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July 19, 2023

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Medical Billing vs Coding – Understanding the Key Differences and Importance in Healthcare

Medical billing and coding are two crucial components of the healthcare revenue cycle. While they both play essential roles in ensuring healthcare providers receive proper reimbursement for services rendered, they serve distinct purposes. In this blog, we will delve into the differences between medical billing vs coding, highlighting their significance and how they collectively contribute to the efficiency of healthcare operations.

What are Medical Billing and Coding?

Medical billing and coding are separate but interconnected processes that involve converting medical information into standardized codes and submitting claims for reimbursement to payers.

Medical Coding: Translating Patient Encounters into Billable Information

Medical coding involves the process of translating patient encounters into standardized codes used for claims submission and reimbursement. During a patient visit, healthcare providers document the services provided, diagnoses, and procedures in the patient’s medical record. Accurate and comprehensive clinical documentation is key to successful medical coding.

ICD-10 Diagnosis Codes

One of the most important types of codes used in medical coding is the International Classification of Diseases, Tenth Revision (ICD-10) codes. These codes are used to describe the patient’s condition and characteristics, such as diseases, injuries, symptoms, signs, and abnormal findings. ICD-10 codes are essential for determining the medical necessity of services and procedures, as well as for reporting quality measures and public health data.

There are two types of ICD-10 codes: ICD-10-CM and ICD-10-PCS. ICD-10-CM stands for Clinical Modification and is used for outpatient and other healthcare settings. ICD-10-PCS stands for Procedure Coding System and is used for inpatient hospital services. Both types of codes have a specific structure and format that must be followed by coders.

CPT and HCPCS Procedure Codes

Another type of code used in medical coding is the Current Procedural Terminology (CPT) codes and Healthcare Common Procedure Coding System (HCPCS) codes. These codes are used to describe the services and procedures performed by healthcare providers. CPT codes are developed by the American Medical Association (AMA) and cover a wide range of services, such as evaluation and management, surgery, anesthesia, radiology, pathology, and medicine. 

HCPCS codes are developed by the Centers for Medicare & Medicaid Services (CMS) and supplement the CPT codes with additional codes for items and services not covered by CPT, such as durable medical equipment, drugs, ambulance services, and preventive care.

One of the important aspects of CPT and HCPCS coding is the use of modifiers. Modifiers are two-digit codes that are appended to the main code to provide additional information or specificity about the service or procedure. For example, modifiers can indicate whether a service was performed by more than one provider, in more than one location, or with unusual circumstances. Modifiers can affect the reimbursement rate and the claim processing time.

Medical Billing: Creating Claims for Reimbursement and Patient Payments

Medical billing involves the creation of insurance claims and patient bills based on the coded information from medical records. The billing process starts with patient registration and culminates in payment collection.

Front-End Medical Billing

Front-end medical billing refers to the activities that take place before or at the time of service delivery. These include:

  • Patient registration: This involves collecting demographic and insurance information from the patient or verifying existing information in the system.
  • Insurance verification: This involves checking the patient’s eligibility and benefits with the payer or clearinghouse to confirm coverage and authorization for the service.
  • Prior authorization: This involves obtaining approval from the payer for certain services or procedures that require preauthorization before they can be performed or reimbursed.
  • Patient financial responsibility: This involves explaining to the patient their copayment, deductible, coinsurance, or any other out-of-pocket expenses that they are responsible for paying.
  • Copayment collection: This involves collecting the copayment from the patient at the time of service or before they leave the facility.

Front-end medical billing also involves interacting with medical coders who begin translating the medical records into billable codes based on the clinical documentation.

Medical Billing vs coding 2

Back-End Medical Billing

Back-end medical billing refers to the activities that take place after the service delivery. These include:

  • Charge capture: This involves linking the clinical items and services to chargemaster codes for billing purposes. A chargemaster is a comprehensive list of all billable items and services offered by a healthcare facility.
  • Claim creation: This involves utilizing superbill forms to create claims based on the coded patient information. A superbill is a summary of all charges for a patient encounter. There are two main types of claim forms used in medical billing: CMS-1500 for professional services (physician) and CMS-1450 (UB-04) for facility services (hospital).
  • Claim scrubbing: This involves checking the claims for accuracy and completeness before submission. Claim scrubbing can identify errors such as missing information, incorrect codes, duplicate charges, or incompatible modifiers.
  • Claim submission: This involves transmitting the claims electronically to payers or using clearinghouses. A clearinghouse is an intermediary that validates and formats claims according to payer specifications.
  • Claim adjudication: This involves processing the claims by payers to determine their payment status. Payers can accept, reject, or deny claims based on their policies and contracts. Payers can also request additional information or documentation to support the claims.
  • Payment posting: This involves recording the payments received from payers and applying them to the patient accounts. Payment posting can also involve adjustments, write-offs, refunds, or appeals.
  • Patient collections: This involves collecting the remaining patient payments for their financial responsibility and reconciling them with the payer reimbursements. Patient collections can involve sending statements, reminders, or notices to the patients or contacting them by phone or email.

Medical Billing vs Coding: Why they are Important?

Medical billing and coding are important for several reasons:

  • They ensure that providers are paid fairly and timely for the services they provide to patients.
  • They justify the reimbursements to payers based on the clinical documentation and coding of the patient encounters.
  • They facilitate the communication and coordination between providers, payers, patients, and other stakeholders in the healthcare industry.
  • They provide data and insights for quality improvement, cost reduction, compliance, research, and policy making.

