What is Medical Coding? The Ultimate Guide

What is Medical Coding? The Ultimate Guide

Medical coding is a critical function of your practice. Coding in healthcare involves translating the services and procedures you provide into standardized codes to improve patient care and ensure prompt payment. Here is your ultimate guide to medical coding. 

What Is Medical Coding?

Medical coding translates clinical diagnoses, services provided, equipment, and procedures into standardized alphanumeric codes. These codes serve as a shorthand summary of an office visit or procedure that can be transmitted electronically.  

Coding in healthcare makes it easier to share clinical data and get paid for your services. All payers require you to submit diagnosis and procedure codes to receive payment. In addition, coding can help your practice coordinate care. Written notes can be confusing and complex to transfer between primary care providers, specialists, and hospitals. The standardized alphanumeric codes for diagnoses and procedures are less subject to interpretation and, thus, less subject to error. Medical codes are also easier for software to read, reducing data entry needs.   

What Are the Three Main Types of Medical Coding? 

There are three main types of medical coding in healthcare. Each serves a specific purpose, and practices must be prepared to use all three:

  • International Classification of Diseases (ICD) codes: This suite of alphanumeric codes focuses on diagnoses. ICD codes are developed by the World Health Organization and are used internationally to describe diseases, conditions, injuries, and symptoms. ICD codes can be highly detailed, including each diagnosis’s specific causes, stages, or complications. While the 11th revision of the ICD coding system is available (ICD-11), many organizations in the U.S. still use ICD-10. 
  • Current Procedural Terminology (CPT) codes: CPT codes focus on clinical services and procedures. The American Medical Association develops and maintains CPT codes for use in charting, data sharing, and payment. CPT codes translate the services a patient receives into a five-digit numeric code. Optional modifiers and additional codesets can be used for performance measurement, new technologies, and proprietary clinical laboratory assessments.  
  • Healthcare Common Procedure Coding System (HCPCS) Level II: HCPCS Level II codes focus on durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). HCPCS Level II is developed and maintained by the Centers for Medicare and Medicaid Services (CMS). This coding system is designed to supplement CPT codes, which do not include medical products and supplies used outside of a physician’s office. HCPCS codes translate DMEPOS and certain other services like ambulance rides into five-digit alphanumeric codes.

Why Is Coding in Healthcare Important? 

Medical coding standardizes patient chart information into a common language. This ensures that payers, providers, practices, and hospitals can share patient data efficiently. ICD-10, CPT, and HCPCS codes are all highly detailed to minimize the loss of information when translating chart notes into codes.   

Medical coding is the cornerstone of healthcare payment. Your practice must submit diagnosis and procedure codes to receive payment for the services you provide to patients. Medicare, Medicaid, and private insurance companies all use ICD, CPT, and HCPCS codes to pay providers and practices.   

But medical coding is also essential for providing high-quality care. Incomplete patient histories and unreadable chart notes can cause significant delays in care and lead to missed diagnoses. A standardized coding language for diagnoses and procedures eliminates confusion among providers and across visits. Coding also helps prevent medical errors by reducing the potential for misinterpretation. And a well-coded chart can easily be shared with specialists, hospitals, and other providers, reducing duplicative testing and helping patients maintain a complete health history.   

Medical coding also helps your practice track physician performance. CPT codes, in particular, can be used to measure physician productivity. For example, more efficient providers likely bill more, or more complex, CPT codes over a given period than their less efficient counterparts. The CPT codes also tie to RVU amounts to determine physician productivity.

How Your EHR Helps with Medical Coding

In the past, paper charts and hand-written notes made medical coding time-consuming. The widespread adoption of EHRs has made medical coding much more straightforward. With an EHR system, physicians and other providers can translate diagnoses and procedures into codes during an office visit. For example, if a provider adds “hypertension” to a patient chart, the EHR system can automatically suggest appropriate ICD-10 codes. Similarly, EHR systems can suggest CPT codes for the services and procedures a provider documents during an office visit.   

By prompting physicians to code office visits, your EHR system makes medical billing easier. Medical billing specialists can start from the list of codes selected by a physician and further refine them according to each payer’s billing rules. With an EHR and EPM system like NextGen, data from patient charts flow directly into billing, reducing data entry errors and saving your practice time and money.   

How To Build a Strong Medical Coding Team

Many practices have dedicated medical billing specialists on staff. These professionals review, revise, and submit medical coding to ensure prompt payment. Having the right medical coding team in place can help your practice reduce claims denials, increase revenue, and reduce physician burnout.   

Building a strong medical coding team starts with hiring. Your search should focus on medical billing specialists who are detail-oriented and comfortable with technology. In most practices, all coding and billing flow through an integrated EHR system. Medical billing specialists must be able to navigate your system, identify coding errors, and submit clear or corrected claims promptly.   

Once you have a solid medical coding team in place, you need to build communication channels. Because medical billing specialists review coding to submit claims, they have a uniquely comprehensive view of your staff’s coding practices. Your medical coding team should have the skill and opportunity to communicate directly with providers about proper coding. Your medical billing specialists can serve as internal experts to help develop coding workflows, identify areas for improvement, and train providers to find and enter codes in your EHR system.   

Finally, you can improve efficiency and retention by fostering problem-solving and independence. Your EHR can automate many repetitive billing tasks, freeing your medical billing specialists to focus on complex patient visits. By letting your medical coding team focus on difficult claims, you can reduce your denial rate. Resolving complicated claims often requires calls to patients and payers and collaboration with providers. Empowering your medical coding team to solve problems can foster stronger connections between staff and increase job satisfaction.

Four Medical Coding Best Practices

Strong medical coding practices help you keep patient charts up-to-date and get paid faster. Here are four best practices for medical coding. 

1. Build Medical Coding into Your Workflows

Medical coding should be a standard procedure for patient complex office visits. Your EHR allows physicians and other providers to code diagnoses, services, and procedures during appointments. Therefore your medical coding team should focus on high-dollar and complex visits rather than E&M visits. Real-time coding improves accuracy, reduces after-hours work, and can help prevent physician burnout. It also ensures that patients can get prescriptions and referrals quickly and that your practice can submit clean claims.  

2. Customize Your EHR

EHR systems like NextGen offer many customization options to fit your practice and your workflows. For example, you can customize NextGen EHR clinical templates with coding rules for your common payers so the right data is collected during office visits. Your practice can also build a claims library in your EHR to help scrub claims before they are submitted to your clearinghouse. 

3. Automate Billing Processes Where Possible

Your NextGen EHR and EPM can automate many simple billing tasks to save you time and money. The NextGen Background Business Processor lets you submit batch claims overnight to reduce strain on your system. You can also automatically run claims against your claims edit library to flag potential errors for further investigation. By automating simple billing processes, you can free your medical coding staff to focus on complex cases and process improvements. 

4. Track Your Progress and Create Feedback Loops

Coding is a critical component of your revenue cycle. Your practice should track claims denial rates, claims processing times, and provider coding practices to improve your finances. Tools like TempDev’s Revenue Cycle Dashboard NextGen EPM Report let you see all of your key revenue cycle metrics in one place, including reasons for denied claims. TempDev has also created a Provider Revenue Executive Summary NextGen EPM Report to help your practice track providers’ medical coding habits.  

How TempDev Can Help with Coding in Healthcare

TempDev’s NextGen developers, consultants, and trainers are medical coding experts. If your practice needs help with coding and billing, TempDev has a wide range of solutions. From fully outsourcing your billing processes to coding training for providers, you can count on TempDev to provide the level of support you need.   

Call us at 888.TEMP.DEV or contact us here for help with medical coding.