28 Feb What Is Medical Coding and What Does a Medical Coder Do?
Medical coding plays an important part in the healthcare industry. It serves as the backbone of the reimbursement cycle and helps healthcare providers receive appropriate compensation for their services. By translating complex medical information from patient records into standardized codes, medical coders facilitate accurate billing and insurance claims processing.
Whether hospitals, clinics, or specialized medical facilities, effective medical coding can enhance operational efficiency, ensure compliance with regulations, and support data-driven decisions to optimize patient care. If you plan to hire a medical coding company soon, it’s best to learn what they are and what they can do for your practice. You will also learn about the various codes and mistakes coders make to give you an overview of their responsibilities.
What Exactly Does a Medical Coder Do?
A medical coder translates healthcare services, procedures, and diagnoses into standardized codes for billing and record-keeping purposes. The process involves reviewing patients’ medical records, such as physician notes, lab results, and other documentation, to identify relevant information.
Coders then use classification systems like ICD (International Classification of Diseases), CPT (Current Procedural Terminology), and HCPCS (Healthcare Common Procedure Coding System) to assign specific medical codes that accurately represent the patient’s encounter and treatments received.
Learning the General Process of Medical Coding
Understanding the general medical coding process is important to know what will happen when you partner with a healthcare provider. It can also help with the collaborative process and achieve optimal results. Here’s a brief overview of each stage in the medical coding process.
1. Abstracting Information
This first step involves reviewing the patient’s medical records to extract important information about diagnoses, procedures, and any medical services provided. Coders carefully analyze physician notes, lab results, and other relevant documents to gather all necessary details.
2. Assigning Codes
Once they abstract the relevant information, medical coders assign specific codes using standardized coding systems such as ICD (International Classification of Diseases) for diagnoses, CPT (Current Procedural Terminology) for procedures, and HCPCS (Healthcare Common Procedure Coding System) for other services. These codes offer a standardized language for billing and record-keeping.
3. Ensuring Compliance
Coders must ensure that the assigned codes comply with the latest coding guidelines, payer-specific requirements, and relevant laws and regulations. Healthcare providers must also be compliant to avoid errors, denials, and potential legal issues.
4. Data Entry and Verification
The assigned codes are entered into the healthcare provider’s electronic health record (EHR) system or billing software. Coders verify the accuracy of the data entry to minimize errors and discrepancies that could impact claims processing.
5. Claim Submission
Once the coding is done and verified, the information is used to prepare and submit insurance claims for reimbursement. This step involves working closely with billing departments to ensure claims are sent to the appropriate payers, such as Medicare, Medicaid, or private health insurance companies.
6. Communication and Follow-Up
Coders may communicate with healthcare providers or insurance companies to clarify or resolve any discrepancies or issues in the coding or claims process. This constant communication guarantees that problems are resolved immediately, leading to successful claim resolution.
7. Quality Assurance and Auditing
Regular audits and quality checks are conducted to make sure that coding is accurate and consistent. Constant proper training and education are also essential for coders to stay updated with coding changes and best practices.
Different Types of Codes Used by Medical Coders
Medical coders use several standardized coding systems to represent healthcare services, diagnoses, and procedures accurately. You can find below several primary types of codes used by professional medical coders:
ICD (International Classification of Diseases)
This system is maintained by the World Health Organization (WHO) and is used to classify and code diagnoses, symptoms, and medical conditions. The ICD codes track disease prevalence, identify health trends, and manage clinical health data. The latest ICD-10 version is widely used globally, and each code consists of a combination of letters and numbers that specify health conditions.
CPT (Current Procedural Terminology)
Developed by the American Medical Association (AMA), CPT codes are used to document medical, surgical, and diagnostic procedures and services performed by healthcare providers. These five-digit numeric medical codes help in billing and reimbursement by providing a uniform language for reporting medical services.
HCPCS (Healthcare Common Procedure Coding System)
Like CPT codes, HCPCS includes additional codes developed by the Centers for Medicare and Medicaid Services (CMS) primarily for billing purposes. It consists of two levels: Level I, which is the CPT codes, and Level II, which covers non-physician services like ambulance services, as well as durable medical equipment, prosthetics, orthotics, and supplies.
DRG (Diagnosis-Related Groups)
Used mainly in hospital settings, DRGs categorize hospital stays into groups that are expected to use similar amounts of resources. This system is used for billing inpatient services, helping hospitals determine how much to bill for a patient’s stay based on their diagnosis and the interventions performed.
LOINC (Logical Observation Identifiers Names and Codes)
This system is used to identify laboratory and clinical observations. LOINC codes facilitate the exchange and aggregation of electronic health data, which is essential for the interoperability of laboratory results across different healthcare systems.
