There’s far more to the healthcare sector than clinical practice. Yes, patient assessments and treatment plans are crucial, but these depend on administrative processes. Simply put, effective clinical care is not possible without a financially viable structure that supports the operation of facilities and the employment of clinicians.
This depends, to a large degree, on accurate documentation and proper reimbursements — and that’s where medical billing and coding fundamentals come into play. Ensuring fair payment for services rendered, medical billing and coding fundamentals are central to the financial stability of the contemporary healthcare industry. It’s a complex, detail-oriented discipline, but also deeply rewarding.
Interested in making a difference as a medical biller or coder? Continue reading for a comprehensive medical billing and coding overview, including insights into coding systems, billing processes, and essential skills for success in both areas.
How Does Medical Billing and Coding Work?
Medical billing and coding promote accurate documentation, offering the crucial link between patient care and timely reimbursements. Coding transforms various diagnoses and treatments into standardized codes that insurance providers can easily interpret to ensure accurate payments.[1]
So, how does medical billing and coding work? This begins with precise coding during clinical visits, capturing the specific services that have been provided — and why. From there, coded information is submitted as a claim. This is processed by the insurer, with payments issued. The explanation of benefits (EOB) indicates what the patient may still owe.[2]
Beyond the Basics: Front-End vs. Back-End Processes
Medical billing and coding involves a series of front-end and back-end tasks that work together to support the overall picture of revenue cycle management. Both processes are crucial, but they play distinct roles in driving financial sustainability within the broader healthcare system.
Front-End Medical Billing: Setting the Stage for Success
Front-end medical billing refers to the various interactions that occur before and during patient appointments. This determines how medical billers and coders gather information about these patients, including their names, contact information, and details surrounding insurance coverage.
Essentials also include pre-authorizations, insurance verifications, and finally, encounter insights: the specific ICD-10 codes that confirm patient diagnoses. Medical coding is a priority at this stage, but front-end processes ultimately determine whether claims are approved without delay.
Back-End Medical Billing: Ensuring Accurate Reimbursement
Following appointments with providers, back-end medical billing determines how charges are entered and how claims are submitted. Through insurance claims and payment processing, providers aim to secure payments promptly and in full. Through back-end strategies, claims are processed, denials are resolved, and providers are reimbursed.[3]
The Language of Healthcare: Types of Medical Codes
Accurate medical billing would not be possible without precise codes that clarify which services have been rendered and how providers can be fully reimbursed. These types of medical codes are described by three central systems, as highlighted below:
ICD-10 Codes: The “Why” of the Patient Visit
The 10th Revision of the International Classification of Diseases (ICD) provides a window into the patient’s condition. This clarifies various diseases or diagnoses, covering everything from infectious illnesses to respiratory conditions, and even mental health concerns.[4]
ICD-10 coding reveals why, exactly, patients require specific services, confirming medical necessity and revealing how diagnoses are linked to particular healthcare services or treatments.[5]
CPT Codes: The “What” of the Services Provided
Developed by the American Medical Association (AMA), the Current Procedural Terminology (CPT) reveals what happens when patients receive clinical care. Each CPT code designates a specific service or procedure.[6]
Every CPT code includes five characters. Most are numeric, but letters such as F, T, or U may also be included. These codes are divided into three main categories, with Category I including the most commonly used codes, while Category II adds supplemental codes for performance management. Category III strictly involves temporary codes that draw attention to experimental services.[7]
As AAPC guidance reveals, this approach to coding removes the “subjective interpretation of precisely what was provided to the patient.” The goal is to limit ambiguity so that it is easier to evaluate the services rendered.
HCPCS Level II Codes: The “With What” Supplies and Services
The Healthcare Common Procedure Coding System (HCPCS) exists within the public domain, featuring standardized alphanumeric codes that help providers submit claims to Medicare.[8]
HCPCS includes two levels. The first focuses on frequently used medical services, while Level II addresses services or supplies not covered via CPT. This ultimately accounts for the different services offered via Medicare and Medicaid.
The Fundamentals of Medical Billing and Coding
Medical billing and coding are complex disciplines that require a well-defined skill set, encompassing administrative abilities, medical knowledge, and a keen eye for detail. In career-focused training programs, students cover the basics of medical billing and coding through theoretical courses and applied learning experiences, which cover the following essentials:
Medical Terminology
The language of the clinical world can seem difficult to understand, in part because this makes such extensive use of complex prefixes, suffixes, and roots. Like nurses and other clinical professionals, medical billers and coders must take time to learn and understand these terms, which are used to assign the proper codes for various diagnoses or procedures.[9]
In billing and coding, however, this terminology enhances precision, ensuring that the correct codes are assigned in the appropriate situations and communicating critical medical details to ensure that services are billed accurately.
