What is Medical Billing and Coding? Exploring the Fundamentals

what is medical billing and coding

Proper medical billing and coding can help ensure that your organization is reimbursed for the care it provides to its patients. Did you know that as many as one in five claims are denied or delayed? We all know that the best defense is a good offense. Similarly, preventing denials from occurring in the first place is an effective way to keep the costs associated with denials low—much more effective, in fact, than focusing exclusively on overturning denials once they’ve been received.

At Vyne Medical, we value proactive denials management as much as you do, and we believe a robust denial management program is an excellent way to efficiently reduce the costs associated with denials and bolster your bottom line overall. Read on for our industry professional’s guide to the fundamentals of medical billing and coding, so you can be on your way to reducing your claim denial rates and smoothing out your revenue cycle management strategy.

Medical Billing and Coding

Medical “billing and coding” is a combined process where a patient encounter is translated into data used for claims submission, and hopefully, reimbursement. While medical billing and coding are separate processes, they work in tandem to help healthcare providers and organizations receive payments for services. When done correctly, they’re critical in the effort to minimize claim denials, and in turn, help providers stay in the business of treating patients.

Coding Fundamentals

Medical coding professionals use several key coding types in order to accurately record data for claim processing. These include the following:

  • ICD-11 diagnosis codes: ICD-11 diagnosis codes are used to describe an illness, injury, or other patient characteristic. These codes come from the World Health Organization’s International Statistical Classification of Diseases and Related Health Problems, identifying more than 70,000 unique codes.
  • CPT and HCPCS procedure codes: Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding (HCPCS) procedure codes describe the services provided during a patient visit. The American Medical Association (AMA) maintains this coding system. The AMA produces guidelines each year for coding professionals. These codes help describe why a service was performed, why it was necessary, and where the service was rendered on the body. Although some third-party payers require claims submitted with these codes, they are typically used for private payers. HCPCS codes can also be used to indicate ambulance rides and prescription drug uses.
  • Charge capture codes: “Chargemasters” are the list of the healthcare provider’s costs associated with different services they provide. Charge capture codes are exactly what they sound like – they help capture the price of the service.
  • Professional and facility codes: Professional codes indicate physician and clinical services, and facility codes outline the cost of providing the service. Professional and facility codes help portray the price of the drugs, supplies, building space, medical supplies used, and other items used in care. “Single-path coding” is when professional and facility codes are entered together and integrated into a single platform.

 

Billing Fundamentals

Front-End Billing

Proper medical billing begins at check-in when patient financial information, personal, and insurance coverage are collected. Confirming patient financial responsibility is a crucial step in the process. At check-out, copays should be collected. This makes up what’s known as “front-end” medical billing.

Training staff on how to talk with patients about their financial responsibility is key to keep bad debt ratios down. Knowing how best to position conversations around required payments is not always easy, but with training, teams can become well-versed in up-front collections.

By using Vyne Medical’s Trace® solution for denials management, healthcare professionals can easily record and search audio encounters by keyword and view screen recordings to review team members’ navigation during a phone or face-to-face interaction with a patient. Trace’s robust screen recording program allows supervisors to recreate entire events and measure productivity, process compliance, and other quality objectives.  Each recording can be indexed to the patient account and centrally stored for enterprise-wide access. The recordings can be referenced in employee training and as a tool to address staff compliance with industry procedures.

Trace digitally captures and centralizes communication around the patient for easy access across your organization, reducing back and forth between teams as they collaborate to win the denials battle. The result is fewer denials, shorter appeals, and better outcomes for revenue cycle management.

Back-End Billing

Back-end medical billing happens after the patient has been discharged and returned home. Medical billing professionals use the patient’s medical records to create billable codes and ultimately submit claims for payment.

In the medical billing process, an associate gathers data from a healthcare provider’s notes and submits a health insurance claim on behalf of the patient to an insurance company. The hope is that the insurance company will send a payment on behalf of the patient.

The CMS 1500 form requires entry of demographic data such as the patient’s name, address, date of birth, sex, and insurance information. Processes that help ensure the quality and accuracy of data collected during pre-registration can help prevent errors during this step.  Associates must also fill out the patient’s date of injury or illness and physician-reported diagnosis information. The diagnosis is entered using a special code dictated by the International Classification of Disease (ICD) Coding Book. Lastly, the CMS 1500 form requires information regarding services provided and the charges associated with those services. Services also receive their own codes, as dictated by the Current Procedural Terminology (CPT) Coding Book.

The medical billing and coding associate must translate a complete picture of the patient’s data onto the required forms. If any information is missing or incorrect, the claim could be denied. In the event of a claim denial, the provider is left to write off remaining balances, adjust them, or try to pursue them in a collection effort.

This process sounds relatively quick, but in reality, it can take days, weeks, or even months to finalize. The length of the process will depend on factors like the services provided, issues arising from the claim, and ultimate collection from an insurance provider or the patient.

Improving Medical Billing & Coding Processes, and Ultimately, Claim Denial Rates, Using Technology

Once the billing department submits the claim to the payer, the claim is in adjudication. During adjudication, the payer determines if they will pay, and if so, how much. Claim denials can be a nightmare for healthcare organizations that need payments to stay in operation. If insurance providers won’t pay claims, the healthcare provider is left to seek payment from the patient. When this happens, accounts can stay in “accounts receivable” (or unpaid) status for lengthy amounts of time.

The number of days an account spends in receivable status is a strong indicator of the likelihood that an organization will ever see payment on account, particularly for self-pay patients. According to the following articles published by Duns & Bradstreet, once an account has remained in receivable status for several months, the likelihood of full reimbursement drops significantly. Many organizations have found great success lowering their average accounts receivable days by using Vyne Medical’s Trace system, including Lowell General Hospital of Massachusetts. Lowell General’s AR-day metric dropped by 16 percent from 42 days to 35 days after switching from a predominately manual, paper-based process for revenue cycle management to the Trace system.

Taking the Next Step toward Effective Revenue Cycle Management

Could your organization benefit from refining your claim denial management processes? Vyne Medical offers Trace, with tools to meet the specific workflow needs of each and every hospital, and Refyne™ solution, which helps your organization automate denial workflows, simplify audit processes and drive more connected care – all from a single platform. With Vyne Medical’s software offerings, your institution can see improvement in key revenue cycle management metrics. Ready to learn more? Connect with the professionals at Vyne Medical today online, by phone at (800) 864-2378, or by email at mailto:[email protected]

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