Medical billing and coding is a critical component of the healthcare industry, as it is responsible for ensuring that healthcare providers receive payments for their services and that patient medical records are accurately recorded and coded. Medical billing and coding is a complex process that requires specialized knowledge and expertise to navigate. In this post, we will answer the common question: how does medical billing and coding work?
The concept of medical billing and coding has been around for over a century. In the early 20th century, medical billing involved handwritten notes and ledgers, which were prone to errors and made the process time-consuming and inefficient. The development of electronic medical records and standardized coding systems, such as the International Classification of Diseases (ICD) and Current Procedural Terminology (CPT) codes, has revolutionized medical billing and coding. These systems have helped to streamline the billing process, reduce errors, and improve the accuracy of medical records.
According to the Bureau of Labor Statistics, there were approximately 341,600 medical records and health information technician jobs in the United States as of 2020. The employment of medical records and health information technicians is expected to grow by 8% from 2019 to 2029, which is faster than the average for all occupations. This growth is due to the aging population and the increasing demand for healthcare services, which will require more medical billing and coding professionals.
The healthcare industry is also becoming more reliant on technology, which is changing the way medical billing and coding is done. Electronic health records (EHRs) are increasingly being used to store patient medical records, and medical billing and coding professionals must have the knowledge and expertise to navigate these systems. Additionally, advancements in artificial intelligence and machine learning are being used to automate certain aspects of medical billing and coding, further changing the landscape of the industry.
How Does Medical Billing Work?
Medical billing is a complex process that involves the submission of claims to insurance companies and payers to receive payment for healthcare services provided to patients. Inaccuracies or errors in medical billing can lead to delayed payments, denied claims, and even legal action. Therefore, it is important to understand the details of medical billing and how it works in healthcare.
The medical billing process begins with the registration of the patient. The patient supplies their personal and insurance information, which is used to create a patient record and verify the patient’s eligibility for coverage. According to a study by the Medical Group Management Association (MGMA), patient eligibility errors account for 23% of medical billing errors.
The healthcare provider documents the services provided to the patient and assigns charges for each service. Charge capture errors can occur when services are not documented or charged for incorrectly, leading to underbilling or overbilling. According to the same MGMA study, charge capture errors account for 15% of medical billing errors.
Medical coding is the process of translating the services provided to the patient into standardized medical codes, such as ICD and CPT codes. The use of incorrect codes or incorrect code modifiers can lead to claim denials or underpayments. According to a study by the American Medical Association (AMA), 7.1% of all medical claims are denied due to coding errors.
Once the services are coded and charges assigned, the claim is submitted to the insurance company or payer for payment. Claims can be submitted electronically or by mail, and timely submission is critical to ensure payment is received in a timely manner. According to the AMA, 61% of claims are paid on the first submission, while 30% require follow-up due to errors or denials.
After the claim is processed, payment is received from the insurance company or payer and posted to the patient’s account. Payments can be made electronically or by check, and the payment must match the billed amount.
If a claim is denied, healthcare providers must investigate the reason for the denial and resubmit the claim with corrections if necessary. Denials can be caused by a variety of factors, including coding errors, missing information, or lack of medical necessity.
How Medical Coding Works?
Medical coding is the process of assigning codes to medical diagnoses, procedures, and services given during patient encounters. Medical codes are used to communicate with insurance companies and to ensure correct payment for medical services.
The two primary coding systems used in healthcare are the International Classification of Diseases (ICD) and Current Procedural Terminology (CPT). The ICD system is used to code diagnoses, while the CPT system is used to code procedures and services.
For example, a patient visit to a primary care physician for a routine checkup may be coded with ICD code Z00.00 (Encounter for general adult medical examination without abnormal findings) and CPT code 99213 (Office or other outpatient visit for the evaluation and management of an established patient).
The medical coding process is an essential part of healthcare that ensures accurate communication between healthcare providers, insurance companies, and government programs. The process involves the translation of medical information into standardized codes using the appropriate coding system. Here is a detailed explanation of the medical coding process:
The medical coding process begins with a patient encounter with a healthcare provider. During the encounter, the provider documents the patient’s diagnosis, procedures performed, and services provided.
