Medical billing and coding are generally used in the same sentence synonymously. While they are the backbone and fundamental to health care revenue cycle management, they are quite different.
The purpose of medical billing and coding is to ensure that providers, doctors, and service providers are reimbursed for their services by medical insurers, payers, and patients.
Medical billing and coding are completely separate processes. They codify patient visits into terms that facilitate submission of claims and subsequent reimbursement. Combined together, medical billing and coding are called Revenue Cycle Management. It starts when a patient registers with a medical practice and ends when the doctor or provider receives full payment for all the services rendered to the patient.
The full revenue cycle process may take anywhere from a few days to several months depending on the patient’s insurance, the complexity of the case and services rendered, how the process is handled to manage rejections and denials, and how the patient’s financial responsibility is managed by the practice.
Efficient revenue cycle management, medical billing, and coding will help providers and staff of medical practices work efficiently to be reimbursed for all the quality of care that they provide.
Let us try to understand the differences between medical coding and billing.
What is Medical Coding?
When a patient visits the medical office, or any other health care facility, a patient visit, otherwise known as an encounter is created and the provider documents the details of the visit as well as services provided. The patient record explains the problem, diagnosis, service, and procedures.
The process of coding is in two parts. The first is Diagnosis coding.
ICD-10 DIAGNOSIS CODES
Diagnosis codes are used to describe a patient’s condition. International Statistical Classification of Diseases and Related Health Problems, Tenth Revision (ICD-10) is used to capture diagnosis codes for billing purposes.
ICD-10-CM (clinical modification) codes are generally used to classify diagnoses in outpatient and private clinic settings, while ICD-10-PCS (procedure coding system) codes are for inpatient services at hospitals.
These ICD codes are used for identifying a patient’s condition, including the location and severity of an injury or symptom. It also indicates if the visit is related to an initial or follow-up encounter.
There are more than 70,000 unique identifiers in the ICD-10-CM code set. The World Health Organization (WHO) maintains the ICD coding system, which is used internationally in various modified formats.
CPT AND HCPCS PROCEDURE CODES
The procedure coding system is called Current Procedural Terminology (CPT) codes and the Healthcare Common Procedure Coding System (HCPCS).
The American Medical Association (AMA) is responsible for the CPT coding system. These CPT codes describe the services given to a patient during an encounter with private payers. AMA publishes CPT coding guidelines and any modifications each year to support medical coders with coding-specific procedures and services.
CPT or procedure codes are used in conjunction with ICD diagnosis codes to show what the providers did during and during encounter visits. These CPT codes have what is known as, modifiers, which describe the services provider in greater detail. They also indicate if there were multiple procedures done, the reason for those services, and where on the patient these procedures were provided.
It is very important to use proper CPT modifiers for ensuring accurate reimbursement for all the services provided.
What is Medical Billing?
As opposed to medical coding, medical billing is the process of submitting claims to insurance companies, payers as well as patients for appropriate reimbursement. Medical coders will enter the codes described above. After that is done, the medical billing team initiates the process of claim submission.
Medical billing usually starts at the front desk. When a patient is registered, medical office staff collects patient demographics data as well as the patient’s insurance information. Once that is collected, the staff is supposed to check the patient’s coverage to ensure that the insurance company will pay for the services. If the patient does not have full coverage or adequate coverage, the patient is supposed to sign documents accepting financial responsibilities.
The office staff is supposed to inform patients that they would be responsible for any costs that are not paid by the insurance company such as copay, co-insurance, and deductible.
After the patient has checked out, the billing staff starts the process of using the codes entered by providers as well as patient information into whatever system or software is being used by the practice for the purpose of medical billing.
Data that is necessary to create and submit claims include among other things, the following:
- Provider information including provider name, location or place of service, NPI number of rendering as well as supervising provider if applicable.
- Complete patient demographics and insurance details
- Visit date and related information, ICD and CPT codes, etc.
In a general outpatient office setting, claims are submitted in a format called CMS-1500 form. Most software systems submit the claim electronically in a format that is compliant withCMS-1500. Billers have to be fully conversant with the form and all its fields.
Once the claim has been submitted to the payer (directly or via clearinghouse), adjudication starts. It will be determined if there is an error in entering the data or not. This process is called claim scrubbing. If an error is found, the claim will be rejected. This is called the claim rejection process. The billing person is supposed to fix the error and resubmit the claim. If everything goes through without any error, the payer will further adjudicate the claim and determine the amount of allowable payment to the provider. Based on that, an Explanation Of Benefits (EOB) is provided and sent to the provider along with payment, if any.
To keep it simple for this article, the billing person then enters payment details and reconciles them with the explanation of the benefits document. The electronic version of the explanation of benefits is also called electronic remittance advice or ERA.
The payer insurance company may also deny the claim for various reasons. In that case the medical biller we’ll prepare a case to dispute the denial and further submit proper documentation for re-adjudication.
The medical billing process can be quite tedious and complicated particularly if insurance payers reject and or deny claims. This is where there is a need for medical billers that are fully conversant with insurance rules which keep on changing very frequently.
The process of following up on pending payments is called A/R – Accounts receivables management. Payments are tracked, posted and denials are fought and worked on constantly to make sure providers are compensated.
Finally, any balance that is owed directly by the patients must also be followed up on by the billing team.