The Reasons Why Coding Is the Most Vital and Crucial Aspect of Medical Billing

The Reasons Why Coding Is the Most Vital and Crucial Aspect of Medical Billing


Like every other business and industry, the healthcare sector also depends on regular financial resources to properly manage the operations. The backbone of every medical practice or hospital is revenue cycle that includes all the clinical and administrative tasks that are performed. A robust and seamless revenue management ensures that healthcare practitioners from doctors to nurses are reimbursed properly and all payment of rent, equipment and utilities is done on time.

Medical billing and coding are the two most important factors of the revenue cycle that help form a medical claim that ensures that patients and insurance providers provide payments for the services rendered by a medical practice. Medical claims are paid by patients, or insurance companies and help to drive the financial operation of a medical practice.

The revenue cycle process starts with patient registration and ends when the medical practice gets full payment for the services given to the patients. It may take weeks to months for a medical practice to get reimbursement due to submission of the claim depending on the nature of patient’s illness to diagnosis, treatment and selection of medical codes, and also many times dealing with claim denials.

What is Medical Coding?

Medical coding is a process where an expert coder will form a ‘superbill’ and go through all the clinical documentation, medical transcripts, and records so that appropriate codes can be selected and applied. The payments or reimbursement that a hospital receives solely rely on selecting accurate codes for the services rendered to the patients.

Medical coding is a complicated and challenging task as every year; medical codes are revised and updated. Many of the old codes are removed, and new ones are added, and there are also certain modifiers that further specify a procedure or service.

A medical coder has to be skilled and knowledgeable to identify and assign the correct code and modifier. The medical codes are the translation of diagnosis, testing, procedure, and prescription into alphanumeric codes. The three fundamental coding systems used in the healthcare industry are

  1. International Classification of Diseases (ICD)
  2. Current Procedural Terminology (CPT)
  3. Healthcare Common Procedure Coding System (HCPCS)

ICD-10 Codes

The essential document that defines the symptoms of the patient due to any illness or injury is the ICD codes, also known as ‘Diagnosis code’. ICD codes aim to determine and address the global trends and statistics of different diseases and ailments.
ICD-10 codes mean the 10th revision of codes by WHO (World Health Organization) on the signs, symptoms, external causes, social causes, and findings of an illness or injury. ICD-10 enlists more than 70,000 disease codes and will be replaced by ICD-11 from January 1, 2022. ICD codes ensure that a patient receives proper treatment and is correctly charged based on the service he/she receives.


HCPCS codes are a collection of standard codes that are used to define medical treatment, diagnosis, testing, supplies, and other services. The HCPCS codes help to fulfill the claim submission process to the insurance companies. HCPCS codes are used by doctors, physicians and also insurance companies.

HCPCS codes consist of two sections, Level I involves CPT codes which are five digits and Level II that includes products, services, and supplies that are not included in CPT. Level II codes are alphanumeric codes and include a letter and then four numeric digits.

The Result of Incorrect Medical Codes

In the healthcare sector, medical coding errors result in over 50% of claim denials, loss of revenues, HIPAA (Health Insurance Portability and Accountability Act) violations and the prospect of the legal lawsuits and hefty federal fines. Once a claim is rejected or denied, the regular revenue stream is affected, and healthcare providers are not billed on time. Not only the regular payment is impacted, but it takes time, and effort to identify and resubmit the claim and the insurance provider may then only agree to make a partial payment.

Medical coding error not only results in loss of revenue but also compromises patient care and a patient has the right to file for malpractice that can result in added payment of expensive fines and legal fees. Installing a sophisticated ‘medical billing and coding software’ is the best solution for a medical practice to reduce coding errors, lower claim denials, improve patient satisfaction, maximize reimbursement, and streamline revenue cycle.

Incorrect medical coding can result in the reimbursement get denied, delayed or partially paid. Denied claims mean an administrative challenge for a medical practice due to loads of paperwork, stress, the impending loss of regular payments, identification of errors and resubmission of claims. Submission of claims based on selecting incorrect codes to Medicaid or Medicare means violating the Federal Act and law and results in costly fines and penalties.

The Need for Developing and Implementing Medical Billing and Coding Software

Designing and integrating an innovative custom billing and coding software means that all the essential codes would be built-in, and mistakes would be reduced when selecting a code. The modern billing software is HIPAA compliant and includes numerous features, and one such is automatic updates of all medical codes as many times a claim may be denied due to the selection of old medical code.

A medical coder is a person who must have relevant and extensive knowledge of the numerous medical terminologies that helps to translate the clinical documentation accurately into codes. The coder must also be familiar with insurance plans, state and federal regulations, and HIPAA compliance. On a typical day, a coder may check a patient’s visit and appointment details and then verify the medical record by the diagnosis, testing, or treatment done and then assign the particular code.

Finding and recruiting an expert medical coder can be tough with the rising billing needs and Covid-19 outbreak that has already badly affected the revenue cycle of medical practices across the country. Implementation of new codes can also be strenuous, and every big or small medical practice must make timely adjustments to prevent claim denial. A medical practice can either install a custom billing software or outsource the coding and billing tasks.

The Key Tasks Involved in Medical Coding Process

Most medical practices follow a ‘golden’ or ‘general’ rule that is never to code a bill if there is no medical documentation to justify or support it. Clinical patient documentation is what healthcare providers use to justify a claim and ask for reimbursement from the insurance company. A claim denial may be due to billing errors, inadequate patient coverage, or missing clinical details.

A medical practice mostly receives an Explanation of Benefits (EOB) that informs them of the reason for claim denial, but the claims can be appealed, corrected, and submitted again for collection of payments. The key tasks performed by a medical coder are

  • Obtaining patient information from clinical documents and records
  • Verifying the medical information from doctors, physicians and other healthcare professionals
  • Checking for any information or details that are missing and can result in claim denial
  • Selecting and assigning codes correctly
  • Ensuring that the bills comply with coding guidelines
  • Informing the medical practice and staff on the coding requirements

Human error is quite common, and one of the leading reason for claim denial and rejection. Many times a claim is rejected due to typographical error by the coder. A billing and coding software allows the coder to select the appropriate code instead of memorizing or going through a series of paperwork to select a code.

The need for a proper and custom billing and coding software has become necessary in changing times, and it will help to significantly reduce manual paperwork and stress normally associated with medical administrative work. An advanced software allows easy input of patient detail and electronic submission of medical claims to the insurance company. It is also easier to run an error check and identify the mistake before a claim is sent and prevent claim denials.

Rapid advancement in technology has allowed companies such as PETTIGREW to offer state of the art billing and coding software, tools, and other resources necessary for a medical practice to streamline its revenue management cycle, lower claim denials and maximum reimbursements. The software is custom designed and developed with the help of skilled software developers and expert coding and billing specialists. The software is developed in compliance with industry standards and practices and can easily integrate with EHR (Electronic Health Records).

The easy access to technology allows small medical practices to design a custom billing and coding software according to their needs and requirements. The software is scalable and allows remote access which means a coder can work without physically going to medical practice. The cloud-based software solution provides robust security and data encryption that prevent any leak or misuse of clinical data.