Why Are Coding and Documentation So Important for Medical Billing?

Health care providers are paid for services based on numeric and alphanumeric codes assigned to a patient’s diagnoses and procedures. These codes are then billed to insurance companies for reimbursement. The accuracy and adequacy of coding and documentation greatly affects medical billing.

Proves Medical Necessity of Treatment

• Coding and documentation helps to prove the medical necessity of treatment. Supportive documentation explains what services were provided, so the appropriate codes can be assigned to explain why treatment was needed.

Assigns Appropriate Charges

• Coding and documentation helps to assign charges to resources used in patient care. The narrative text is matched to a code that has a corresponding charge.

Provides Accurate Reimbursement

• Coding is the main source for accurate reimbursement of services. Codes are grouped together to alert the insurance payer of patient treatment provided, so reimbursement can be made.

Facilitates Insurance Reviews

• Insurance companies often perform random reviews to ensure that charges are valid. Supportive coding documentation helps insurance companies to understand why specific charges were submitted.

Helps Appeal Denials

• In some cases, payers will deny medical claims that they feel are incorrectly coded or where treatment was unnecessary. Health care providers have the opportunity to appeal those reimbursement denials by submitting supportive coding documentation that explains why specific codes were assigned for reimbursement.