical record and explain why they delivered specific services, items, or procedures.

Accurate and complete clinical documentation during the patient encounter is critical for medical billing and coding, AHIMA?explains. The golden rule of healthcare billing and coding departments is, “Do not code it or bill for it if it’s not documented in the medical record.”

Providers use clinical documentation to justify reimbursements to payers when a conflict with a claim arises. If a provider does not sufficiently document a service in the medical record, the organization could face a claim denial and potentially a write-off.

Providers could also face a healthcare fraud or liability investigation if they attempt to bill payers and patients for services incorrectly documented in the medical record or missing from the patient’s data altogether.

Once a patient leaves the healthcare facility, a professional medical coder reviews and analyzes clinical documentation to connect services with billing codes related to a diagnosis, procedure, charge, and professional and/or facility code.

Coders use the following code sets during this process.

ICD-10 DIAGNOSIS CODES

Diagnosis codes are key to describing a patient’s condition or injury, as well as social determinants of health and other patient characteristics. The industry uses the International Statistical Classification of Diseases and Related Health Problems, Tenth Revision (ICD-10) to capture diagnosis codes for billing purposes.

ICD-10-CM (clinical modification) codes classify diagnoses in all healthcare settings, while ICD-10-PCS (procedure coding system) codes are for inpatient services at hospitals.

ICD codes indicate a patient’s condition, the location and severity of an injury or symptom, and if the visit is related to an initial or subsequent encounter.

There are more than 70,000 unique identifiers in the ICD-10-CM code set alone. The World Health Organization (WHO) maintains the ICD coding system, which is used internationally in modified formats.

CPT AND HCPCS PROCEDURE CODES

Procedure codes complement diagnosis codes by indicating what providers did during an encounter. Current Procedural Terminology (CPT) codes and the Healthcare Common Procedure Coding System (HCPCS) make up the procedure coding system.

The American Medical Association (AMA) maintains the?CPT coding system, which describes the services rendered to a patient during an encounter for private payers. AMA publishes CPT coding guidelines each year to support medical coders with coding-specific procedures and services.

CPT codes have modifiers that describe the services in greater specificity. CPT modifiers indicate if providers performed multiple procedures, the reason for a service, and where on the patient the procedure occurred. Using CPT modifiers helps ensure providers receive accurate reimbursement for all services.

While private payers tend to use CPT codes, CMS and some third-party payers require providers to submit claims with?HCPCS codes. The Health Information Portability and Accountability Act (HIPAA) requires organizations to use HCPCS codes in certain cases.

Many HCPCS and CPT codes overlap, but HCPCS codes describe non-physician services, such as ambulance rides, durable medical equipment, and prescription drug use. CPT codes only indicate the procedure, not the items a provider used.

HSPCS codes also have modifiers that help specify services further.

CHARGE CAPTURE CODES

Coders connect physician order entries, patient care services, and other clinical items with a chargemaster code.?A chargemaster is a collection of standard prices for services and items?that a provider organization offers.

Charge capture codes may include procedure descriptions, time reference codes, departments involved in the medical service, and billable items and supplies.

The?CMS Hospital Price Transparency rule requires hospitals to publish their chargemasters on their website?and display the prices of 300 shoppable services.

In a process known as charge capture, revenue cycle management leaders use these prices to negotiate claims reimbursement rates with payers. Coders submit the codes and corresponding charges to the payers, and then providers bill patients for the remaining balance.