INTRODUCTION TO MEDICAL CODING AND BILLING

Medical coding and billing are of utmost importance in today's healthcare system. They are critical in
facilitating the payment process between patients and insurance companies, making it easier for doctors
and other healthcare professionals to conduct transactions.

Doctors and insurance companies can better comprehend the patient's condition through coding, a
systematic method of categorizing and classifying a patient's illnesses and diseases. On the other hand,
billing involves requesting payment for the goods or services provided. To illustrate, when a patient
visits a doctor's office for a physical examination, the doctor evaluates various parameters such as
height, weight, and blood pressure.

Once the patient's well-being is confirmed, the doctor or their office creates a bill and sends it to the
patient via mail, asking for payment for the services rendered. Medical coding and billing are
inseparable healthcare system components in today's interconnected world. Both necessitate a
comprehensive understanding and practical implementation.

While billing may appear straightforward with explicit instructions, coding is more intricate. It
encompasses an extensive set of codes that are updated every year. The most widely used code sets in
medical coding include CPT, ICD, and HCPCS, which are employed to classify diseases and treatments.

With advancements in technology and medical procedures, new codes are continuously being
developed to classify emerging diseases and treatments. To fully comprehend the significance of coding,
it is essential to delve into its origins and trace its evolution over the years, leading to its pivotal role in
today's healthcare field.

(Bajowala et al., 2020)(Erickson et al.2020)(Esposito et al.2020) Overview of Medical Coding and Billing
Medical coding and billing processes are vast and multipart operations that help in the fiscal operations
of any healthcare provider. Medical coding is the process of documenting a patient's diagnosis,
procedures, and supplies used in treatment.

Medical coders will review the documentation located in the patient's medical record and determine the
diagnoses and procedures from it. Medical coding involves abstracting the information from
documentation, assigning the appropriate codes, and creating a claim to be paid by insurance carriers.
Medical billing is the process of submitting and following up on claims.

These claims are submitted to insurance companies to receive payment for the patient's treatment. In
some cases, government programs such as Medicare or Medicaid will pay on behalf of a qualified
patient. Both individual practitioners and facilities such as hospitals and clinics can utilize the software
for medical billing.

It is essential to have medical coding for insurance to conduct coverage and determine the necessity of a
medical procedure. The patient's coverage information is confirmed in the case of routine care services.
Precisely coded data allows the insurance company to claim the patient's medical needs for healthcare
services. With the availability of medical conditions and procedures, the insurance company can
communicate the policy coverage between the patient and the healthcare provider.

Medical billing simplifies the payment process and provides the objective of having complete payment
for medical services. Importance of Medical Coding and Billing Coding accuracy is the cornerstone of CPT
to ICD-9CM/ICD-10CM linking. Precise code linking provides meaningful data to track physician and
healthcare facility performance.

Pay-for-performance and other value-based purchasing initiatives depend on comparative data analysis.
Public health agencies and other organizations also use ICD and CPT-coded data to access the incidence
and prevalence of diseases and conditions. High-quality data coded to the highest level of specificity has
never been more essential to the success of a healthcare organization.

This is the reason why medical coding is the fastest-growing profession in healthcare. Given the scope
and importance of coded data, qualified coders are in demand. High-quality medical coding is an
investment in the future that will ensure healthcare data is effectively communicated to meet the needs
of all stakeholders.

Billers, clinical documentation improvement specialists, administrative staff, and healthcare

Accrediting bodies, government agencies, payers, and other organizations conduct data analysis to
determine national and local healthcare trends. Comparing coded data to national and regional
benchmarks is a way to determine if the healthcare facility is providing effective and efficient healthcare.
This data also includes information regarding quality of care, patient safety, and public health.

Role of Medical Coders and Billers Because medical coders and billers are not involved in direct patient
contact, their importance is often overlooked. In reality, they are integral to the medical field; they are
the ones who interpret the services provided by a physician and translate that into a billing claim.

The process begins with the medical coder, who examines the patient's medical record and assigns the
proper diagnosis and procedure codes. This is done using alphanumeric codes from a classification
system based on a patient's symptoms, diagnosis, and medical history.

