Insurance companies are very strict on correct medical billing and coding practices, and even the smallest mistake can cause an insurance company to reject a medical billing claim due to carrier edits.

Private practice physicians face enormous pressures. Among the biggest stressors today is the business side of healthcare, especially concerning medical billing and coding. The complexity of the medical industry can take precedence over the treatment of medical conditions in determining the sustainability of a medical practice.

Medical billing errors result in billions of dollars in incorrect payments and loss of revenue for the healthcare system. Physicians walk a fine line when submitting payments to Medicare and other third-party carriers. The probability that a medical claim will contain errors is high. New levels of specificity in coding and the addition of pay-for-performance measurements have taken reimbursement woes to a new level. The rule of thumb is if it is not documented, it did not happen.

No matter how many bells and whistles the EHR has, providers cannot rely on technology to make correct coding decisions.

It is more common than not to find errors in claim submissions. Insurance companies are very strict on correct medical billing and coding practices, and even the smallest mistake can cause an insurance company to reject a medical billing claim due to carrier edits. This starts the process over again. Billing staff must research the reason for the errors and resubmit corrected information for the new claim to be reevaluated by the payer, accepted, and processed for payment. Developing a process for periodic audits before claims are submitted can significantly decrease rejects and denials due to resolving common trends and correcting before submission to carriers. If done successfully, this can increase your first claims pass with carriers and who doesn’t like to do things right the first time?

Denials often are an indication of failure to understand correct coding guidelines and payer contracts. Physicians rely on their billing staff to handle claims effectively and efficiently for proper and timely payments, requiring them to stay current with regard to changes to medical codes, claims management, and proper billing protocols. Reimbursement problems most often stem from failure to follow strict coding and billing practices and lack of proper reimbursement training. These rules are updated frequently. Inexperienced staff or failure to stay up-to-date with proper billing protocols that may vary by payer and may leave a trail of denials or improper payments.

Pay-for-performance and quality measures have added layers to the reimbursement process. A lack of continuing education and software training has a direct effect on the cash flow and profits of a practice. The importance of a trained staff cannot be overemphasized. Well-trained coders and billers pay dividends when it comes to positive cash flow and overall profitability of the practice.


Coding rules are voluminous and specific, requiring a well-trained coder who can take documentation from an encounter and code it correctly for proper reimbursement. As an example: when billing a claim for medical necessity, a diagnosis code linked to a procedure code supports medical necessity on a claim.

However, some procedural codes require multiple diagnoses. Review the documentation for appropriate diagnosis (es). Medical necessity reflects the “WHY” and “WHAT” of the patient encounter. “Why” is the patient here and “what” services were rendered. According to, “medically necessary” is defined as “health-care services or supplies needed to prevent, diagnose, or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.”

Technology often provides a false sense of security. If coding staff are relying on electronic health records (EHR) systems and features such as cloning or copy/pasting, this can attract auditors to the door. No matter how many bells and whistles the EHR has, providers cannot rely on technology to make correct coding decisions. The level of detail required for effective coding and billing requires a skilled coder with in-depth knowledge to apply the rules correctly for accurate reimbursement. Penalties levied for failure to follow government payer guidelines can pack a serious punch.


There is no lack of industry oversight with regard to billing mistakes; Medicare contractors watch for red flags in billing patterns. Fraud claims can lead to civil penalties and criminal charges for many involved. Healthcare auditors that find problems may recover large sums of money for things like billing for services not rendered, unbundling, and upcoding. Ultimately, the physician signs off on claims, but staff may share liability for incorrect billing practices if they knowingly submit false claims.

Section 6401 of the Affordable Care Act provides that a “provider of medical or other items or services or supplier within a particular industry sector or category shall establish a compliance program” as a condition of enrollment in Medicare, Medicaid or the Children’s Health Insurance Program (CHIP). The Office of the Inspector General (OIG) published a seven-step plan with core elements designed for individual and small group practices as a guide for implementing an effective compliance program. The plan includes designating a compliance officer, conducting regular internal monitoring and auditing, and conducting appropriate training and education.

In a small to medium size practice, the manager may also be the designated compliance officer. They must ensure that a working compliance plan is in place, and regularly monitor things like personnel management and training, physician credentialing and revenue cycle management.

New performance measures and reporting guidelines can be additional challenges that further slowing the reimbursement process. Keeping up with the business side of medicine requires physicians and administrators to spend time and money on continuing education, software, or staff training to stay current, having a direct effect on the cash flow and profits of a practice.


Proper training curriculum that addresses coding, billing, management and compliance for administrative staff working in an outpatient medical office setting is a necessity. When it comes to the profitability of value of staff, that training cannot be overstated. When a medical practice is managed well, and employees receive regular training to keep up with their ever-changing roles, you see better employee engagement, fewer errors and overall job satisfaction.

Communication and education play a key role in retention. Among the many hats a medical office manager wears, protecting providers from risks, motivating employees, and improving the practice’s financial outlook are essential for a productive, profitable practice.

Pam Joslin is a faculty member with Practice Management Institute. She has more than 20 years of medical practice management, coding, reimbursement and compliance experience. She has managed in medical practices ranging from single to multi-specialty groups, including ASC. She is an advocate of process improvement and maximizing and empowering your employees to bring about the “best practice” results for your organization. She received her master’s in management from University of Phoenix. She maintains memberships in professional organizations to support her continuing cycle of learning in the ever-changing healthcare industry. Prior to joining the PMI Instructor team, she was an Adjunct Instructor and served on three advisory boards at a community college in San Antonio.