Medical coding is the work of turning what happened at a doctor's visit into standard codes: one code for each diagnosis, and one code for each thing the doctor did. An insurer's software can check codes in seconds, while it cannot reliably read a doctor's note. So the codes are what turn a visit into a bill.
Here is how it works in general. The doctor writes the note: what the patient complained of, what was found and what was done. A trained person called a medical coder, or more and more often software, reads the note. The coder picks a diagnosis code for each illness and a procedure code for each test, treatment or visit. Diagnosis codes come from the International Classification of Diseases (ICD), which the World Health Organization publishes. In America, procedures use a second list called CPT. For example, ICD code E11.9 means type 2 diabetes without complications. The codes go on the claim, which is the bill sent to the insurer. The insurer's software then checks that the diagnosis justifies the procedure, and that the patient's plan covers it. A wrong or missing code is a common reason for a claim to be refused, which is called a denial.
Coding is large-scale work. Hundreds of thousands of people code American medical bills, and a large share of them work in coding centres in Chennai, Hyderabad, Bengaluru and Delhi. Many hold a coding certificate.
Take, for example, a clinic in the United States after a busy day. An AI medical billing agent reads each note, suggests the codes and sends the claim, and an employee in the billing team checks the cases the agent is unsure of.
Consider a doctor who uses an AI medical scribe. The scribe drafts the note during the visit and suggests the codes at the same time, and the doctor approves both.
For instance, an American health plan for people over 65 is paid more for members who are sicker. Risk adjustment works out how sick each member is from the diagnosis codes on their claims.
How is medical coding different from the clinical terms in a patient's record? A record may use a detailed clinical vocabulary, such as SNOMED CT, to describe exactly what the doctor found. Billing codes are fewer and broader, and are built for payment and statistics. The idea is close to the HSN code on a GST invoice, which tells the tax software what kind of goods were sold. Codes also let a real-world evidence platform find every patient with one illness among millions of records.
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- Risk adjustment↗ Medical billing and claimsIn the US, risk adjustment reads members' diagnosis codes to calculate how much more Medicare pays a plan for sicker members.
- Procedure documentation software↗ Healthcare ITProcedure documentation software records an endoscopy and adds the procedure and anaesthesia codes that the bill needs.
- AI medical scribe↗ Healthcare ITAn AI medical scribe suggests the diagnosis and billing codes for the visit, and the doctor checks them before signing.
- Remote patient monitoring software↗ Chronic care managementThis software for American practices adds the monthly billing code for each patient's remote monitoring before the claim is sent.
- Revenue cycle management (RCM)↗ Medical billing and claimsRCM software checks each diagnosis and procedure code on a claim against the record before sending it to the insurer.
- AI medical billing↗ Medical billing and claimsAI medical billing reads the doctor's note, picks the diagnosis and procedure codes, and a billing employee reviews them.