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1. Medical coding is the process ofsubmitting and following up on

claims with health insurancecompanies in order to receivepayment for services rendered by ahealthcare provider. The sameprocess is used for most insurancecompanies, whether they are privatecompanies or government sponsoredprograms. 

3)

Medical coding is the process ofsubmitting and following up onclaims with health insurance companies in order to receivepayment for services rendered by ahealthcare provider. The sameprocess is used for most insurancecompanies, whether they are privatecompanies or government sponsoredprograms. Medical billers areencouraged, but not required by law,

to become certied by taking an

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exam such as the M!" #xam, !$%&#xam and others. ertication

schools are intended to provide atheoretical grounding for studentsentering the medical coding eld.

Contents

• 1 $istory

• ' (illing process 

o'.1 #lectronic billing

o'.' )ayment

o'.* Medical coding services

• * "ee also

• + !eferences

• #xternal links

History

-or several decades, medical codingwas done almost entirely on paper.

$owever, with the advent of medical

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practice management software, alsoknown as health information

systems, it has become possible toeciently manage large amounts ofclaims. Many software companieshave arisen to provide medicalcoding software to this particularlylucrative segment of the market."everal companies also o/er fullportal solutions through their ownweb0interfaces, which negates thecost of individually licensed softwarepackages. ue to the rapidly

changing requirements by 2.".health insurance companies, severalaspects of medical coding andmedical oce management havecreated the necessity for speciali3ed

training. Medical oce personnelmay obtain certication thro

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ugh various institutions who may

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provide a variety of speciali3ededucation and in some cases awarda certication cre

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dential to re7ect professional status. The ertied Medical!eimbursement "peci

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alist 8M!"9 accreditation by th

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e &merican Medical coding&ssociation is o

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ne of the most recogni3ed ofspeciali3ed certication for medical

coding professionals.Billing process

 The medical coding process is aninteraction between a health careprovider and the insurance company8payer9. The entirety of thisinteraction is known as the billingcycle sometimes referred to as!evenue ycle Management. Thiscan take anywhere from several days

to several months to complete, and

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require several interactions before aresolution is reached. The

relationship between a health careprovider and insurance company isthat of a vendor to a subcontractor.$ealth care providers are contractedwith insurance companies to providehealth care services. The interactionbegins with the oce visit: aphysician or their sta/ will typicallycreate or update the patient;smedical record.

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&fter the doctor sees the patient, the

diagnosis and procedure codes areassigned. These codes assist theinsurance company in determiningcoverage and medical necessity ofthe services. <nce the procedure

and diagnosis codes are determined,the medical biller will transmit theclaim to the insurance company8payer9. This is usually doneelectronically by formatting the claimas an &="% 5*6 le and using

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#lectronic ata %nterchange tosubmit the claim le to the payer

directly or via a clearinghouse.$istorically, claims were submittedusing a paper form> in the case ofprofessional 8non0hospital9 servicesenters for Medicare and Medicaid"ervices. &t time of writing, about*?@ of medical claims get sent topayers using paper forms which areeither manually entered or enteredusing automated recognition or <! software.

 The insurance company 8payer9processes the claims usually bymedical claims examiners or medicalclaims ad4usters. -or higher dollaramount claims, the insurancecompany has medical directorsreview the claims and evaluate theirvalidity for payment using rubrics8procedure9 for patient eligibility,provider credentials, and medical

necessity. &pproved claims are

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reimbursed for a certain percentageof the billed services. These rates

are pre0negotiated between thehealth care provider and theinsurance company. -ailed claims aredenied or re4ected and notice is sentto provider. Most commonly, deniedor re4ected claims are returned toproviders in the form of #xplanationof (enets 8#<(9 or #lectronic!emittance &dvice.

2pon receiving the denial message

the provider must decipher themessage, reconcile it with theoriginal claim, make requiredcorrections and resubmit the claim. This exchange of claims and denialsmay be repeated multiple times untila claim is paid in full, or the providerrelents and accepts an incompletereimbursement.

 There is a di/erence between aAdeniedB and a Are4ectedB claim,

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although the terms are commonlyinterchanged. & denied claim refers

to a claim that has been processedand the insurer has found it to be notpayable. enied claims can usuallybe corrected andCor appealed forreconsideration. & re4ected claimrefers to a claim that has not beenprocessed by the insurer due to afatal error in the informationprovided. ommon causes for aclaim to re4ect include when personalinformation is inaccurate 8i.e.: name

and identication number do notmatch9 or errors in informationprovided 8i.e.: truncated procedurecode, invalid diagnosis codes, etc.9 &re4ected claim has not been

processed so it cannot be appealed.%nstead, re4ected claims need to beresearched, corrected andresubmitted.