The International Classification of Diseases (ICD) and the Current Procedural Terminology (CPT) are the
two central coding systems used. After codes are assigned, the medical coder will abstract the
information from the documentation, such as the physician's notes, laboratory results, and clinical
reports.

The coder must possess strong analytical skills to find the critical information within the documentation,
which will be used to support the diagnosis and procedure.Because coding often affects the
reimbursement a physician will receive, medical coders must stay informed about any updates or
changes to the coding system; they must frequently communicate with the physician to obtain any
missing or unclear information in the patient's record.

It is important to note that there are different types of medical coders, each requiring a different area of
specialized knowledge – this will be discussed in further detail in Chapter 3. If the coder has performed
their job correctly, the claim will be sent to a payer, a medical insurance company, or the patient. At this
point, the medical biller must follow up on the claim and ensure that the physician is reimbursed the
total amount.

This may involve appealing the claim if the initial submission was denied or resubmitting the claim with
additional information. Throughout this process, billers must stay in contact with the payer and persist
in receiving payment.

Fundamentals Of Medical Coding

The first part of this chapter delves into the details of medical coding, emphasizing the importance of
understanding medical terminology. The first step in the medical process is communication between the
patient and the provider. Understanding what the patient is trying to convey and adequately
documenting that in the patient's record is vital to accurate diagnosis coding and medical billing.

Coders must also be able to understand what a provider is documenting. This is especially difficult when
a physician has poor handwriting or uses an abbreviation that the coder is unfamiliar with. If a coder is
unsure about what a provider has documented, the coder must consult with the provider to clarify and
improve physician documentation. Medical terminology is not just memorizing a massive amount of
words.

It is learning to break down complex medical terms to determine their meaning. Most medical terms can
be broken up into three essential word elements—the root word is the foundation of the term and
provides the primary meaning. The prefix comes before the root word to give you more information
about the term, and the suffix comes after the root word to provide context.

By breaking down words into these elements, a coder can learn to understand the definition of a term
and more easily discern between similar terms. Understanding the definition of terms is invaluable
when selecting diagnosis codes, as one must code to the highest degree of accuracy. This is crucial in
preventing claim denials and ensuring that a patient's medical records are correctly coded.

The next step is understanding human anatomy. Like terminology, it is not just memorizing a massive
amount of information. It is about understanding the human body to better comprehend the diagnoses
and procedures being coded. A coder will find it very difficult to distinguish between similar diagnoses
without proper knowledge of anatomy and medical terminology. For this reason, some curriculum
considers anatomy a prerequisite to medical coding.
Medical Terminology Medical terms are based on word elements. Many word elements exist, including
root words, combining forms, suffixes, and prefixes. A root word provides the essential meaning of the
term. The root word of a term can be altered by adding a vowel, a vowel, and a consonant by adding a
second root element to make pronunciation more accessible or by combining the word with another
root.

A combining form is similar and provides the term's essential meaning. Suffixes and prefixes are word
elements added to a term and often indicate a procedure, a condition, or a disease. Understanding word
elements is essential because it can allow one to interpret many complex medical terms. By learning just
a few elements, one can often determine the meanings of many terms.

Medical terminology is a system of words used to describe specific medical aspects and diseases. This
course teaches all allied health professionals the language of medicine to carry out their work more
successfully, be it administrative, like billing and coding, or more hands-on, like nursing or therapy.
Understanding the language of medicine is no small task.

Healthcare professionals will encounter thousands of complicated and sometimes perplexing terms.
Imagine how difficult it would be to work with different diagnoses, such as cirrhosis, varicose veins, and
cerebrovascular accident if one had not previously learned the meanings of these terms. Anatomy and
Physiology Anatomy is the study of the structure of living things. It is a conscious direction of our
attention to the characteristics of living things.

Many things about us are taken for granted, and we rarely understand their workings. Anatomy gives us
this chance. Physiology is the complementary study of the functioning of living things. This sounds
simple, but it is perhaps the most valuable of the sciences. Understanding how healthy bodies function
directly affects how we should care for ourselves, and understanding how diseased bodies malfunction
gives us insight into preventing and treating disease.

Medical terminology describes the human body, its functioning, and its disease. An in-depth
understanding of medical terminology and a broad knowledge of anatomy and physiology is the hidden
foundation of the healthcare system and the key to proficient medical coding. It makes medical coding
possible, and it makes good coding attainable.

