What Is Medical Coding and Billing? How does it Streamline a Hospital’s Financial Performance?

What Is Medical Coding and Billing? How does it Streamline a Hospital’s Financial Performance?


At first glance, physicians and nurses would seem to be the ones running the show at medical facilities nationwide. That is a reasonable observation, as they are the people who treat patients. However, there are numerous other individuals working at hospitals, medical facilities and other healthcare settings doing work that makes visits with doctors possible. Two such examples of this work are the processes of medical coding and billing.

What is Medical Billing?

medical coding and billingA vital process in the uninterrupted functioning of any hospital or medical facility is medical billing. Medical billing encompasses preparing billing claims and submitting them to insurance providers. This safeguards that the medical office or hospital receives the correct amount for the services that they deliver to patients.

Medical offices receive funding from private insurance providers and various healthcare programs, which the government offers. Receiving proper funds enables the medical office to stay in business. With suboptimal reimbursement, it is problematic for these facilities to deliver stellar healthcare to patients.

The need for keeping everything in a short and systematic way has birthed the concept of medical coding services. This process refers to changing-over the healthcare diagnosis, medical services and equipment into a combination of alphanumeric medical codes. This conversion guarantees uniform documentation and helps administrations identify the effectiveness and prevalence of the treatment.

What is Medical Coding?

While it also pertains to the all-imperative aspect of insurance reimbursement, medical coding varies in that it involves an exclusive code for each diagnosis, procedure, and prescription. The translation of diagnoses, prescription, and procedures into these universal codes enables the health care provider to process the bill accurately.

ICD-10, The International Classification of Disease, is the existing book of codes reinforced across the vast world of healthcare. Produced by the World Health Organization (WHO), the ICD-10 and its components are important not only for maintaining billing and records, but also for enabling data on diseases to be kept both nationally and worldwide.

Why Should We Code?

Let’s begin with a simple question about medical coding: Why should we code medical reports? Wouldn’t it be adequate to list the symptoms, diagnoses, and procedures, send them to an insurance company, and wait to hear which services qualify for reimbursement?

According to the Centers for Disease Control (CDC), there were approximately 1.4 billion patient visits in 2018. That’s a stat that comprises visits to hospital outpatient facilities, physician offices, and emergency departments. If we estimate only five pieces of coded information per visit, which is an exceptionally low estimate, that’d be 6 billion discrete pieces of information that are supposed to be transferred every year. In a system flooded with data, medical coding enables for the efficient transfer of huge silos of information.

Coding also enables for uniform documentation between medical facilities. The code for streptococcal sore throat is identical in Hawaii as it is in Arkansas. Having uniform data enables efficient analysis and research, which government and health agencies use to track health trends much more competently. If the CDC, for instance, wants to analyze the prevalence of viral pneumonia, they can search for the number of recent pneumonia diagnoses by searching for the ICD-10-CM code.

In conclusion, medical coding companies enable administrations to look at the incidence and effectiveness of treatment in their facility. This is particularly important to large medical facilities like tertiary-care hospitals. Like government agencies tracking, for instance, the incidence of a certain disease, medical facilities can track the efficiency of their practice by analyzing

Now that we’ve covered the importance of medical coding services companies, let’s take a look at the three types of code

A Brief Account of 3 Types of Coding:


“ICD-10” stands for International Classification of Diseases, Tenth Edition. The World Health Organization creates ICD-10 codes, and governments all over the world accept them.


Stands for “Current Procedural Terminology,” codes update yearly and split into three categories:

  • Category 1: Five-digit codes with descriptions that correspond to a procedure or service.
  • Category 2: Alphanumeric tracking codes employed for execution measurement.
  • Category 3: Provisional codes for new and emerging procedures, technology, as well as services.


HCPCS stands for “Healthcare Common Procedural Coding System” and is based on CPT. HCPCS Level II codes are typically used for products and supplies that are not directly related to a physician, for instance, drugs, ambulance services, etc.

How Medical Coding and Billing Streamlines Hospital’s Finances

medical coding and billingTo this point, it is precisely clear that medical coding and billing are imperative processes to the upkeep of hospitals and medical facilities. Medical offices rely heavily on insurance providers and other healthcare initiatives for funding.

Insurance businesses make their profit by charging those who bear policies monthly fees, or premiums. The buy-ins from the people in the pool allow the insurance providers to cover the bulk of medical costs of policyholders, based on the policy. Bearing that in mind, that is a lot of money coming in from reimbursements. And not out of the clients’ pockets.

That is why it is extremely important for medical billing and coding to be completed (and completed accurately). For every patient visiting a hospital, immediate care center or other medical facility has information that needs to be documented.

Not only that, but accurate medical billing and coding are important in making sure that patients aren’t left paying more for a procedure than they should, and that they and their insurance are charged for the correct services.

Does your organization have a seemingly insurmountable backlog? Do you have constant denials, and a lack of standardization in your day-to-day coding operations? YES Coding Support teams provide fast, reliable, and scalable solutions to your organization with over 20 years of experience in Inpatient, Outpatient, and ProFee coding. Contact YES today.

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What is Medical Coding and Billing

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