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Medical coding is the transformation of verbal descriptions of diseases, injuries, surgical operations and other procedures into standardized numeric or alphanumeric codes. The diagnoses and procedures are usually gathered from a variety of sources within the medical record, such as the transcription of the doctor's notes, laboratory results, radiologic results, and other sources.

Delivering quality healthcare services fully relies on capturing medical data in accurate and timely fashion. Medical coders/billers and the software that aids their task are the key players in this arena.

Since 1983 when the federal government implemented the first prospective payment system, there has been a great deal more emphasis placed on medical coding. Currently, reimbursement of hospital and physician claims for Medicare patients depends entirely on the assignment of correct codes to describe diagnoses, services, and procedures provided. As the basis for reimbursement, assigning appropriate medical codes has become crucial as healthcare providers seek to assure compliance with all nationally-accepted and official coding guidelines. Today the government performs statistical analysis of diseases and therapeutic treatments as well as direct surveillance of epidemic or pandemic outbreaks based on the medical codes coming from millions of providers. Coded data are also used internally by institutions for quality management activities, case-mix management, planning, marketing and other administrative and research activities. Medical coding is also the pillar for building future knowledge-based and decision support systems for the health care.

But Medicare providers are often faced with uncertainty when it comes to keeping up with changes in Medicare policy. It is still hard to determine "How does this rule apply to me?” Lack of time and knowledge on the part of doctors, administrators and records personnel often means that healthcare providers receive considerably less reimbursement than they are entitled to. Published studies continue to estimate that medical practices are losing thousands of dollars due to down coding-incorrect medical coding and medical billing. Studies suggest that some practices lose as high as 20% due to down-coding.

But there is a fine line. One of the most common sources of fraud accusations involves up-coding - coding at a higher level of service than your documentation will support or claiming the medical services or products provided were of a higher quality than those actually delivered. Very often there is even pressure on medical coders to “up-code” in order to maximize income. If a physician only has level 3 and level 4 visits, it raises a red flag. And, the flag will remain red if the physician's charts don't contain adequate documentation justifying each level of service.

Lack of knowledge of Medicare guidelines also causes physicians problems. For example, a physician may determine that it is medically necessary to see a patient in a skilled nursing facility three or four times a week. However, if Medicare only permits two visits, the physician could be accused of overbilling. It doesn't matter if the physician thought he or she was just practicing good medicine.

Unbundling is a third area in which physicians can run into pitfalls of Medicare regulations. If three of four physicians don't include a separate charge to Medicare for a procedure which is medically necessary, and the fourth physician does, then this physician will stick out from the rest and have a lot of explaining to do.

Compliance planning takes time, research, and a certain degree of expertise, particularly legal know-how. But when done correctly, compliance planning is a wise investment in your practice's future. Compliant and correct medical coding is the key to ease of mind and enhancement of your practice profitability.
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