Everything That You Need To Know About Medical Coding
In healthcare, there is no payment for a claim unless a code is applied. There is always a step before an insurer considers paying a single dollar; it needs to interpret in its terms what took place during a patient visit - the diagnosis, the treatment and the devices used. This interpretation is called medical coding and this is what lies at the heart of the revenue cycle.
Medical billing services perform this task efficiently, and this is what separates the practices that collect their revenues from those who simply lose their revenues due to improper medical coding, rejected claims and underpayments. The Medical Group Management Association reports that the average annual loss of practices is from 5% to 11% due to improper medical coding and billing. This is not just a margin of error but a significant financial difference for a medical practice.
What Is Medical Coding and How Does It Work?
Medical coding is the translation of documentation of clinical information including diagnoses, treatment, procedures and equipment into codes for processing by insurance companies. Without medical coding, no claims can ever be processed or paid.
There are three coding systems responsible for processing almost all healthcare claims.
- ICD-10-CM codes deal with diagnoses which represent the reason behind the visit to the doctor.
- CPT codes deal with procedures which refer to what was done at the time of the visit.
- HCPCS Level II codes deal with the equipment, supplies and services not covered in the CPT.
The coder looks at the documentation and selects the appropriate code in each of the three coding systems. All codes have to be supported by the documentation.
What Is the Difference Between Medical Coding and Medical Billing?
The processes of medical coding and medical billing are closely related to each other, yet not interchangeable. Medical coding involves translating information from patient records into standardized codes. Medical billing uses those codes to file a claim to insurance providers, and that includes handling the entire process of filing, follow-ups, and payment collections after that.
In essence, it is a chain of sequential actions. The coder is responsible for preparing the groundwork for the claim. The biller takes care of assembling the claim and presenting it to the provider. If coding is done incorrectly, the biller will be working with an incorrect claim right from the beginning, and nothing can compensate for incorrectly coded data beforehand.
Why Does Accurate Medical Coding Matter So Much for Revenue?
It is only medical coding accuracy that will ensure that the claim is paid, at what rate it is paid, and whether it passes audit testing or not. Thus, it is the most important consideration in ensuring that a practice gets the revenue that it deserves.
There are coding problems on both ends of the spectrum. Undercoding means using a lower complexity code compared to the documentation while overcoding is the problem when the billing uses a higher level of code based on the documentation provided. According to the Bureau of Labor Statistics, there will be a 9% increase in the demand for medical records specialists between now and 2033 due to the importance of accurate coding.
How Does Insurance Eligibility Authorization Connect to Medical Coding?
Insurance eligibility authorization is what decides if the claim is going to get paid at all; establishing if there is coverage, what the limit is, and if there were prior authorizations necessary before the claim is made to ensure that the coding effort was not for someone who is not covered.
There is no mistaking the relationship between insurance eligibility authorization and medical coding since it goes like this: even if you have coded a claim perfectly for someone who had coverage lapsing before the visit or a procedure requiring prior authorization that the practice did not receive, then the claim will be denied anyway.
Eminence RCM handles medical coding, billing, and insurance eligibility authorization as a connected, specialty-specific process; so, nothing falls between the gaps.
If your practice needs any help in coding or billing, learn more- https://eminencercm.com/.
Frequently Asked Questions
Medical coding is the process through which information in medical documents such as diagnoses, procedures, and treatment is coded according to standardized code sets, which are used by insurers for claims processing and reimbursement purposes. Without proper coding, no claim can be processed. This is the first essential step that ensures the providers receive payment for the services rendered.
The three most common coding systems include ICD-10-CM for diagnosis, CPT codes for procedure and services and HCPCS Level II codes for equipment, supplies and some professional services. Each of the coding systems has different codes, updating cycles and requirements by payers. Claims need codes from several coding systems; therefore, it needs specific knowledge of the specialties.
Improper coding results in denial, underpayment, violation risks, and audits. Undercoding means losing money that should be paid to you. Overcoding means you have to pay money back. If this happens across all your claims, you will lose a lot of money over time. The only way to get that money back is to find the problem and fix it.
CPT codes are changed once a year starting from January 1. ICD-10-CM codes are updated once in October every year. HCPCS Level II codes are changed every three months. Coverage policies and bundling rules are modified independently from the primary codes. If your practice does not pay attention to these changes, you will use outdated code systems while filling the forms.
A medical coder is a person who uses a coding system to code the medical record documentations while the medical biller uses the codes that are coded by the medical coder and files the claim with the insurance company. Both jobs are different from each other but follow one after the other. The errors in coding will create issues for billing.
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