Key Contrasts Between Medical Coding and Medical Billing
Medical coding and billing are two crucial components of the healthcare revenue cycle, each with distinct functions, responsibilities, and skill sets. While they often work in tandem, key contrasts exist between the two processes. Here’s a detailed look at their differences:
Purpose
| Medical Coding | Medical Billing | |
|---|---|---|
| Purpose | The main objective of medical coding is to translate patient care into universal alphanumeric codes that describe diagnoses, procedures, and services provided. This coding process ensures a standardized method of detailing patient encounters for reporting and billing. | Certified professional billers submit and follow up on claims with insurance companies to receive payment for services rendered by healthcare providers. Billing assures that the healthcare facility receives reimbursement for services provided. |
| Role | Medical coders convert detailed healthcare information, such as patient diagnoses, medical procedures, and equipment usage, into standardized codes using systems like ICD, CPT, and HCPCS. This accurate coding is crucial for maintaining patient records and for billing purposes. | Medical billers use the codes provided by medical coders to prepare insurance claims, submit them to payers, and follow up on unpaid claims. They also manage patient billing inquiries and ensure that healthcare providers are properly compensated. |
Skill Sets and Expertise
| Medical Coding | Medical Billing |
|---|---|
| Requires deep knowledge of anatomy, medical terminology, and coding systems. | Requires an understanding of insurance processes, claim submission, and payer requirements. |
| Experienced coders must be detail-oriented, analytical, and capable of interpreting complex medical records to select the correct codes. | Medical billers must have strong organizational and communication skills to manage billing cycles and resolve issues with insurance companies and patients. |
| Staying updated with the latest coding guidelines and revisions is essential. | They must be adept at billing software and comfortable with financial transactions and records management. |
Workflow and Processes
| Medical Coding | Medical Billing |
|---|---|
| Coders typically work behind the scenes, focusing on accurately translating clinical notes and patient information into standardized codes. | Billers interface more directly with patients and insurance companies. |
| Their workflow revolves around reviewing clinical documentation, abstracting pertinent information, and applying correct codes. | The medical billing process involves claim submission, managing denied or rejected claims, processing payments, and handling patient billing inquiries. |
| Coding is largely concerned with internal documentation and compliance. | Billing is focused on external financial transactions and often involves customer service elements. |
Impact on Revenue Cycle Managementand Processes
| Medical Coding | Medical Billing |
|---|---|
| Proper coding leads to accurate billing, reducing the risk of claim denials and ensuring compliance with regulations. | Efficient billing processes lead to timely reimbursements, which is important for maintaining cash flow in healthcare facilities. |
| Coding errors can lead to revenue loss, claim rejections, and potential legal issues. | Billing errors can delay payments, increase administrative costs, and cause financial strain for both providers and patients. |
Common Types of Medical Coding Errors Healthcare Practices May Experience
Most of the medical coders you hire will always have extensive training and experience with the job. However, errors can rarely occur due to the complexity of medical records and coding systems. It’s best to learn some of the common errors that they may make:
- Upcoding. This happens when a coder assigns a code that reflects a more severe diagnosis or a more expensive procedure than what was documented in the patient’s medical records. Upcoding can lead to overbilling and possible legal issues since it inaccurately reflects the care provided.
- Undercoding. Conversely, undercoding happens when a coder assigns codes reflecting a less severe diagnosis or cheaper procedures than the services rendered. This can lead to a loss of revenue for healthcare providers because they aren’t reimbursed correctly for the services provided.
- Incorrect Code for the Diagnosis or Procedure. Using the wrong ICD or CPT code for a diagnosis or procedure can result in claim denials or delayed payments. Coders must carefully review documentation and select the most accurate codes that precisely match the medical service provided.
- Lack of Specificity. Many coding classifications require high specificity to capture the full scope of the patient’s condition or the procedure performed. Using unspecified codes or generalizing the medical condition can lead to inaccurate representation and affect reimbursement rates.
- Failure to Code All Relevant Conditions or Procedures. Omitting secondary diagnoses, comorbidities, or additional procedures that were addressed during a patient encounter can cause incomplete medical records and missed financial opportunities for the provider.
- Not Keeping Updated With Coding Changes. Coding standards like ICD, CPT, and HCPCS frequently undergo updates. Failing to know these changes can cause coders to use outdated codes, which insurance companies may reject.
- Mismatched Coding and Documentation. When the codes selected do not align with the patient’s medical records or physician’s notes, it leads to claim denials. Coders must be certain that the documented medical record supports every code they assign.
- Wrong Use of Modifiers. Modifiers provide additional details about a procedure, such as its complexity or special circumstances. Applying incorrect or unnecessary modifiers can create reimbursement issues and fraud allegations.
- Inadequate Knowledge of Payer Guidelines. Different insurers may have specific criteria for certain services. Not following insurer-specific guidelines can delay or deny payments. Coders should familiarize themselves with the requirements of the payers they work with regularly.
- Improper Sequencing. In many cases, the order in which codes are listed is significant. Incorrect sequencing can affect the medical severity and reimbursement of the claim. Coders must understand the importance of correctly coding hierarchy and sequence.
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Contact us today if you have additional questions about our medical billing and coding services.
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