Electronic billing

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& practice that has interactions withthe patient must now under $%)&& 

send most billing claims for servicesvia electronic means. )rior toactually performing service andbilling a patient, the care providermay use software to check theeligibility of the patient for theintended services with the patient;sinsurance company. This processuses the same standards andtechnologies as an electronic claimstransmission with small changes to

the transmission format, this formatis known specically as D1'0'6?$ealth are #ligibility E (enet%nquiry transaction.F1G & response toan eligibility request is returned by

the payer through a direct electronicconnection or more commonly theirwebsite. This is called an D1'0'61H$ealth are #ligibility E (enet!esponseH transaction. Most practicemanagementC#M software will

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automate this transmission, hidingthe process from the user.

 This rst transaction for a claim forservices is known technically as D1'05*6 or &="%05*6. This contains alarge amount of data regarding theprovider interaction as well as

reference information about thepractice and the patient. -ollowingthat submission, the payer willrespond with an D1'0II6, simplyacknowledging that the claim;s

submission was received and that itwas accepted for further processing.Jhen the claim8s9 are actuallyad4udicated by the payer, the payerwill ultimately respond with a D1'05* transaction, which shows theline0items of the claim that will bepaid or denied> if paid, the amount>and if denied, the reason.

Payment

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%n order to be clear on the paymentof a medical coding claim, the health

care provider or medical biller musthave complete knowledge ofdi/erent insurance plans thatinsurance companies are o/ering,and the laws and regulations thatpreside over them. Karge insurancecompanies can have up to 1di/erent plans contracted with oneprovider. Jhen providers agree toaccept an insurance companyLs plan,the contractual agreement includes

many details including fee scheduleswhich dictate what the insurancecompany will pay the provider forcovered procedures and other rulessuch as timely ling guidelines.

)roviders typically charge more forservices than what has beennegotiated by the physician and theinsurance company, so the expectedpayment from the insurance

company for services is reduced. The

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amount that is paid by the insuranceis known as an allowable amount.

-or example, although a psychiatristmay charge 5?.?? for a medicationmanagement session, the insurancemay only allow ?.??, and so a*?.?? reduction 8known as aHprovider write o/H or Hcontractualad4ustmentH9 would be assessed.&fter payment has been made, aprovider will typically receive an#xplanation of (enets 8#<(9 or#lectronic !emittance &dvice 8#!&9

along with the payment from theinsurance company that outlinesthese transactions.

 The insurance payment is furtherreduced if the patient has a copay,deductible, or a coinsurance. %f thepatient in the previous example hada .?? copay, the physician wouldbe paid +.?? by the insurancecompany. The physician is then

responsible for collecting the out0of0

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pocket expense from the patient. %fthe patient had a ??.??

deductible, the contracted amount of ?.?? would not be paid by theinsurance company. %nstead, thisamount would be the patient;sresponsibility to pay, and subsequentcharges would also be the patient;sresponsibility, until his expensestotaled ??.??. &t that point, thedeductible is met, and the insurancewould issue payment for futureservices.

& coinsurance is a percentage of theallowed amount that the patientmust pay. %t is most often applied tosurgical andCor diagnosticprocedures. 2sing the aboveexample, a coinsurance of '?@would have the patient owing 1?.??and the insurance company owing+?.??.

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"teps have been taken in recentyears to make the billing process

clearer for patients. The $ealthcare-inancial Management &ssociation8$-M&9 unveiled a H)atient0-riendly(illingH pro4ect to help healthcareproviders create more informativeand simpler bills for patients.&dditionally, as the onsumer0riven$ealth movement gains momentum,payers and providers are exploringnew ways to integrate patients intothe billing process in a clearer, more

straightforward manner.

Medical coding services

%n many cases, particularly as apractice grows beyond its initial

capacity to cope with its ownpaperwork, providers outsource theirmedical coding process to a thirdparty known as a medical codingservice. These billing services

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typically take a percentage of apractice;s revenues as payment.

<ne goal of these entities is toreduce the burden of paperwork formedical sta/ and to recoup losteciencies caused by workloadsaturation, paving the way for

further practice growth. )racticeshave achieved signicant costsavings through Nroup purchasingorgani3ations 8N)<9, improving theirbottom line by @ to 1?@.F'G

Medical coding regulations also tendto be complex and often change.Oeeping sta/ and billing systems upto date with the latest billing rulescan become a distraction for health

care providers and administrators.&nother primary ob4ective for amedical coding service is thereforeto use its billing expertise and tofocus on maximi3ing insurancespayments by properly processing the

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provider;s claims. They are solelyresponsible for taking codes from the

coders and preparing accurate billsthat are further forwarded to theinsurance company. %t is the task of amedical coding professional tocomplete the billing process in amanner that it will avoid denials fromthe insurance companies.

&dditionally, the recent trend in thiseld towards outsourcing, has showna potential to reduce costs. %n

addition, many companies arelooking to o/er #M!, #$! and !Mto help increase customersatisfaction, however as an industrythe "&T levels are still extremelylow