Without it, the codes are merely a pair of glasses with a fine sheen of Vaseline on the lens. Before we
start discussing coding diagnoses and procedures, understanding medical terminology and the basics of
human anatomy is vital. Medical coding transforms healthcare diagnoses, procedures, services, and
equipment into universal alphanumeric codes.

The diagnoses and procedure codes are taken from medical record documentation, such as transcription
of physician's notes, laboratory and radiologic results, etc. Now, let us consider the example of using a
GPS unit for a trip. If the data put into the GPS is wrong, the directions and the arrival at the destination
will also likely be incorrect.
Coding with a poor understanding of medical terminology and anatomy has the same result. ICD-10-CM
Coding Guidelines ICD-10-CM coders have specific guidelines they must follow. These guidelines are not
in the code book. They are posted on the CMS website as well as the CDC website. The guidelines are
updated throughout the year and take effect on October 1st of every year.

These guidelines are very general because each chapter in the ICD-10-CM has its own specific rules
regarding the codes. A joint effort between the healthcare provider and the coder is essential to achieve
complete and accurate documentation, code assignment, and reporting of diagnoses and procedures.

These guidelines have been approved by the four organizations that make up the Cooperating Parties
for the ICD-10-CM: the American Hospital Association (AHA), the American Health Information
Management Association (AHIMA), CMS, and NCHS. The diagnosis codes (Tabular List and Alphabetic
Index) have been adopted under HIPAA for all healthcare settings.

They cover simple diagnosis codes or record secondary diagnoses. These diagnosis codes also determine
the medical necessity for the procedure or service, CMS's Hierarchical Condition Category (HCC), and
AHRQ's Patient Safety Indicators. Using a diagnosis code to describe a patient's reason for a procedure
will drive up the reimbursement of claims.

It will also prove the medical necessity of the procedure. CPT Coding Principles The current procedural
terminology (CPT) code set lists descriptive terms and identifies codes for reporting medical services and
procedures. The purpose of CPT codes is to provide a uniform language that accurately describes
medical, surgical, and diagnostic services, thereby providing an effective means for reliable nationwide
communication among physicians, patients, and third parties.

CPT is divided into three categories. Category I is the largest and most widely used. It is comprised of
medical procedures and services. Category II is used for performance management and helps identify
how well a medical office is doing. These codes are optional and have five characters followed by the
letter F. They are also used to help track the patient's progress and help to keep patients motivated.

An example is code 1155F - "exercise-induced asthma documented." The patient must understand that
this qualification is a character of the patient. In the case of asthma, it could result in a higher premium
for life insurance or possibly not qualifying for it. There are no character limits on CPT categories III and
category II. They are the ideal situation compared to said situation, or they maintain the current state at
best.

This can make CPT tricky because one category I code may have several tiered treatment options and
various possible outcomes. Each character directly left of the semicolon signifies a placement in a semi-
subset of the code directly right of it. The semicolon may be interrupted by a letter specifying a
procedure variation without changing the code.

This can be technical or by the location of the procedure being done. Anything to the left of the
semicolon does not alter the coded title but identifies the specific character of the procedure. This
occurs in all categories, but in categories I and II, a variation in the procedure will result in a letter
directly to the right of the semicolon. The letter will begin with a new variation subset with the character
in Category I. This can get very specific and sometimes confusing when finding the correct code, so it is a
best practice to check if new codes are available.

MEDICAL CODING SYSTEMS

The ICD-10-CM coding system has yet to be implemented but is tentatively scheduled for a launch date.
The system has been delayed several times with various implementation dates, partly due to the
complicated nature of transitioning the currently used ICD-9-CM codes to the new, more specific ICD-10-
CM codes. For each ICD-9-CM code, a suggested ICD-10-CM crosswalk code is given as the
"approximation" of the ICD-9-CM code.

The conversion process will not be linear, as it is unlikely that there will be an exact translation for every
single code. There will probably be an increase in the number of diagnosis codes due to the greater
specificity of ICD-10-CM compared to ICD-9-CM. This improvement in coding detail will result in
improved data for many uses and more precise data analysis.

