Coding and Billing Basics

You could lose hundreds of thousands of dollars every year if don’t know proper coding and billing procedures!

Did that get your attention?

Whether you own your practice or not, you likely receive compensation that relates  directly to how much revenue you bring in. Therefore, it’s critical you understand how to maximize your coding, billing and collections appropriately.

What is “coding”?

Physicians and independent health care practitioners receive reimbursement based on the codes assigned to that work. This is how you determine how much you compensation you receive for the work you do. Let’s start with some basic definitions:

  • Relative value unit (RVU): The unit of measurement used to value a physician’s work. As of 2019, one RVU is worth $36.04. When you conduct patient care, your work is worth a certain number of RVUs, which then converts to an actual dollar amount.
  • ICD-10: The International Classification of Diseases (10th revision) is the set of codes that describe what condition you are treating. Each time that you see a patient, you have to document the code corresponding to the condition you are treating so that you can bill for that work.
  • CPT code: Current Procedural Terminology (CPT) codes are 5 digit codes that insurers use to determine reimbursement rates for physician work.
  • E/M code: Evaluation and Management (E/M) coding uses the complexity of your history, physical exam, and medical decision-making to generate a 5 digit CPT code. The more components you document in your history, physical exam, and medical decision-making, the higher the value of the resultant CPT code, which leads to a higher reimbursement rate.
  • Billing vs Collections: Once the CPT codes are available for your patient encounter or procedure, you submit/bill those codes  to the patient’s insurance company for reimbursement. The insurer reviews the billing codes and determines how much of that bill they will agree to pay. The amount paid is the collection amount. Collections are commonly less than billing, sometimes significantly less.

How do I know if I’m coding correctly?

Start with the coders employed by your practice. Even if you’re employed by a big hospital, go find the coders and sit down with them. Ask them to teach you. Trust me, they’ll be tremendously grateful because it makes their jobs much easier when you do things right the first time.

They’ll be eager to teach you.

Ask for periodic audits of your coding practices. Request that the coders at your facility review 10 or 15 of your charts and give you tips on how to code more effectively. You may find that just by changing your documentation, you’ll be able to correctly code for more RVUs. This isn’t gaming the system, it’s getting paid for work you actually do!

Click to download for free!

What are the keys to coding well?

  1. Document everything! If you didn’t write it down, it didn’t happen.
  2. Leverage your electronic medical record (EMR) templates to help you automate the coding process. Many EMR systems will automatically calculate the proper CPT code for your work. That only works if you document all of the things you do. Set up your templates to prompt you to fill in the right number of items to ensure you’re maximizing your documentation for each encounter.
  3. Be honest! Don’t over-code encounters. Don’t document work you didn’t do. Your integrity is worth more than that extra 10-20% reimbursement.
  4. Laws change frequently, so stay up to date! Check in with your coders every 3-6 months to see if there are any changes that will affect your coding practices.
  5. Have your coders audit your charts every few months to help you improve your coding.
  6. Consider hiring professional coders to help you in your business if you don’t already have them. They are definitely worth the money.
  7. Take an online course or attend sessions on coding hosted at medical conferences to learn how to code better.

Improper coding can hurt your patients!

If self-interest isn’t enough to motivate you to start learning how to code well, did you know that it can actually harm your patients if you don’t code properly?

Obviously, if you code for more work than you actually did, your patients can get inappropriately charged too much for their visit or procedure. It’s uncommon that physicians do this out of greed or deceit. Over-coding usually happens due to ignorance, but the effect to the patient is the same.

The less well known problem is that if you don’t code correctly, the patients may have to pay completely out of pocket for their care! Every test you order (labs, CT scans, etc.) must be ordered under a “payable diagnosis.”

If you code your encounter under a diagnosis that isn’t payable, the insurance company won’t cover it, and your patients will have to pay cash.

Can you imagine the angry phone calls you might get if a patient gets a $2,000 bill for an MRI they didn’t know they would have to pay for? So, you need to know what constitutes a payable diagnosis for the work that you do.

Each specialty has different diagnoses that can create confusion around this issue, so check with your colleagues or your coders to make sure you’re using the right codes.


Even if you’re still in residency or fellowship, it’s worth it to learn how to do this well. You absolutely have to be able to code properly, or you risk not getting proper reimbursement for the great work that you do.

The sooner you learn how to do this properly, the better you’ll set yourself and your patients up for long-term success. Take the time to do this! It’s an important investment in your business.

Click to download for free!

Further Reading

Leave a comment below and tell us what specific questions you’d like to have answered regarding coding and billing.

This post may contain affiliate links. See the Disclosure Page for details.

Comments (3)

  • It’s good to learn that a medical insurer can review billing code to determine how much of the bill should be paid. My brother is wanting to work in the medical industry and he was wondering how people get billed for their time in the hospital. I’ll be sure to tell him that a medical insurer reviews the billing code before determining how much should be paid.

    • Whether it should be done or not is a question. The truth is, there are a lot of mysteries surrounding the insurance world. It’s often not a transparent process. It’s important for physicians to pay attention and to appeal bills if the company is not initially agreeing to pay sufficiently for a legitimate amount of work.

  • I’m glad you explained the keys to proper coding. My friend wants to learn more about medical billing and payment management. I’ll share this info to help her understand its components.

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2024 The Scope of Practice. All Rights Reserved.

Social Share Buttons and Icons powered by Ultimatelysocial