Medical Billing and Coding

Medical billing and coding entail the processes by which patient encounters are translated into a systematized documents so to submit claims of services rendered by physicians and other healthcare providers to payers (including insurance companies and federal healthcare sources) and subsequently obtain reimbursement for those claims.  Medical billing and medical coding are distinct yet critical processes within revenue cycle management so to enable providers to obtain reimbursement. While medical coding entails the act of capturing billable data from clinical documentation and translating into codes that payers recognize as payable, medical billing entails harnessing these codes and appropriately registering them in claims forms for insurances companies and patient statements for patients so to receive payment.  

The intersection of billing and coding occurs when claims are created for reimbursement, and this is the keystone of the entire revenue cycle.  Upon credentialing providers to be able to accept insurance and negotiating contracts for reimbursement on codes, the revenue cycle process begins at the time of patients registering for their appointment and is complete once providers are totally paid for all patient services rendered.  Depending on complexity, pre-authorization requirements to render services, claim rejections, claim denials, payer requirements for more medical records, and patient payment collections method employed, the total revenue cycle process for a given claim can take weeks, or even months, to accomplish.

By maximally learning the core processes of medical billing and coding, physicians, other providers, and staff can optimize their revenue cycle and ensure accurate, timely reimbursement for services rendered to patients. 

WHAT IS MEDICAL CODING?

When a provider in a medical practice or facility encounters a patient, the medical coding process initiates. During the encounter, the provider documents clinical notes regarding the visit in the patient’s medical record, and the provider notates the rationale for any tests, diagnoses, procedures, treatments, and other relevant clinical items performed during the visit.  

A precise and thorough documentation of clinical notes is essential as clinical documentation is what validates the reimbursement amount owed to the providers from payers.  Should a payer raise questions about a claim or deny a claim, complete and accurate clinical documentation is the only thing providers have to prove their case to get reimbursed and prevent the patient encounter from being written-off for no reimbursement.  Inaccurate documentation could also result in enormous trouble for providers if the inaccuracy results in submitting a bill that raises red flags indicating that the provider is attempting to commit healthcare fraud, especially if the documentation record shows more clinical work being done than what was actually performed. 

Upon the provider completing the patient encounter and finishing the clinical notes, a medical coder analyzes the clinical notes of the encounter and determines which billing codes properly reflect the diagnosis, treatment, services and procedures rendered, the professional, facility, technical, and global elements of the encounter, the bundling for different services, and the appropriate modifiers to be applied to demonstrate exactly what the nature of the encounter was in specific details.  In order to codify all this information, several different code sets are used to accomplish the medical coding process.  These code sets include the ICD-10 Diagnosis Codes, CPT and HCPCS Procedure Codes, Professional Codes, and Facility Codes.

ICD-10 DIAGNOSIS CODES

The healthcare community utilizes a code set of over 70,000 unique identifiers called the International Classification of Diseases, Tenth Revision (ICD-10) to input diagnosis codes for medical billing.  These diagnosis codes translate a provider’s documentation of a patient’s medical condition into a billable alpha-numerical code representing the condition, its severity, its location, and if its an initial encounter or a later one.  The ICD-10-CM (clinical modification) is a code set used for diagnostic coding while the ICD-10-PCS (procedure coding system) is a code set used for inpatient procedures performed in the hospital.

CPT & HCPCS PROCEDURE CODES

In conjuncture with diagnosis codes, the medical coder must extract from the provider’s clinical documentation exactly what procedures and services were rendered during the patient encounter.  For this purpose, the code sets established by the American Medical Association (AMA) — the Current Procedural Terminology (CPT) codes and/or the Healthcare Common Procedure Coding System (HCPCS) — are used.  These code sets have modifiers to enhance specificity of the coded services, delineating exactly where the service was performed on the body, the number of services rendered, if the services rendered were in conjuncture with other services, why the service was deemed to be medically necessary, etc.  Private payers tend to have providers submit codes in the CPT code set, while CMS may request codes by input in the HCPCS format.  Besides hospital providers, HCPCS codes are also used for non-provider services like durable medical equipment provision, ambulance riding, certain infusion or prescription drugs, and other hospital-related services.  

PROFESSIONAL CODES & FACILITY CODES

In certain instances, medical coders must harness professional and facility codes in order to appropriately bill for reimbursement.  Professional codes are extracted upon reviewing clinical documentation and entail physician and provider services rendered for billing purposes.  Facility codes, as the name describes, are used by healthcare facilities to cover overhead costs — including supplies, space utilization, medications, equipment, etc. — stemming from the rendering of services.  

