As a practice manager, you are responsible for making sure that everything in your medical office runs smoothly, and that includes getting paid. The only way to do this is for you to have at least a basic understanding of how medical coding works, why payers hold it in such importance, and why it’s so tightly tied to your revenue.

Without a general knowledge of medical coding and billing, your practice is most likely leaving a significant amount of money on the table uncollected, you’re at a higher risk for payer audits, and are experiencing a high than average volume of claim denials.

In fact, incorrect medical coding errors caused more than $1.5 billion in recouped revenue from practices last year — and that’s just from Medicare. So, if you want to prevent coding errors up front, your best bet is for you, and everyone else involved in the revenue cycle at your practice — from the nurse to the front desk — to gain a basic knowledge of how medical coding works. But first, it’s important to understand WHY coding is important.

What and Why of Coding

Every claim you submit to an insurer — whether it’s Medicare, Medicaid, workers’ compensation, TRICARE, or a private payer — is paid based on which codes you submit on your claims. It’s not enough to send insurers a description of what your provider did, and in most cases, insurance reviewers don’t want to read your entire medical charts.

That’s actually why the coding system was developed: To allow insurers a way they could quickly and easily review what your practice performed, and why you did it. There are typically two types of codes that are submitted:

1. Procedure Codes: For every service your practice provides to its patients, you’ll report an outpatient procedure code (typically a CPT code). CPT codes are usually five-digits and describe to payers WHAT was done. It’s up to your practice to choose the most accurate code based on what services are provided, which isn’t always easy. There are more than 10,000 codes to choose from. To choose the right CPT code, you must be able to review your provider’s documentation, understand exactly what they did, and translate it into the closest procedure code.
2. Diagnosis Codes: Each procedure code you submit must be accompanied by the correct diagnosis code. This tells the payer WHY the patient received the service you’re billing. Diagnoses are submitted on your claim with ICD-10-CM codes, which describe everything from a cough to an injury sustained as a passenger on a bicycle. You’ll have more than 68,000 codes to choose from when selecting a diagnosis, so it can be time-consuming to find the right one, but it’s also essential.

Leaving your coding processes blindly in the hands of one or two people can be a questionable choice. Even the best coder makes mistakes – which means lost money for your practice.  So, if no one in your practice is periodically reviewing the codes being submitted, your reimbursement could take a significant hit and you wouldn’t even know it.

If payers don’t receive both an accurate procedure code and diagnosis code, your entire claim will not be paid. Insurers want to see both the “what” and the “why,” to tell the story of what occurred. This is how the money your practice brings in is tied to medical coding. And, if your medical coding is inaccurate, your practice can be at risk of fraud allegations, penalties, and fines.

Incorrect Coding Equals Trouble

There is no way to stop every single mistake during the coding process. Even the most skilled coders and billers can’t boast a 100% accuracy rate. But unlike a typo or a missed fax, a coding mistake can result in much more serious outcomes (i.e., lost revenue, recoupments, loss of medical license, fraud allegations, and even jail time).

Most payers have claim reviewers who are just waiting for you to make a mistake. This is true for government run insurance and commercial payers alike. These organizations use complex computer algorithms to monitor your claims. They look for anomalies and outlier trends to single out practices that are most likely submitting incorrect claims for reimbursement.

A great way to reduce this risk is for your entire revenue cycle team to better understand how medical coding works.

Get Your Whole Team on Board

Whichever way you look at it, the coding process is complicated. You and the rest of your team (other than your coders) certainly don’t have the time to really learn how to code – you have your own jobs to do. However, adding a basic grasp of how coding works to your skills toolbelt can pay off – big time. Consider these frontline tactics to help boost your team’s coding IQ and reap the benefits.

1. Get Your Front Desk Team Involved: The information your receptionist gathers from patients can significantly impact the coding process – both positively and negatively. From accurately capturing patient insurance information to correctly entering a patient’s medical history from their intake documents, your front desk team plays a big part in the codes that are chosen, and whether your claims are paid.
2. Providers Play a Big Role too: Even if your coding/billing team members do everything right, payers can still ask for proof of why you submitted specific codes. Typically, this proof is pulled from provider documentation. This is why the accuracy and detail documented by your providers is so important. If not, your claim will either be denied right away, or you’ll be asked to pay back money the insurance company believes they paid in error.
3. Billers Rely on Accurate Codes. When your billing staff members submit claims to payers, they expect to turn in accurately coded claims. If your claims aren’t coded correctly, your clearinghouse or payer could kick a claim back to your billing team, and they’ll have to fix it and reprocess it, leading to wasted time and slow reimbursement.
4. The Practice Manager Is Working the A/R: Practice managers rely on timely accounts receivables (A/R) processes to keep pay rolling into your practice. If you don’t have the right coding processes in place, you’ll be facing slower payments, which could throw off your entire revenue cycle.

The medical codes and the regulations that guide your reimbursement can change at any time, and your team has to stay on top of these changes, or it could mean lost revenue and a pile of claim denials. It’s not your staff’s fault if they don’t realize how flexible coding professionals need to be, but once they find out about the frequent changes, they may be more apt to pay closer attention to the coding processes, so they don’t fall behind.

It may seem obvious to you, but not everyone realizes the importance of keeping medical claims flowing through the system smoothly. Without income to function, your practice would have to close its doors. Reminding your team that coding is tied to revenue can help reinforce the importance of getting to know the basics of medical coding for everyone in the office.

There’s much more to know about why a basic understanding of medical coding can help your practice optimize reimbursement. To get more details about why coding is essential for every practice manager, check out our July 12 online training session, Coding for Practice Managers: What You Really Need to Know. You’ll learn why a basic understanding of medical coding can help you boost pay, reduce denials, and improve compliance!

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