1.

Medical coding is the process of

submitting and following up on
claims with health insurance
companies in order to receive
payment for services rendered by a
healthcare provider. The same
process is used for most insurance
companies, whether they are private
companies or government sponsored
programs.
3)
Medical coding is the process of
submitting and following up on
claims with health insurance
companies in order to receive
payment for services rendered by a
healthcare provider. The same
process is used for most insurance
companies, whether they are private
companies or government sponsored
programs. Medical billers are
encouraged, but not required by law,
to become certified by taking an

exam such as the CMRS Exam, RHIA

Exam and others. Certification
schools are intended to provide a
theoretical grounding for students
entering the medical coding field.
Contents
1 History
2 Billing process
o 2.1 Electronic billing
o 2.2 Payment
o 2.3 Medical coding services
3 See also
4 References
5 External links
History
For several decades, medical coding
was done almost entirely on paper.
However, with the advent of medical

practice management software, also

known as health information
systems, it has become possible to
efficiently manage large amounts of
claims. Many software companies
have arisen to provide medical
coding software to this particularly
lucrative segment of the market.
Several companies also offer full
portal solutions through their own
web-interfaces, which negates the
cost of individually licensed software
packages. Due to the rapidly
changing requirements by U.S.
health insurance companies, several
aspects of medical coding and
medical office management have
created the necessity for specialized
training. Medical office personnel
may obtain certification thro

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ugh various institutions who may

provide a variety of specialized

education and in some cases award
a certification cre

dential to reflect professional status.

The Certified Medical
Reimbursement Speci

alist (CMRS) accreditation by th

e American Medical coding

Association is o

ne of the most recognized of

specialized certification for medical
coding professionals.
Billing process
The medical coding process is an
interaction between a health care
provider and the insurance company
(payer). The entirety of this
interaction is known as the billing
cycle sometimes referred to as
Revenue Cycle Management. This
can take anywhere from several days
to several months to complete, and

require several interactions before a

resolution is reached. The
relationship between a health care
provider and insurance company is
that of a vendor to a subcontractor.
Health care providers are contracted
with insurance companies to provide
health care services. The interaction
begins with the office visit: a
physician or their staff will typically
create or update the patient's
medical record.

After the doctor sees the patient, the

diagnosis and procedure codes are
assigned. These codes assist the
insurance company in determining
coverage and medical necessity of
the services. Once the procedure
and diagnosis codes are determined,
the medical biller will transmit the
claim to the insurance company
(payer). This is usually done
electronically by formatting the claim
as an ANSI 837 file and using

Electronic Data Interchange to

submit the claim file to the payer
directly or via a clearinghouse.
Historically, claims were submitted
using a paper form; in the case of
professional (non-hospital) services
Centers for Medicare and Medicaid
Services. At time of writing, about
30% of medical claims get sent to
payers using paper forms which are
either manually entered or entered
using automated recognition or OCR
software.
The insurance company (payer)
processes the claims usually by
medical claims examiners or medical
claims adjusters. For higher dollar
amount claims, the insurance
company has medical directors
review the claims and evaluate their
validity for payment using rubrics
(procedure) for patient eligibility,
provider credentials, and medical
necessity. Approved claims are

reimbursed for a certain percentage

of the billed services. These rates
are pre-negotiated between the
health care provider and the
insurance company. Failed claims are
denied or rejected and notice is sent
to provider. Most commonly, denied
or rejected claims are returned to
providers in the form of Explanation
of Benefits (EOB) or Electronic
Remittance Advice.
Upon receiving the denial message
the provider must decipher the
message, reconcile it with the
original claim, make required
corrections and resubmit the claim.
This exchange of claims and denials
may be repeated multiple times until
a claim is paid in full, or the provider
relents and accepts an incomplete
reimbursement.
There is a difference between a
denied and a rejected claim,

although the terms are commonly

interchanged. A denied claim refers
to a claim that has been processed
and the insurer has found it to be not
payable. Denied claims can usually
be corrected and/or appealed for
reconsideration. A rejected claim
refers to a claim that has not been
processed by the insurer due to a
fatal error in the information
provided. Common causes for a
claim to reject include when personal
information is inaccurate (i.e.: name
and identification number do not
match) or errors in information
provided (i.e.: truncated procedure
code, invalid diagnosis codes, etc.) A
rejected claim has not been
processed so it cannot be appealed.
Instead, rejected claims need to be
researched, corrected and
resubmitted.
Electronic billing