WHAT IS MEDICAL BILLING?

The medical billing process starts from patient registration, harnesses the coder’s work for developing and submitting a claim to be paid, and only ends when a provider is actually paid in full or has to partially or fully writes-off the bill as uncollectible, which may happen for a variety of reasons.

FRONT-END MEDICAL BILLING

When a patient registers for an appointment at a medical practice or healthcare facility, the medical billing process initiates.  The front desk representative’s job of obtaining 100% accurate patient demographic and insurance information is absolutely critical for accurate and efficient billing; without 100% accuracy on the front-end, the back-end bill, upon submission, will be rejected or denied, rendering the claim unpayable until the error is found-out and corrected.  The data the front desk representative must collect includes patient date of birth, address, contact information, and current insurance coverage.  

Furthermore, the front desk representative must collect copays, coinsurances, past-due balances, and other patient financial responsibilities.  Failure to do so while the patient is still in the office hampers cash flow.  If the patient leaves the office without paying, the chances of collecting monies due exponentially reduces. 

Prior to the patient seeing the provider, the front desk representative or billing team must check eligibility and verification of benefits.  This check is to ensure that the services the patient seeks are in fact covered by the patient’s insurance health plan in some manner.  If it is not, the patient will be required to pay a self-paid bill for services rendered by the physician or other medical providers.  High-performing outsourced billing services or in-house billers render this check the same day for all patients coming in that day prior to the office opening.  This done so that non-coverage issues can be flagged and options can be discussed with the patient prior to their arrival at the office, thereby preventing any back-end surprise bills, which almost always massively diminish the patient experience and reduce patient satisfaction, regardless of how excellent the physician is at delivering care.  If a patient is a walk-in, the front desk staff may run an eligibility check during check-in.

After check-in, the patient sees the physician or other healthcare provider:  when the patient and provider actually see each other for the scheduled visit, this is called a patient encounter or a patient visit.  The provider documents everything he or she does, diagnoses, treats, performs, and prescribes during the encounter, and upon completion of the clinical notes of the encounter, the notes are flagged or transmitted for the medical coder to begin work.  Here-in, the medical coder initiates his or her work in converting the patient encounter notes into codes for billing.

BACK-END MEDICAL BILLING

Medical billers utilize the medical coding work done by the medical coders to create an itemized form called a “superbill” upon which providers create claims to be submitted for reimbursement.  Key pieces of information include data about the provider (name, site, NPI number of the provides that ordered tests, referred to the provider, and served as attendings, etc.), the patient (name, when symptoms began, date of birth, insurance information, address, contact data, etc.), and visit information (diagnosis codes, procedure codes, units, time, code modifiers, quantities, pre-authorization data, code modifiers, etc.).  Proof that the services and tests were for medically necessary may result in the provider having to attached clinical notes to the superbill.  

Medical billers harness superbill data to create medical billing claims.  Various payers require the submission of different types of claim forms specific to their own requirements to be prepared by medical billers.  This in itself makes the medical billing process quite complex.  Medicare mandates that the CMS-1500 form is used to submit medical practice claims, and the CMS-1450, or UB-04, form is used to submit claims for healthcare facilities.

In order to make sure that all of the entered codes and patient demographic data is accurate prior to claim submission, medical billers will scrub the claims via manual and automated systems.  Once the scrubbing process is complete, the medical biller will start the process of claim submission to the payer.  In most instances now, the claim submission process is electronic; however, in a select few instances, some payers still require certain types of claims to be submitted by paper mail.  Generally, the claim will be submitted to a third-party company called a Clearinghouse, which will perform another scrubbing of the claim so to ensure that it is appropriately formatted for transmittal to the actual payer.  Clearinghouses therefore serve as useful allies in the medical billing process.  If the Clearinghouse detects an issue, the claim will be “rejected” and sent back to the biller to correct.  This is typically a rapid process; the biller must be vigilant and diligent about following-up and resubmitting these rejected claims.  If the Clearinghouse accepts the claim, they will forward it to the payer.  