The Synergy: How Medical Billing and Coding Intersect

Medical billing and coding are interconnected processes, forming the backbone of the healthcare revenue cycle. Accurate coding is crucial for justifying reimbursements to payers, while efficient billing ensures proper payment collection.

Revenue Cycle Efficiency

One of the benefits of having streamlined medical billing and coding processes is increased revenue cycle efficiency. Revenue cycle efficiency refers to how well a healthcare organization manages its cash flow and maximizes its revenue potential. By having accurate and timely coding and billing, healthcare providers can reduce claim denials, rejections, errors, and delays, which can negatively impact their revenue cycle. They can also improve their cash flow by collecting payments faster and reducing accounts receivable.

Automation and technology play a vital role in optimizing medical billing and coding processes. Automation refers to using software or systems to perform tasks that would otherwise require human intervention. Technology refers to using devices or tools that enhance or enable certain functions or capabilities. For example, automation and technology can help with:

  • Electronic health records (EHRs), which are digital versions of patient medical records that can facilitate clinical documentation, coding, billing, and data exchange.
  • Computer-assisted coding (CAC), which is a software that can automatically generate codes from clinical documentation using natural language processing (NLP) or other algorithms.
  • Electronic data interchange (EDI), which is a system that can transmit claims electronically between providers and payers or clearinghouses using standardized formats.
  • Revenue cycle management (RCM) software, which is a software that can manage all aspects of the revenue cycle, such as scheduling, registration, coding, billing, payment posting, reporting, and analytics.

Compliance and Accuracy

Another benefit of having streamlined medical billing and coding processes is enhanced compliance and accuracy. Compliance refers to adhering to the rules and regulations set by various entities, such as government agencies, payers, accreditation bodies, and professional associations. Accuracy refers to ensuring that the information provided is correct, complete, consistent, and reliable.

Compliance and accuracy are important for preventing claim denials and potential investigations due to fraud or abuse. Fraud refers to intentional deception or misrepresentation that results in unauthorized benefits or payments. Abuse refers to improper practices that are inconsistent with accepted standards of care or business ethics. For example, fraud and abuse can occur when:

  • Upcoding is assigning codes that indicate a higher level of service or complexity than what was actually performed or documented.
  • Unbundling is breaking down a service or procedure into separate components and billing them individually instead of using a single comprehensive code.
  • Duplicate billing, which is submitting multiple claims for the same service or procedure performed on the same patient on the same date.
  • Modifier misuse, which is applying modifiers incorrectly or unnecessarily to manipulate reimbursement rates or bypass edits.

Compliance and accuracy depend largely on accurate and complete clinical documentation. Clinical documentation is the record of the patient’s medical history, condition, diagnosis, treatment plan, progress notes, and outcomes. Clinical documentation supports claims by providing evidence of medical necessity, appropriateness, quality, and outcomes of care. It also helps with communication among healthcare providers involved in the patient’s care.


Medical billing and coding are two crucial components of the healthcare revenue cycle. They serve distinct purposes but work together to ensure healthcare providers receive proper reimbursement for services rendered. Medical coding involves translating patient encounters into standardized codes used for claims submission and reimbursement. Medical billing involves creating claims based on coded information and collecting payments from payers and patients. Both processes require accuracy,


What is the qualification for a medical coding course?

To enroll in a medical coding course, a high school diploma or equivalent is typically required. While there are no specific educational prerequisites, having a background in healthcare or life sciences can be beneficial. Basic computer skills and knowledge of medical terminology are also helpful for a smoother learning experience.

Which certification is best for medical coding?

Several reputable organizations offer medical coding certifications, each catering to different specialties and career paths. The American Academy of Professional Coders (AAPC) and the American Health Information Management Association (AHIMA) are prominent certifying bodies. The best certification for you depends on your career goals and the area of medical coding you wish to specialize in. Common certifications include CPC (Certified Professional Coder), CCS (Certified Coding Specialist), and CCA (Certified Coding Associate).

What is medical coding with an example?

Medical coding involves assigning standardized codes to medical diagnoses, procedures, and services to facilitate claims submission and reimbursement. For example, a patient visits a healthcare provider for a respiratory infection. The medical coder will assign an ICD-10 diagnosis code, such as J06.9 (Acute upper respiratory infection, unspecified), to represent the patient's condition. Additionally, a CPT code, like 99213 (Office or other outpatient visit for the evaluation and management of an established patient), may be used to signify the specific service provided during the encounter.

Which medical coding certification pays the most?

The earning potential for medical coding certifications can vary based on factors such as experience, geographic location, and employer. Generally, the CPC (Certified Professional Coder) certification from AAPC is known for its competitive salary prospects. However, it's essential to note that other factors, such as one's coding expertise and additional qualifications, also play a significant role in determining earning potential.

Which medical coding is best for beginners?

For beginners in the medical coding field, the CPC-A (Certified Professional Coder-Apprentice) certification from AAPC is an excellent starting point. This certification offers an entry-level opportunity for individuals who have completed a coding course but lack the required work experience. With the CPC-A certification, individuals can gain practical experience and later upgrade to full CPC status by fulfilling the work experience requirement.