Understanding Insurance and Medical Billing Terminology

Part 2: Cracking the Medical Billing Code

This is part two of “Understanding Insurance And Medical Billing Terminology.” You can read part one here.

In order to get reimbursed for providing care, medical professionals need to puzzle together a set of codes – diagnosis codes along with separate procedure codes – to comprehensively describe a condition and its treatment.

These codes were created to simplify the process of billing and reimbursement, and reduce errors in medical records. But coding errors are easy to make, a single decimal mistake can result in higher bills, incorrect medical records, and insurance reimbursement claim denial. A good understanding of how these codes work is essential in order to review a complex medical bill properly.

There are three sets of codes used in medical billing: CPT, ICD, and/or HCPCS. Dentists use CDC (also known as “ADA”) coding.

CPT Codes (Current Procedural Terminology): This is a five-digit number that identifies the service or procedure received. Insurance companies use these codes to determine the portion of the bill that is covered by insurance – and how much a patient must pay out of pocket. CPT codes are listed next to the items in a bill’s description of services. Compare CPT codes on a bill to the codes noted on the Explanation of Benefits to see if they match. You can look up the meaning of CDC codes, to see if the code matches the treatment/service received.

ICD Codes (The International Classification of Diseases) these codes are used to describe patient symptoms and the medical procedures used to address the problem. ICD-10, the version currently in use, contains about 70,000 codes representing every conceivable issue that a healthcare professional might encounter. ICD codes tend to have decimal points (A00.111), and can be verified online.

HCPC Codes (Healthcare Common Procedure Coding System is used by Medicare to determine provider reimbursements. There are two levels of HCPC codes in wide usage: Level I are identical to the CPT codes. Level II is used by healthcare service or equipment suppliers.

ADA/CDC: Dentists use a similar set of codes for insurance claims and billing. Known as “CDC” (Current Dental Terminology) codes, the list was developed and is annually updated by the American Dental Association (ADA), which is why this code set is also referred to as “ADA codes.” Check a dental insurance plan or dental saving’s plan fee schedule for a list of these codes.

Other Terms to Know

Balance billing:  hospitals, clinics, doctors’ offices and other medical facilities may attempt to bill patients for the difference between what an insurance company will pay, and the cost (see above) of a treatment or service. Balance billing is illegal for all Medicare patients and individuals older than 65 years of age. It’s also illegal in 47 states for in-network providers. There is an exception if a healthcare provider tells the patient ahead of time that a service will probably not be covered by the insurance company.

Duplicate Billing: Multiple entries for a single service or treatment is a very common error on medical bills. These are often innocent errors that occur when a medical team doesn’t know that another team member already recorded the procedure – both a doctor and a nurse might make a note that medication was given to a patient, or both the admitting department and a private doctor could record a hospital admittance. Check for duplicate entries; if found call the healthcare provider.

Upcoding: this describes a mistake in CPT coding that result in a higher cost for treatment. The mistake could be an error, or a deliberate attempt to boost the total of a medical bill.  If you spot a coding error on a bill, check with the provider. If Upcoding occurs more than once, report the problem to your insurance provider.

Code Bundling/Bundled Costs: medical coding “bundles” describe a set of related services (such as an injection, the medication that was injected, and the illness being treated).  These are usually (but not always) marked with a “b” on the bill. Watch for duplications in codes: a bundled set as well as a single charge that replicates a procedure included in the bundle.

Unbundling: if a provider lists services separately, rather than bundling them, the bill can be much higher than it should be. This can be difficult to spot, as most people don’t know whether procedures should be listed as a bundle or separate entries. Check also to ensure that a bundle charge along with charges for each separate procedure don’t appear on the bill.

Finding Help: Medical Advocacy Services

An entire industry has been created around medical coding – there are expert coders who translate health records into codes, and equally expert insurance company analysts who carefully review these codes to spot errors, inconsistencies, and outright fraud. If an insurance company refuses to make a reimbursement due to a coding error, the patient may be faced with an unexpected, huge bill.

To manage this issue, many businesses now offer medical advocacy services as part of their compensation package.

:DP HealthNow includes a benefit that provides unlimited, free access to medical advocacy services. Along with untangling billing issues, medical advocates also provide help with coordinating care, getting second opinions, explaining diagnoses and treatments, and finding the most suitable healthcare services and programs within the community or across the nation. To find out more about this offering, and all the advantages of the DP HealthNow telehealth package, visit DPHealthNow.com.