To properly code diagnoses and procedures, one must understand the three essential medical coding
systems used for this purpose. These systems are the International Classification of Diseases, 9th
Revision, Clinical Modification (ICD-9-CM), the Current Procedural Terminology (CPT), and the
Healthcare Common Procedure Coding System (HCPCS).

These systems serve as a universal language for accurate medical data reporting to ensure that
information is transmitted efficiently and effectively across the health spectrum. Due to the length of
the ICD-9-CM code set and the upcoming implementation of ICD-10-CM codes, this paper will focus on
ICD-10-CM codes and how to translate current ICD-9-CM coded data to ICD-10-CM.

The ICD-10-CM system is vastly different from ICD-9-CM. ICD-9-CM codes were primarily numeric and
didn't necessarily have any future direction. ICD-10-CM codes are seven characters long, specifically
alphanumeric, and include a coding structure that allows for expanding future diseases and conditions.

Due to the codes' length and specificity, there were over 68,000 codes when ICD-10-CM initially began.
However, at first glance, it may seem daunting. The coding structure of ICD-10-CM and the specificity of
the codes allow for a decrease in errors and illogical codes. ICD-10-CM codes are comprised of
categories and subcategories.

There are two categories:

The category is a three-character code, category title and includes all subcategories. Subcategories are
four to seven characters, code titles, and codes with no further subcategories. An example of a category
would be M25, and a subcategory would be M25.572. ICD-10-CM codes have three to seven characters.
The first character is always an alphabet.
Characters 2 and 3 are numeric, and characters 4-7 are alpha/numeric. The decimal place is located after
the third character. Subcategory characters are used after a decimal point, unlike in ICD-9-CM, which
was located after the third character. There are always codes to the highest specificity. If a patient has a
sprained ankle, we can specifically code which ankle and if it is the initial or subsequent encounter.

The ICD-10-CM coding system was adopted in the United States on October 1, 2015. ICD-10-CM is an
alphanumeric coding system used to describe diseases, conditions, and symptoms. It is the diagnosis
system used in inpatient and outpatient healthcare settings. ICD-10-CM documents the condition that
led the patient to seek treatment.

The format of the code is as follows:

CPT Coding System The CPT (Current Procedural Terminology) coding system lists terms and numbers.
These terms and numbers are used for procedures that different healthcare providers do. The purpose
of these codes is to provide a uniform language that describes these procedures to achieve effective
communication. Effective communication is critical to the success of any organization, and the medical
field is no exception.

CPT also provides a uniform language that accurately describes medical, surgical, and diagnostic
services. This benefits other physicians and healthcare professionals by helping them better understand
what was done for the patient and communicate with them and their payers. The organization
responsible for maintaining CPT is the American Medical Association (AMA).

The AMA was founded in 1847 and served to advance the art and science of medicine and improve
public health. The CPT Editorial Panel is made up of 17 physicians who represent various specialties. The
panel meets three times a year to discuss changes to the CPT codes and any discrepancies within the
codes. This panel is also responsible for adding new codes, deleting ones no longer in use, or revising
existing ones.

HCPCS Level II Coding System Hcpcs Level II codes are alphanumeric and primarily include non-physician
services such as ambulance transportation, durable medical equipment, and prosthetic devices. HIPAA
does not require the Level II code set, but it is used for codes on outpatient claims that are not found in
the CPT coding system.

Level II codes are organized in a manner that is similar to that of the CPT codes. The first character is
alphabetical (A), followed by four numeric digits. When a Level II code is used, it must be accompanied
by a CPT code because the medical procedure or service carried out always pertains to a CPT code.

For example, if a patient is scheduled to have an X-ray done on their body to search for foreign objects,
there is a specific CPT code for that service (76000); thus, the HCPCS code for the X-ray (CPT codes are
located in the HCPCS manual), would be linked to the specific CPT code.
The HCPCS coding system is fundamental to know when processing claims because there are codes that
cross from DME (durable medical equipment) and medical supplies to a medical procedure/service.
Knowing where to locate the code and where it is being used is imperative to obtain accurate
reimbursement for services rendered.

This is based on the link established by Medicare, where all diagnosis and treatment information is
reported by a patient/facility to substantiate the need and cost for items or services in a report called
CMS Form 1500. The HCPCS coding system will help medical coders link the procedures on the CMS
form to the correct format and location needed to fulfill Medicare reporting requirements.