Once the diagnosis is documented, the healthcare provider assigns a code using the appropriate coding system. In most cases, the ICD coding system is used to describe diagnoses, symptoms, and abnormal findings. The ICD codes are alphanumeric and provide specific details about a patient’s condition, including its cause, severity, and location. For example, a patient with a diagnosis of hypertension may be assigned ICD code I10 (Essential primary hypertension).
After the diagnosis is coded, any procedures or services performed during the encounter are coded. In most cases, the CPT coding system is used to describe medical procedures and services. CPT codes are five-digit numeric codes that describe specific medical procedures and services. For example, a patient visit to a primary care physician for a routine checkup may be coded with CPT code 99213 (Office or other outpatient visit for the evaluation and management of an established patient).
Accuracy and Compliance
Accuracy and compliance with coding regulations are essential to ensure proper payment for medical services rendered. Inaccuracies or errors in coding can result in claim denials, underpayment, or legal action. Healthcare providers must ensure that they are following coding guidelines and regulations set forth by insurance companies and government programs.
Common Medical Billing Errors to Avoid
Medical billing errors can lead to delayed payments, denied claims, and even legal action. Therefore, it is crucial to understand and avoid common billing errors. Here are some common medical billing errors to avoid, along with examples and statistics:
Incorrect Patient Information
Patient information errors occur when incorrect demographic information is entered into the billing system, such as incorrect names, dates of birth, or insurance information. According to a survey by the Medical Group Management Association (MGMA), patient registration errors account for 23% of medical billing errors.
Example: A patient’s insurance policy number is entered incorrectly, resulting in a denied claim.
Coding errors occur when incorrect codes are used to describe medical procedures, diagnoses, or services provided. According to the American Medical Association (AMA), 7.1% of all medical claims are denied due to coding errors.
Example: A healthcare provider bills for a more expensive procedure than was actually performed, resulting in an overpayment.
Unbundling of Services
Unbundling of services occurs when multiple services that should be billed together are separately billed. Unbundling is considered fraudulent billing and can result in legal action.
Example: A healthcare provider bills for a surgical procedure, anesthesia, and post-operative care separately instead of billing for the entire package, resulting in overpayment.
Upcoding occurs when a healthcare provider bills for a higher level of service than was actually provided. Upcoding is also considered fraudulent billing and can result in legal action.
Example: A healthcare provider bills for an office visit as a more complex visit, resulting in overpayment.
To avoid these errors, it is essential to maintain accurate patient records, use the correct codes, and perform regular audits to ensure compliance with billing regulations. Healthcare providers must also stay up-to-date with changes in coding guidelines and insurance policies.
The Importance of Accuracy in Medical Billing and Coding
The importance of accuracy in medical billing and coding cannot be overstated. The accuracy of billing and coding is vital to ensure that healthcare providers receive proper payment for services rendered, that patients receive accurate and appropriate care, and that insurance companies and government programs are not overcharged. Here are some reasons why accuracy in medical billing and coding is so important:
Proper Payment for Medical Services
Accurate medical billing and coding help ensure that healthcare providers are properly reimbursed for the services they provide. Inaccurate coding can result in underpayment or overpayment for medical services, which can cause financial strain for both healthcare providers and patients.
Avoiding Legal and Financial Penalties
Medical billing and coding errors can result in legal and financial penalties for healthcare providers. Fraudulent billing practices can lead to fines, legal action, and even imprisonment.
Improved Patient Care
Accurate medical billing and coding also play a crucial role in supplying quality patient care. Inaccurate coding can result in incorrect treatment plans or medication dosages, which can negatively impact patient health.
Reduced Costs for Patients
Inaccurate billing and coding can result in increased costs for patients, including higher out-of-pocket expenses, incorrect billing to insurance companies, and delayed or denied claims. This can be financially burdensome for patients and can even lead to a delay in seeking necessary medical care.
Medical billing and coding accuracy are industry standards for all healthcare providers. Failure to comply with these standards can result in loss of reputation, loss of business, and legal action.
Studies have shown that up to 80% of medical bills contain errors, with an estimated $68 billion lost annually due to billing errors. Ensuring accuracy in medical billing and coding requires ongoing training, regular audits, and a commitment to compliance with regulations and guidelines. It is important for healthcare providers to stay up-to-date with changes in coding guidelines and regulations to maintain accuracy in medical billing and coding.
