What Is Medical Coding & Billing?

By Jason Chavis

  • Overview

    What Is Medical Coding & Billing?
    Medical coding and billing uses a basic form of language derived from codes that illustrate the procedures and services performed by medical professionals and insurance companies. The language used for medical coding and billing is specifically designed to allow hospitals, patients and insurance companies to understand what diagnostic and procedural activities have taken place.
  • Function

    The American Medical Association uses the medical coding and billing system, called the Healthcare Common Procedure Coding System, in all facets of the medical industry, from surgical and diagnostic services to insurance providers. It was designed to communicate information in a uniform fashion at all levels of care and processing. Doctors, coders, insurers and patients all use and are issued the same terminology on paperwork.
  • Considerations

    Medical coding and billing techniques are reviewed and renewed by the Current Procedural Terminology (CPT) Editorial Panel. Operating under the control of the American Medical Association, the panel adjusts their coding and billing procedures or the language that is used. The CPT Editorial Panel sets up advisory groups to gather information regarding the efficiency of the procedures and determines what changes may be necessary. Nurses and coding administrators must stay privy to the changes from this panel in order to continue the effective use of medical coding and billing procedures.
  • Features

    There are three levels to the Healthcare Common Procedure Coding System that determine how medical coding and billing occurs. Level 1 deals with the encoding that is completed by nurses, administrators and insurance companies. The other two levels deal with performance management and emerging technologies. These coding techniques use specific words and abbreviations on paperwork and computer-based files to illustrate what services and procedures were completed by doctors and nurses. This allows medical personnel and insurance companies to understand what has been done and how to bill.
  • History

    The Healthcare Common Procedure Coding System was established in 1978 to provide a standardized language for medical coding and billing. It was first adopted by the Medicare and Medicaid programs to better process claims in a consistent and orderly way. The rest of the healthcare industry did not adopt the system until 1996 and the Health Insurance Portability and Accountability Act was passed.
  • Effects

    Many critics of the healthcare industry complain that the medical coding and billing procedures in place are inefficient and increase the administrative costs of running a hospital and insurance company. They point out that, although the coding and billing language has streamlined paperwork, the volume of coding nurses and administrative teams that have been added to the industry have brought additional costs to the patient. Critics feel that the medical coding and billing system could be adjusted to offset these costs. Many government agencies believe that computerization of medical records is the first step in this process.
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