top of page

How Medical Coding Impacts Healthcare Administrative Costs

When was the last time you really took a close look at a medical bill you received? Chances are you have seen a variety of numbers on your bill that were not a part of the payment you were asked to submit. Those International Classification of Diseases (ICD), Current Procedure Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes play an essential role in medical billing and can have a negative impact on healthcare administrative costs if not documented correctly.

Reducing the amount of errors within medical coding and billing can drastically reduce healthcare administrative costs. With healthcare administrative costs making up almost 30% of medical billing, understanding the different codes and their purpose can greatly benefit the providers within the healthcare industry and those who receive payment notices.

What is Medical Coding?

Medical coding is the uniform conversion of medical procedures, services, and/or equipment into a medical alphanumeric code for billing purposes. The universal diagnosis and procedure codes are taken from medical record documentation. The current version, ICD-10, features more than 68,000 codes for infectious diseases, neoplasms, and congenital malformations, as well as diseases of the digestive system, respiratory system, and nervous system. CPT codes are five-digit codes and consist of five numbers and occasionally may have four numbers and letters, depending on the type of service. CPT codes are used to identify services provided to patients such as medical, surgical, diagnostic, and radiological.

This type of documentation can come from a physician’s notes during an exam or from results of a test that a physician ordered. Medical coding professionals help ensure the codes are applied correctly during the billing process, which includes abstracting the information from documentation, assigning the appropriate codes, and creating a claim to be paid by insurance companies.

How Proper Medical Coding Effects the Revenue Cycle Process

Accurate medical documentation is a critical aspect of billing within the revenue cycle process in the healthcare industry. Providers use these detailed medical records to validate their reimbursements to payers when a conflict with a claim has been issued. If a procedure or treatment is not properly documented in the medical record by a provider or their hospital staff, the health organization could face a denied claim. When records contain inaccurate information or are incomplete, an immense amount of time and money must go into correcting the flaws within the document. When this issue is happening on a grand scale, the stress put on the revenue cycle process can have major consequences for the provider’s bottom line.

By ensuring that documentation is correct before it is sent to the payer, the flow of the revenue cycle can go uninterrupted and healthcare administration costs can be kept at a minimum. With healthcare administration costs make up roughly 30% of all medical bills, keeping that number low impacts not just the healthcare organization, but also those who are being billed for the treatment they received. If healthcare administrative costs were reduced in the United States, patients and their families could not only receive the care they needed without hesitation, they could shift their energy and focus to their recovery and long-term health goals and providers can focus on patient care and experience. They also would not have to worry about an unexpected health event bankrupting their family.

Signature Impacts Healthcare Administrative Costs

At Signature Performance, we are dedicated to making a lasting impact in the nexus of healthcare by inhabiting the payer, provider, federal and community sectors. Our unmatched experience on both the payer and provider side of the business allows our team the opportunity to evaluate healthcare industry issues from a variety of perspectives and create custom solutions that get to the core of the problem.

We believe the healthcare industry in the United States deserves only the best, and that sentiment is what motivates our dedicated team to do our very best each and every day. It’s our calling to bend the cost of healthcare administration by improving overall quality and minimizing resources.

To learn more about Signature Performance, contact our team today!


bottom of page