Assigning diagnosis codes is translating written descriptions of diseases, illnesses, and injuries into codes
from a particular classification. Diagnoses are usually taken from a patient's chart in the doctor's office.
The diagnoses are taken from the discharge summary and medical notes in the hospital. For the best
level of coding, the diagnosis should be taken from the doctor's words.

An effective medical coder can discern which pieces of information in a medical record are essential and
which are not. This is a valuable skill for coding diagnoses, not all of which are listed in a patient's
record. Assigning procedure codes is similar to assigning diagnosis codes, though some key differences
exist.

Often, the procedures performed on a patient are not a doctor's final course of treatment but are
revisions of previous procedures. It can be challenging to discern whether the diagnosis code for a
medical problem also covers any procedures performed while treating it.

Failure to assign the correct diagnosis code could result in claims denial or payment for a less severe
diagnosis, so coders must be thorough and accurate with diagnosis coding. Assigning Procedure Codes
To categorize a patient encounter with a physician, the coder must review and analyze the medical
documentation to abstract the information about the services the physician provided.

This is accomplished by selecting the CPT code that most accurately represents the service rendered.
CPT codes have a format consisting of five digits and are divided into three categories. Category I codes
are the most numerous and describe procedures ranging from medical services to surgeries. Category II
codes are used to track performance measures.

The AMA uses them to track data for national quality assessment. The codes are optional, and
performance measures are generally derived from evidence-based medicine. The last group is Category
III codes, which are temporary codes that the AMA uses to track emerging technology, services, and
procedures.

This decision is a tough judgment call in medical coding since a wrong assumption can cause insurance
companies to deny payment. Another aspect of procedure coding is that it requires medical coders to
probe physicians' minds and decide if a particular procedure is the best treatment for a diagnosed
ailment. The answer to this question is often no, so assigning the procedure code will be unnecessary.
Assigning Diagnosis Codes The first step after a physician has finished examining a patient is for the
medical coder to determine a diagnosis. To do so, they will look to see the symptoms, problems,
complaints, or other reasons for the encounter. After selecting the diagnosis, they will locate that term
in the alphabetic index of their ICD-9-CM code book. They will then verify the code in the tabular list.

They must verify the code in the tabular list because the alphabetic index may have led them to an
invalid code for the condition. For prevalent diagnoses, a note may further define the diagnosis by the
following terms: due to, associated with, or in. There may also be other notes that highlight other
factors to consider when coding the diagnosis.

During the CPT editorial panel meetings, they are updated annually in January and July. CPT codes are
also organized into sections. The six sections are Evaluation and Management, Anesthesia, Surgery,
Radiology, Pathology, and Medicine. Ensure the appropriate section and subsection are chosen when
locating a CPT code. This will significantly reduce the number of codes to review before selecting the
correct one.

Modifiers and their Application Modifiers follow the main CPT or HCPCS code. They provide how the
reporting physician can indicate that a service or procedure has been performed and altered by some
specific circumstance but has not changed its definition or code. A modifier may add information to a
code, confirm that a procedure differs in some way from the usual, or add information vital to the claim
submission.

Modifiers may influence pre-authorization, bundling of a service, payment determination, or medical

Adding a modifier should never be done to bypass a carrier's system edits. An unlisted CPT or HCPCS
code shall not be reported when a specific code describes the procedure. The decision to use the
unlisted code must be based on the knowledge that no such specific code exists. The application of an
unlisted code will delay claim payment for further documentation review.

Written and telephone inquiries about whether one particular unlisted code exists will receive no
response. Payment for the unlisted code is contingent upon submitting the operative report or a
procedure description for review. Modifiers are two-digit codes that are often used to explain changes
in procedure.

For example, a situation where a surgeon must convert a laparoscopic procedure to an open procedure
can mean that certain complications are avoided. Still, the reimbursement level is higher for the open
procedure. Modifiers aid in explaining the validity of additional payment. Further use of Part B modifiers
is defined with additional specificity.