A practice that has interactions with

the patient must now under HIPAA
send most billing claims for services
via electronic means. Prior to
actually performing service and
billing a patient, the care provider
may use software to check the
eligibility of the patient for the
intended services with the patient's
insurance company. This process
uses the same standards and
technologies as an electronic claims
transmission with small changes to
the transmission format, this format
is known specifically as X12-270
Health Care Eligibility & Benefit
Inquiry transaction.[1] A response to
an eligibility request is returned by
the payer through a direct electronic
connection or more commonly their
website. This is called an X12-271
"Health Care Eligibility & Benefit
Response" transaction. Most practice
management/EM software will

automate this transmission, hiding

the process from the user.
This first transaction for a claim for
services is known technically as X12837 or ANSI-837. This contains a
large amount of data regarding the
provider interaction as well as
reference information about the
practice and the patient. Following
that submission, the payer will
respond with an X12-997, simply
acknowledging that the claim's
submission was received and that it
was accepted for further processing.
When the claim(s) are actually
adjudicated by the payer, the payer
will ultimately respond with a X12835 transaction, which shows the
line-items of the claim that will be
paid or denied; if paid, the amount;
and if denied, the reason.
Payment

In order to be clear on the payment

of a medical coding claim, the health
care provider or medical biller must
have complete knowledge of
different insurance plans that
insurance companies are offering,
and the laws and regulations that
preside over them. Large insurance
companies can have up to 15
different plans contracted with one
provider. When providers agree to
accept an insurance companys plan,
the contractual agreement includes
many details including fee schedules
which dictate what the insurance
company will pay the provider for
covered procedures and other rules
such as timely filing guidelines.
Providers typically charge more for
services than what has been
negotiated by the physician and the
insurance company, so the expected
payment from the insurance
company for services is reduced. The

amount that is paid by the insurance

is known as an allowable amount.
For example, although a psychiatrist
may charge $80.00 for a medication
management session, the insurance
may only allow $50.00, and so a
$30.00 reduction (known as a
"provider write off" or "contractual
adjustment") would be assessed.
After payment has been made, a
provider will typically receive an
Explanation of Benefits (EOB) or
Electronic Remittance Advice (ERA)
along with the payment from the
insurance company that outlines
these transactions.
The insurance payment is further
reduced if the patient has a copay,
deductible, or a coinsurance. If the
patient in the previous example had
a $5.00 copay, the physician would
be paid $45.00 by the insurance
company. The physician is then
responsible for collecting the out-of-

pocket expense from the patient. If

the patient had a $500.00
deductible, the contracted amount of
$50.00 would not be paid by the
insurance company. Instead, this
amount would be the patient's
responsibility to pay, and subsequent
charges would also be the patient's
responsibility, until his expenses
totaled $500.00. At that point, the
deductible is met, and the insurance
would issue payment for future
services.
A coinsurance is a percentage of the
allowed amount that the patient
must pay. It is most often applied to
surgical and/or diagnostic
procedures. Using the above
example, a coinsurance of 20%
would have the patient owing $10.00
and the insurance company owing
$40.00.

Steps have been taken in recent

years to make the billing process
clearer for patients. The Healthcare
Financial Management Association
(HFMA) unveiled a "Patient-Friendly
Billing" project to help healthcare
providers create more informative
and simpler bills for patients.
Additionally, as the Consumer-Driven
Health movement gains momentum,
payers and providers are exploring
new ways to integrate patients into
the billing process in a clearer, more
straightforward manner.
Medical coding services
In many cases, particularly as a
practice grows beyond its initial
capacity to cope with its own
paperwork, providers outsource their
medical coding process to a third
party known as a medical coding
service. These billing services

typically take a percentage of a

practice's revenues as payment.
One goal of these entities is to
reduce the burden of paperwork for
medical staff and to recoup lost
efficiencies caused by workload
saturation, paving the way for
further practice growth. Practices
have achieved significant cost
savings through Group purchasing
organizations (GPO), improving their
bottom line by 5% to 10%.[2]
Medical coding regulations also tend
to be complex and often change.
Keeping staff and billing systems up
to date with the latest billing rules
can become a distraction for health
care providers and administrators.
Another primary objective for a
medical coding service is therefore
to use its billing expertise and to
focus on maximizing insurances
payments by properly processing the

provider's claims. They are solely

responsible for taking codes from the
coders and preparing accurate bills
that are further forwarded to the
insurance company. It is the task of a
medical coding professional to
complete the billing process in a
manner that it will avoid denials from
the insurance companies.
Additionally, the recent trend in this
field towards outsourcing, has shown
a potential to reduce costs. In
addition, many companies are
looking to offer EMR, EHR and RCM
to help increase customer
satisfaction, however as an industry
the CSAT levels are still extremely
low