When the payer receives the claim, the process of claim adjudication is initiated, wherein the payer will analyze the claim and either accept, partially accept, or deny the claim.  The payer will then send electronic communication such as an ERA (Electronic Remittance Advice) to the provider’s facility.  These communications explain which services were paid, which were denied, and which require more information from the provider in order to evaluate an appropriate amount of reimbursement from the payer to the provider.  The correction, resubmission, and continuous follow-up of Clearinghouse rejections and Payer denials is a vital part of the medical billing process.  Unfortunately, many in-house billers and outsourced billing companies fail to appropriately, proactively, and aggressively follow-up on correcting, resubmitting, and contacting payers in regard to denials, and this typically ranks among the largest catastrophes for providers with respect to getting reimbursed for services rendered and actually obtaining their revenues in their bank account.  Therefore, it is absolutely essential that providers having their billing done by a high-organized, efficient, effective, process-driven revenue cycle management company such as Avosina Medical Technologies that follows-up on every rejection and denial within 24 hours and doesn’t stop following-up until the a resolution is met.  It is the experience of most healthcare providers that, in general, payers tend to actively, aggressively, and authoritatively attempt to minimize reimbursement; therefore, it is of the utmost importance that your medical billing specialists are willing to aggressively battle payers for every penny owed to your medical practice or facility.

Once the claim is adjudicated and appropriately paid by the payer, the medical biller will create a billing statement for patients to pay.  This statement reflects the patient financial responsibility which is the difference between the total allowable charge of the service minus the amount the payer paid for the service on behalf of the patient.  This remainder balance is the patient’s financial responsibility to pay the provider.  

The amount owed to a provider from payers and patients is total accounts receivables (AR).  Payer AR reflects the amount owed by payers to the provider and is delineated by how many days it is taking for a payer to pay what is owed.  Similarly, patient AR reflects the amount owed by patients to the provider and is delineated by how many days it is taking for a patient to pay what is owed.  Payer AR and Patient AR can be broken down by individual claim, by payer, by patient, or in other multi-faceted ways in most EHR reporting systems; these reports great help medical billers understand the break-down of AR and who to approach for payment on claims.  The reports also help providers and management understand the financial status of the healthcare organization.

When AR is averaged out, roughly-speaking:  top-performing medical billers collect the average of all AR in under 35 days average; mediocre billers take between 35 and 45 days average; and poor performing medical billers take over 45 days average.  This metric, called “Average Days in AR,” is tremendously helpful in understanding the health of your medical practice or facility’s ability to collect revenue and keep abreast of cash flow.  Typically, any particular claim falls into one of the following AR buckets:  0 to 30 days, 30 to 60 days, 60 to 90 days, 90 to 120 days, and 120+ days.  The longer it takes to collect payment, the exponentially greater the likelihood is that the claim will go unpaid or underpaid.  Thus, having a low Average Days in AR is critical to the success of any healthcare organization. 

With an ever-increasing provision of high-deductible plans, a greater inability of patients to pay healthcare costs, and a diminished negative credit score impact for failure to pay medical bills, patients are more responsible to, less able to, less incentivized to actually pay their medical bills than ever before.  That is why collecting patient financial responsibility at the front desk on the front-end is more important than ever before, and this is why back-end medical billing specialists must be more diligent than ever before to collect patient balances.  This is also way convenient payment options such as online payment methods and securely vaulted electronic credit cards on file systems are critical to a healthcare organization’s survival today.  Upon receiving the full balance of the allowable amount for a given claim from the payer and the patient, the biller can close the claim. 

MEDICAL BILLING AND CODING CHALLENGES

Healthcare organizations face a slew of challenges regarding medical billing and coding.  Some common challenges include:

• Maintenance of compliance with HIPAA, HITECH, and other healthcare privacy laws when processing and collecting claims 
• Prevention of manual data entry errors by learning and harnessing technology and automation tools effectively and efficiently
• Constant and persistent communication with third-parties such as federal and commercial payers and regulatory bodies 
• Following and staying on top of the perpetual changes in the way claims are to be billed and coded as per payer policies
• Adopting an EMR system and effectively integrate it with a Practice Management System and other medical billing software
• Adopting healthcare price transparency tools to give patients accurate estimates of bills on the front-end, preventing surprises
• Ensuring medical billing and coding team members have updated training and certifications so they know the latest industry changes

The revenue cycle management process rests upon effective medical billing and coding.  By establishing effective and efficient medical billing and coding processes, providers optimize their ability to maximize revenue collections and get paid as quickly as possible.  This enables providers to keep their doors open to serve patients and thrive in the healthcare industry.  Avosina Medical Technologies is here to partner with you to professionally fulfill all of your medical billing and coding needs and drive the revenue cycle results you need to prosper.