Use of Technology in Medical Billing and Coding Process
The use of technology in medical billing and coding has revolutionized the healthcare industry by streamlining the process, reducing errors, and improving the accuracy of medical records. Here are some examples and statistics of how technology is used in the medical billing and coding process:
Electronic Health Records (EHRs)
Electronic health records (EHRs) are computerized systems that store patient medical records, including diagnoses, procedures, medications, and test results. EHRs allow healthcare providers to easily access and share patient information, reducing errors and improving patient care. EHRs are also used to facilitate medical billing and coding by automatically generating claims and codes based on the services provided.
According to a report by the Centers for Disease Control and Prevention (CDC), the adoption of EHRs by office-based physicians in the United States increased from 18% in 2001 to 87% in 2017. The use of EHRs has resulted in significant improvements in the accuracy and efficiency of medical billing and coding.
Advancements in artificial intelligence and machine learning are being used to automate certain aspects of medical billing and coding, such as coding and charge capture. Automated coding uses algorithms to analyze clinical documentation and automatically assign codes, reducing the need for manual coding by medical coders. This technology not only improves accuracy but also saves time and reduces costs.
According to a report by Frost & Sullivan, the global market for healthcare artificial intelligence is expected to grow at a compound annual growth rate (CAGR) of 40.2% from 2019 to 2025. The use of automated coding in medical billing and coding is expected to increase significantly in the coming years.
Claims Management Software
Claims management software is used to manage the entire medical billing and coding process, from patient registration to claim submission and payment posting. This software allows healthcare providers to track claims, identify and resolve errors, and ensure timely reimbursement. Claims management software also provides analytics and reporting capabilities, allowing healthcare providers to monitor financial performance and identify areas for improvement.
According to a report by ‘Markets and Markets’, the global market for healthcare revenue cycle management (RCM) software is expected to grow at a CAGR of 12.1% from 2020 to 2025. The use of claims management software is becoming increasingly common in the healthcare industry, with many healthcare providers opting for cloud-based solutions to reduce costs and improve efficiency.
Mobile applications are becoming increasingly popular in the healthcare industry, allowing patients to access their medical records, schedule appointments, and pay bills using their smartphones. Mobile applications can also be used by healthcare providers to manage patient information, track claims, and communicate with patients.
According to a report by ‘Research and Markets’, the global market for healthcare mobile applications is expected to grow at a CAGR of 23.3% from 2020 to 2025. The use of mobile applications in medical billing and coding is expected to increase in the coming years, providing patients and healthcare providers with more convenient and efficient ways to manage medical billing and coding processes.
Finally, the use of technology in medical billing and coding is transforming the healthcare industry, improving accuracy, efficiency, and patient care. Electronic health records, automated coding, claims management software, and mobile applications are just a few examples of the technology being used in the medical billing and coding process. As technology continues to advance, the medical billing and coding process will become increasingly streamlined and efficient, benefiting patients, healthcare providers, and the healthcare industry as a whole.
In conclusion, medical billing and coding are critical components of the healthcare industry that ensure healthcare providers receive payments for their services and patient medical records are accurately recorded and coded. The process has come a long way from the early days of handwritten notes and ledgers to the use of electronic medical records and standardized coding systems like ICD and CPT codes. The healthcare industry’s reliance on technology is changing the landscape of medical billing and coding, with electronic health records and artificial intelligence playing an increasingly important role.
Medical billing involves patient registration, charge capture, medical coding, claim submission, payment posting, and denial management. Coding diagnoses, procedures, and services are an essential part of healthcare to ensure accurate communication between healthcare providers, insurance companies, and government programs. Accuracy in medical billing and coding is vital to ensure proper payment for medical services rendered, avoiding legal and financial penalties, providing quality patient care, reducing costs for patients, and complying with industry standards.
The use of technology, such as electronic health records, automated coding, claims management software, and mobile applications, is transforming the medical billing and coding process, improving efficiency and accuracy. However, healthcare providers must also remain vigilant to avoid common billing errors that can result in legal and financial penalties. Overall, accuracy in medical billing and coding is crucial for providing quality patient care, reducing costs for patients, and maintaining industry standards.