Evaluation and Management (E/M) Coding When selecting the correct E/M code, an E/M service score
sheet must be utilized. Many types of E/M service score sheets are available to guide code selection,
some developed by insurance companies and others by private organizations. The most common and
widely known guidelines for E/M code selection are the 1995 and 1997 CMS documentation guidelines.

These guidelines are designed to assist in determining the level of E/M service by focusing on the critical
components in the documentation of a patient's visit. Whether it is the history and physical, a hospital
progress report, procedure notes, or consult notes (inpatient or outpatient), the score is calculated from
the specifics of the visit.

To distinguish differences between code levels for E/M services, it is essential to recognize the
differences in the three key components. The definitions of these components are History—a
chronological description of the patient's illness from the time of onset to the present; Examination—
identifying the body of the patient's disease and injury through observation, palpation, auscultation, and
manipulation; and Medical Decision Making—the complexity of determining a diagnosis and selecting a
treatment intervention.

Evaluation and management (E/M) service codes were introduced in the late 1980s and early 1990s.
These codes were developed to report specific services within the physician's office and other
outpatient settings. These codes quickly became the most complex and confusing codes in the CPT
manual. E/M codes are categorized by the type of history taken, the examination performed, and the
complexity of medical decision-making. Then, a code is selected from one of the three key components
(history, examination, medical decision-making) based on the service level provided.

Medical Process

The payment posting and reconciliation process occurs after the medical office receives the Explanation
of Benefits (EOB). An Explanation of Benefits is the insurance company's statement regarding what they
paid and what, if anything, is the patient's responsibility. EOBs are matched with the patient's account,
and the amount paid is posted to the account.

If the EOB shows the patient owes a deductible, co-insurance, or non-covered service, the patient is sent
a statement. The billing specialist ensures that all payments and adjustments for a patient's account are
accurate and up-to-date. Medical billing programs can be used to check for errors and produce revenue
reports. Any discrepancies in the EOB must be resolved promptly to ensure proper reimbursement and
run a successful accounts receivable program.

Finally, the accounts receivable and payment posting information can be reconciled with the reports
generated from the medical billing program and adjusted to create accurate revenue and accounts
receivable records. This process is lengthy and must be done carefully to avoid mistakes. Each step is
critical for a physician to be reimbursed for services provided.
Experienced medical billing specialists and well-designed medical billing programs are essential in
managing and carrying out these steps. With changes and updates to health care plans and the rise in
patient responsibility for payment of services, it will remain an ongoing challenge for physicians to
maximize revenue from their services.

Overview of Medical Billing The days of the standard 80/20 indemnity insurance plan are gone and have
been replaced by managed care plans such as HMOs and PPOs. In addition to group and individual
insurance plans, we must not forget the vast number of patients who are Medicare and Medicaid
recipients. Today's medical practices will see various insurance plans, each with a unique coverage and
payment structure.

Therefore, patient registration and insurance verification may be the most critical aspect of the entire
medical billing process. When a patient is appropriately registered and insurance information is
accurately verified, there is a greater chance that a biller will submit a clean claim and receive payment.

The failure to register a patient and verify insurance information will often result in the provider
performing services without payment. This is because the service was performed, the patient was not
eligible for the given insurance coverage, or the coverage had lapsed. To understand the medical billing
process, one must have a working knowledge of the administrative flow and overall structure of the
procedure.

Once an appointment is scheduled, whether the first visit or a follow-up, the patient will report to the
registration desk and present their insurance information. During the patient registration portion of the
visit, the registration staff will need to collect accurate demographic information and obtain a copy of
the patient's insurance card.

This information will include the patient's full name, DOB, sex, mailing address, phone number, social
security number, and place of employment. The demographic information will be used to determine the
correct insurance eligibility for the patient and aid in the insurance verification process. The medical
billing process can be regarded as the end of the entire clinical encounter between a patient and a
physician.

This process starts contingent upon the patient's check-in and finishes when the provider receives a
payment in full. As payer requirements to process a claim require medical billing personnel to have a
firm understanding of coding, medical billers must have a strong knowledge of the claim process and a
good understanding of various insurance plans and local medical coverage decisions.

Patient Registration and Insurance Verification Financially responsible parties must be identified with
specific requirements for insurance verification outlined by Medicare and Medicaid, in addition to
specific managed care organizations. The patient's financial file should contain a copy of the patient's
insurance card and a signed statement to release information.