Anatomy and Physiology
Foundational medical billing and coding coursework should place a clear emphasis on anatomy and physiology, which are relevant far beyond the context of clinical care.
Without a solid grasp of bodily structures and their interactions, medical billers and coders may struggle to assign accurate codes. This could lead to claim denials or other issues that negatively impact provider revenue.
For this reason, billing and coding students take time to learn about diverse systems, such as the musculoskeletal, respiratory, and cardiovascular systems, and how they are affected by various illnesses or conditions.
Coding Systems
Coding systems such as ICD-10, CPT, and HCPCS form the basis for nearly every aspect of the medical coding profession. It is, after all, the medical coder’s responsibility to translate diagnoses or procedures into specific codes. These systems also significantly impact the everyday roles and responsibilities of medical billers who are responsible for verifying coverage and submitting claims.
To ensure success in this field, medical billers and coders must thoroughly understand all three coding systems, including their specific criteria and modifiers, and relevant compliance concerns. Aspiring coders must learn to interpret documentation and choose code accordingly.
The Revenue Cycle
The ultimate goal of medical billing and coding is to streamline and optimize the healthcare system’s revenue cycle. This financial process determines the flow of payments within the healthcare sector, and, when properly managed, improves providers’ overall financial stability. Medical billing and coding fundamentals support revenue cycle management by promoting timely reimbursement via precise documentation.
What Is the Golden Rule in Medical Billing and Coding?
Medical billing and coding centers around a simple, yet profound reality: If it wasn’t documented, it wasn’t done. Known as the field’s golden rule, this core concept guides everything that medical billers and coders do. Every test, diagnosis, and treatment must be recorded. Without proper documentation, services cannot be billed in full, nor will they be paid for appropriately.
Is Medical Billing and Coding a Good Career Path?
Medical billing and coding offer the opportunity to make a positive impact in the healthcare sector without committing to clinical roles. This can be a great option for finding stability and balance within the healthcare field, offering exposure to various administrative opportunities.
As an excellent entry-level opportunity, medical billing and coding can be pursued after committing just a few months to targeted training. There are many ways to grow and even to specialize, with opportunities available within medical specializations or various types of facilities. This can serve as a strong foundation for roles in revenue cycle management or health information technology.
How to Learn Medical Billing and Coding
Improve healthcare revenue cycles through accurate medical billing and coding. Begin by exploring medical terminology and coding systems within a structured college program. This provides powerful preparation not only for your medical billing and coding career, but also for the National Healthcareer Association (NHA) Certified Billing and Coding Specialist (CBCS) exam.
Commit to developing medical billing and coding skills as you take the next step towards a meaningful healthcare career. It all begins by exploring Carrington College’s Medical Billing and Coding program. Learn more today to get started.
Sources:
[1] American Academy of Professional Coders. “Understanding the differences between medical coding and medical billing.” https://www.aapc.com/resources/understanding-the-differences-between-medical-coding-and-medical-billing
[2] Centers for Medicare & Medicaid Services. “How to read an explanation of benefits (EOB).” https://www.cms.gov/medical-bill-rights/help/guides/explanation-of-benefits
[3] Hagenow, C. et al. “We’re All in This Together: Connecting the Front End to the Back End.” National Association of Healthcare Access Management. https://www.naham.org/page/ConnectionsAllinThisTogether
[4] Centers for Medicare & Medicaid Services. “ICD-10.” https://www.cms.gov/medicare/coding-billing/icd-10-codes
[5] Centers for Disease Control. “ICD-10-CM.” https://www.cdc.gov/nchs/icd/icd-10-cm/index.html
[6] American Medical Association. “CPT® overview and code approval.” https://www.ama-assn.org/practice-management/cpt/cpt-overview-anitd-code-approval
[7] National Institutes of Health. “All About CPT Codes: Who, What, Where, When, How.” https://seed.nih.gov/sites/default/files/2023-09/CPT-Codes-Presentation.pdf
[8] U.S. Centers for Medicare & Medicaid Services. “Healthcare Common Procedure Coding System (HCPCS).” https://www.cms.gov/medicare/coding-billing/healthcare-common-procedure-system
[9] American Academy of Professional Coders. “Unlocking the benefits of medical terminology, anatomy, and pathophysiology knowledge.” https://www.aapc.com/resources/unlocking-the-benefits-of-medical-terminology-anatomy-and-pathophysiology-knowledge
