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Updated Nov 08, 2023

What Is Medical Billing and Coding?

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Max Freedman, Business Operations Insider and Senior Analyst

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The United States Bureau of Labor Statistics predicts medical billing and coding employment will grow 8 percent through 2032 — a higher-than-average figure across industries. This fact alone makes investing in a more robust medical billing and coding setup a smart plan. It also suggests there’s never been a better time for you to enter the field. Keep reading to find out how medical billing and coding works, the credentials you may need and how medical billing software can streamline the billing and coding process.

Editor’s note: Looking for the right medical billing service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

What is medical billing and coding?

Medical billing and coding involves converting patients’ encounters with healthcare professionals into numbers and formats that payers, including insurance companies and government agencies, can use to reimburse providers. It requires the transcription of the diagnoses, exams, procedures and treatments in patients’ charts into two types of codes. The first code is the International Classification of Diseases, 11th Revision (ICD-11), which describes diagnoses. The second is Current Procedural Terminology (CPT), which depicts services.

What do medical billers and coders do?

Medical billers and coders oversee the process of converting clinical data from patients’ charts into standardized codes that government and private payers can differentiate. Medical billers and coders also record a patient’s insurance information alongside codes for proper claim filing and reimbursement.

After creating and filing accurate claims, medical billers and coders work with payers to ensure their practice receives timely and full reimbursement. Billers and coders also oversee the resubmission process if claims are rejected and the appeals process if claims are denied. However, it’s becoming less common for medical billers and coders to manually check errors for claims as automated claim scrubbers complete this task faster.

FYIDid you know
Automated claim scrubbers, typically built into modern-day medical billing software, now handle most medical biller and coder accuracy-checking work.

Depending on the practice, a medical biller or coder may be more familiar with either the UB-04 or HCFA-1500 billing forms. Read the Business News Daily guide to Health Care Financing Administration (HCFA) forms to learn the difference between these forms and what information most claims include.

Medical billing and coding training and skill requirements

Medical billers and coders must have a relevant degree or certification to work with healthcare information systems. Other credentials are highly recommended. Additionally, there are several skill sets that predispose a person to being a sufficient medical biller and coder. These three considerations are outlined below.

1. Medical billing and coding educational requirements

To work in medical billing or coding, you need one of the following degrees or certifications. A trustworthy program in any of these areas will boast an American Health Information Management Association (AHIMA), Commission on Accreditation for Health Informatics and Information Management Education (CAHIIM) or AAPC accreditation.

  • Medical billing and coding certificate: If you’re aiming to enter the medical billing and coding field quickly, certificate programs are ideal. Many programs take less than a year and cover medical terminology, treatments, procedures, biological systems and the basics of ICD-10 codes. Most certification programs provide hands-on training with the best medical (electronic medical record/electronic health record) software and teach billing and compliance basics.
  • Associate degree: Over the course of two years, associate degree programs in health information management will teach you the same curriculum as a certification program. However, practices and medical billing companies may be more inclined to hire you if you’ve earned a degree instead of a certificate. Additionally, associate degrees can count as the completion of several undergraduate credits.
  • Undergraduate degree: Some universities offer traditional four-year bachelor’s degree programs in medical billing and coding, healthcare administration and health information management. These longer, more in-depth programs teach you about data analysis, health policy, project management, human resources and compliance.
Key TakeawayKey takeaway
To work in medical billing and coding, you need a certification, associate degree or bachelor’s degree.

2. Medical billing and coding credentials

Upon graduating from any of the above programs, you can — and should — take one of the following AHIMA credentialing exams.

  • Certified Coding Associate (CCA): This certification indicates you are capable of tactfully and diligently managing healthcare information. If you graduate from an AHIMA-accredited program, you can take this certification exam immediately upon graduation. Otherwise, six months of work experience is highly recommended as a replacement to qualify for the exam.
  • Registered Health Information Technician (RHIT): To qualify for this exam, you must graduate from a CAHIIM-accredited health information management associate program. However, you do not need prior work experience to take the RHIT exam.

After you work as a medical biller or coder for two years (or one year if you hold the CCA credential), these two AHIMA credentials become more accessible.

  • Certified Coding Specialist (CCS): This credential is highly recommended if you’re seeking to work as a medical biller and coder in a hospital setting. A CCS credential indicates proficiency in medical terminology, pharmacology, disease processes and ICD-11 and CPT coding.
  • Certified Coding Specialist – Physician-Based (CCS-P): The CCS-P signifies you are proficient in physician-level billing. It covers all the same areas as a CCS credential, plus HCPCS Level II coding. It is considered the highest possible indicator of medical billing and coding excellence.

