The Importance of Medical Billing Codes

The process of medical billing is an interaction between a health care professional and the insurance company. By submitting and following up on insurance claims, healthcare providers receive payment for services they render. Medical billing codes play an important role in this process because they determine the amount of reimbursement the healthcare provider receives. Various codes exist for diagnosis, treatment, drugs, dental services, Medicare, and hospital treatment.

When a patient visits the doctor, a medical record is created. The doctor issues a diagnosis or cites a reason for the visit. A level of service is established, based on patient history, comprehensiveness of a physical examination, and complexity of medical decision making. This service level is subsequently converted to standardized procedure code taken from the Current Procedural Terminology (CPT) database. The diagnosis is also translated to a numerical code, taken from an ICD-9-CM database.

To arrive at these codes, medical coders translate the doctor notes from the patient visit into the proper numerical sequences. Treatment and diagnosis codes are listed on the claim form transmitted to the insurance company. Electronic transmission is the most common method, replacing paper forms used in the past. Medical claim adjusters or examiners with the insurance company process the claims. An approved claim is reimbursed at a certain percentage of billed services pre-negotiated by the insurance company and healthcare provider.

If a medical coder does not understand how to determine and assign the correct codes, the claim will be rejected by the insurance company. A rejected claim is returned to the healthcare provider, usually in the form of an electronic remittance advice or explanation of benefits, also called an EOB. The provider must then decipher the information, reconcile the details with the claim originally submitted, make any necessary corrections to the claim, and submit the revised claim to the insurance company.

Though these extra steps may not seem time or labor intensive for one claim, consider the hundreds of claims submitted by a single healthcare provider each week. In some cases, claims may be rejected and resubmitted multiple times before they are paid in full. It is not uncommon for a provider to eventually give up and accept incomplete reimbursement. To avoid loss of income for the provider, medical coders should assign the correct codes the first time the claim is submitted.

Nearly 50 percent of the time, a claim is either denied, rejected, or overpaid. This is due to the highly complex nature of some claims and errors resulting from similarities that exist with diagnoses. In some cases, the insurance company is to blame for attempting to get away without covering certain services. After the medical coder makes a small adjustment and resubmits the claim with relevant documentation, the denial may be overturned.

On October 01, 2013, the ICD-10-CM database will replace the ICD-9-CM version. Medical coders must become familiar with the medical billing codes contained in this database, so they can hit the ground running when submitting insurance claims in the future. Properly coding each claim ensures that the healthcare provider is accurately reimbursed.

It is imperative that medical billing codes are entered properly when submitting forms to insurance companies for reimbursement for services rendered. If you are experiencing denials or other challenges due to improper medical billing codes being submitted on forms, visit All-Things-Medical-Billing.com today for more assistance and information.

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