As insurance information needs to be confirmed, it is typical for the front desk to copy the insurance
card. Particular attention should be paid to patients covered by workers' compensation, no-fault, and
personal injury protection. In these cases, the billing staff must know early in the treatment process if a
liability insurer will cover such patients' medical expenses to expedite claims processing and payment.

This is unique to the cases above, as all other traditional and non-traditional assignments of benefits
necessitate proper completion of the CMS-1500. In health maintenance organizations, patients may be
required to have procedures pre-authorized, and a copy of the authorization needs to be filed with the
medical record and claims information.

Any insurance changes should be reported to the billing office immediately to maintain proper billing
and claims filing. This step in the billing process serves as a preventative measure against claims
rejection and denial for lack of insurance pre-authorization or specific procedural requirements.

Though pre-authorization and the move to electronic transmission have heightened the need for
detailed tracking of claims submissions and rejections, insurance verification will be the first step in
ensuring payment for services rendered. Claims Submission and Processing Claim submission and
processing are the backbone of the medical billing process.

Once the patient has been seen and the procedures have been coded, the medical biller will transmit
the claim to the insurance company. Claims can be transmitted in several ways, according to the facility
the biller works for. Most claims are transmitted electronically using a computer, modem, and software
from the practitioner's office to a clearinghouse and then to the insurance company.

Some claims are transmitted using specific billing software that is networked with the insurance
company, or, in some cases, the biller must fill out a paper form called an HCFA 1500 and mail it to the
insurance company. Medicare claims must be transmitted electronically. No matter which way the claim
is sent, the biller should have a tracking system to ensure that all claims are accounted for.

It is essential that the biller knows the clearinghouse or insurance company's specific requirements and
follows their guidelines to avoid delays in the claim processing. Claims that do not follow these
guidelines will be rejected, and the biller will have to resubmit the claim, which results in more
processing time. If the claim does not get to the insurance company or is lost or damaged, it is
considered a failure to transmit it.

Reasons for failures to transmit can include technology errors such as a power outage, system failure, or
a computer virus. The biller should have a contingency plan for claim retrieval and resubmission if such
mistakes occur. All these processes mentioned here are done by medical coding professionals who carry
out administrative tasks, coding, and billing; medical coding and billing training provides them with the
necessary knowledge to carry out these functions without errors.

Payment Posting and Reconciliation When the term payment posting related to billing is searched in
Google, you will find the search results relevant to account receivables, how to post patient payments,
etc. However, in actual medical billing, payment posting is a process of applying payments and
adjustments to an account and reconciling them to the total amount due from the payer or patient.
Payments from an insurance company or the patient are posted to the patient's account. A payment can
be a complete or partial payment of a specific charge or a payment on the total account. Payment
notifications are in the form of an Explanation of Benefits (EOB) remittance advice from insurers or a
check and an accompanying Explanation of Benefits (EOB) from the patient.

EOBs explain how the payer determined the amount paid, what charges were disallowed, the patient's
financial responsibility, etc. Posting payments is the application of the EOB and the payment to the
corresponding patient and charge.

Adjustment: When the payers do not pay the full charge amount, the payer and the patient's
responsibility are reduced by this difference. In software applications of the EOB/managing patient
payments, they will vary, but the payment is generally required to be applied to a specific charge. This
will show the charge as being paid and transfer the responsibility from the patient to the payer if it is
covered.

Payers will frequently disallow some charges with a given explanation. To reconcile the payment and
ensure the payer has paid correctly, the biller must compare the payment and allowed charges on the
EOB with the amount posted and the total allowed charges. This assures that the payment is accurate
and identifies any underpayment by the payer. If a payment is partial, it will be paid across multiple
charges.

Simulation for a course of this kind is complex and can be done in a web-based format; the most
effective way to understand payment posting is through the application using actual EOBs and payment
checks. In a group setting, an instructor can provide the EOBs and checks and create various scenarios,
allowing students to determine how to post the payment and what adjustments should be made to
accurately reflect the payment and the change in patient/payer responsibility. The group can then
compare their results and identify discrepancies in posted payments from the same EOB, thus
highlighting any misunderstandings of the payment and adjustment process.