In all the above cases, you must recertify every other year to continue as a credentialed medical biller and coder. To recertify, you need to take 20 Continuing Education Units (CEUs). AHIMA explains additional recertification criteria and CEU options in its recertification guide.

3. Medical billing and coding skills

Although medical billing and coding courses are theoretically open to anyone, you may be more likely than others to succeed in this field if you’ve acquired these skill sets:

  • Attention to detail: Since medical coding systems comprise seemingly infinite strings of five- and six-digit numbers, you will need a keen eye to spot numerical errors. Without adequate attention to detail, you are more likely to encounter claim rejections.
  • Computer proficiency: Most of the medical billing process now takes place digitally instead of in paper form. If you are computer-savvy, you may have a natural tendency to complete medical billing and coding tasks efficiently online.
  • Organizational skills: Medical billing and coding require you to complete many forms for a number of patients. Failing to properly organize these forms can lead to operational hiccups that make the billing process painful for both the patients and the practice.
  • Ability to maintain data privacy: Under Health Insurance Portability and Accountability Act (HIPAA) laws, you are required to keep healthcare information confidential at all times — except to obtain payer reimbursement. As a medical biller or coder, you will need to respect others’ privacy. Consequently, you will not be able to discuss details of a patient’s information with team members who aren’t working on their case. [Related article: Medical Records Retention and HIPAA]
  • Data analysis: You should be able to look at groups of codes and assess quickly whether they make sense based on the patient’s charts. You should also know how to rectify errors you spot during data analysis.
  • Anatomy and physiology: To know whether groups of codes make sense together, you should be aware of anatomy and physiology basics. No biller or coder is quite an expert in any scientific field, but you should be capable of understanding bodily systems, medical processes and their interactions.
If you're opening a medical practice and want to hire a medical biller or coder, consider candidates who possess the above skills and the right credentials.

How medical billing software helps medical billers and coders

Medical billing software makes a huge difference in the day-to-day work life of medical billers and coders. Even though the certification options outlined above qualify billers and coders to get the job done, software expedites the processes. Using a computer system instead of manual paperwork streamlines medical billing and coding procedures, but the advantages here are about more than just going digital. It’s about the specific functions such software solutions facilitate.

For example, medical billing software provides a backbone for all of the steps you complete in medical billing and coding. That backbone includes claim creation, filing and scrubbing, an integrated clearinghouse and denial management tools. If you work for a practice, you can also benefit from medical software that facilitates all of a biller’s claim-related tasks. Another huge selling point is the accuracy checks that help your practice maintain a high first-pass acceptance rate.

The best medical billing software

The best medical billing services improve the medical billing and coding process from start to finish by equipping you with tools to ensure efficiency and accuracy. We recommend looking into the following platforms and companies:

  • CareCloud: This medical billing software excels at facilitating payer contract negotiation. Additionally, unlike most vendors, CareCloud doesn’t require you to use its practice management system if you use its medical billing software. Learn more via our CareCloud Medical Billing Review.
  • DrChrono: For a lightweight yet powerful medical billing platform, DrChrono is a great pick. You can use it to oversee all parts of the medical billing process, making your life easier while pleasing both practitioners and patients. Read our DrChrono Medical Billing Review to learn more.
  • athenahealth: When you use athenahealth for medical billing, you get access to the most thorough billing reports available. This medical billing vendor also specializes in consulting with practices and billing teams to improve financial performance. Our athenahealth Medical Billing Review explains this unique business model in greater detail.
  • AdvancedMD: Another great choice for data-rich software, AdvancedMD offers billing teams access to several hundred fully customizable reports. The company also has its own in-house staff of highly experienced medical coders and billers with whom you can problem-solve or troubleshoot. Get to know this medical billing software provider via our AdvancedMD Medical Billing Review.
  • Kareo: If you’re exploring medical billing software for the first time, Kareo might be your best bet. Although all the platforms we’ve named in this list are user-friendly, Kareo is exceptionally so, lessening your initial learning curve. Find out more in our Kareo Medical Billing Review.

Making the most of a medical billing and coding career

From education and certification through software setup and usage, the world of medical billing and coding is incredibly comprehensive. Choosing the educational programs, certifications and software platforms that best serve your needs and interests can lead to success in this complex field. The more time and effort you put into building your billing and coding infrastructure and prowess, the more exciting the opportunities that lie ahead.

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Max Freedman, Business Operations Insider and Senior Analyst
Max Freedman has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
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