Friday, June 21, 2013

Billing and coding

Billing and coding

Medical billing and coding refers to the process of submitting as well as following up claims from insurance companies to ensure that payment for the services offered by a particular healthcare provider is received (Young, 2008). A similar billing and coding process is also applied for most of the insurance companies regardless of whether they are government sponsored or private companies. The medical billers are normally certified by sitting for a particular exam. Some of the exams undertaken by medical billers include the RHIA Exam, the CMRS Exam among others. There are several certification schools which provide a theoretical understanding for the students intending to join the medical billing profession.

The entire medical billing process revolves around an interaction between the insurance company and the health care provider. The term revenue cycle is commonly used to refer to the entire billing process until payment is made to the health care provider (Rumpakis, 2011). The revenue cycle is normally a very complicated process which may take several days or even months to be completed. A series of interactions are required between the parties before the final resolution is arrived at. The complexity of this process is brought about by several issues that are involved. The vendor to subcontractor type of relationship exists between the health care providers and the insurance companies. The insurance companies contract health care providers to offer services to their clients. The process begins on the first visit where the physician or health care staff will create or update a patient`s medical record.

The medical record normally contains a brief summary of the patient`s demographic information and the treatment details. Some of the information contained in these records include the patient`s name, social security number, address, work telephone number, home telephone number as well as the insurance policy number (Miscoe, 2008). In case the patient is a minor, guarantor information will be appended. The guarantor may either be the patient`s parent or any adult who is related to the patient. During the first visit, the health care provider can give one or more diagnoses to the patient in order to streamline and coordinate their care. If no definitive diagnosis was performed on the patient, the reasons of visiting the health center will be recorded for the claims filing purposes. Very personal information is contained in the patient`s record which includes the nature of illness, medication lists, examination details and results, diagnoses as well as suggested treatment.

Billing the insurance is a complex process which involves a number of things. The physical examination extent, the patient`s background information and complexity of decision making are all evaluated in order to determine the accurate level of service to be used in billing the insurance. The level of service is determined by qualified health care staffs who then translate it into a five digit standardized procedure code that is drawn from the Current Procedural Terminology (CPT) database. The health care provider also translates verbal diagnosis into a specific numerical code drawn from a similarly standardized ICD-9-CM (Young, 2008). The CPT and ICD-9-CM are very important for processing of claims from insurance companies.

After determination of the diagnosis and procedure codes, it is the responsibility of the medical biller to transmit the claim to an insurance company. This can be done electronically through formatting of the claim as an ANSI 837 file which is submitted via the Electronic Data Interchange directly to the insurance company or through a clearing house (Miscoe, 2008). In the past, claims were normally submitted through a paper form. The Health Care Financing Administration (HCFA) form or the CMS-1500 form was commonly used for professional/non-hospital services. The CMS-1500 form originates from the Centers for Medicare and Medicaid Services. At the writing stage, close to 30% of the medical claims are sent to insurance companies via paper forms that are either entered manually or using automated recognition or the OCR software.

The payer (insurance company) does the processing of claims through medical claims adjusters or the medical claims examiners. In cases where the claims involve higher dollar amounts, the medical directors of the insurance company reviews the claims to evaluate whether they are valid for payment using the rubrics for eligibility of patients, medical necessity and provider credentials. Claims that have been approved are reimbursed at a certain percentage of the total billed services (Rumpakis, 2011). The rates to be paid are normally negotiated in advance between the insurance company and the health care provider. In case the claims have failed, they are denied and a notice is sent back to the heath care provider to inform her of the outcome.

In most cases, the rejected or denied claims are usually returned to the health care providers in form of Electronic Remittance Advice or Explanation of Benefits (EOB). On receiving a denial message, the health care provider has to decode the message, make reconciliation with the original claim, correct as required and then resubmit the claim to the insurance company. The process of exchanging claims and denials may continue repeatedly for a number of times until a point whereby the claim will be paid in full or when the service provider relents on the earlier claim and accepts to take an incomplete reimbursement.

Although the terms rejected and denied are interchangeably used, they have different meanings altogether. A denied claim is that which has been processed by the insurer and found to be not payable. Claims that are denied can be corrected and appealed to be reconsidered. On the other hand, a rejected claim is that which the insurer has not processed because of the fatal error contained in the information (Kenny, 2012). The most common causes for rejection include cases where personal information contained in the claim is inaccurate or when there are errors in provided information. The health care provider cannot appeal against a rejected claim since it has not been processed by the insurance company. The only remedy for rejected claims is to research, correct the information and resubmit to the insurer.

Due to the complexity of the billing process, most health care providers outsource the entire medical billing process to third parties known as the Medical Billing Service. This enables the service providers to reduce the paperwork burden on the medical staff and recover lost efficiencies through workload saturation. The medical billing regulations are very complex and they are subjected to regular changes. It is therefore very difficult for health care providers and administrators to keep their employees as well as the billing system up to date with the latest rules. Contracting of the medical billing service enables the health care provider to maximize insurance payments through properly processed claims.


Kenny, C. (2012). Correct Coding for Dialysis Billing: Providers must ensure proper coding to avoid returned claims. Dennis Barry's Reimbursement Advisor, 28(2), 10-12. Miscoe, M. (2008). A Structured Approach to Developing an Effective Internal Audit Program for Billing and Coding. Journal Of Health Care Compliance, 10(3), 17-57. Rumpakis, J. (2011). Coding and Billing Strategies for Advanced Diagnostic Technology.Review Of Optometry, 148(8), 46-53. Young, C. (2008). Billing and Coding Laboratory Developed Tests. Journal Of Health Care Compliance, 10(2), 69-72.