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Class # 1: "Introduction to Medical Billing and Coding"

Medical Coding and billing are the invisible engines of the healthcare system. Without either field, the healthcare industry would be unable to efficiently transmit important data, and healthcare providers would have an incredibly hard time getting paid for their services. In a nutshell, it is the medical coder’s job to translate the healthcare provider’s report of a patient’s visit into numeric or alphanumeric code, which in turn is used by the medical biller to make a bill, or “claim,” for the insurance company and determine the appropriate charge for the patient. In this section, we’ll introduce you to the basic concepts of coding and billing, and we’ll give you an idea of what it’s like to work in these fields. You’ll learn about the leading professional organizations in coding and billing, and we’ll show you the certifications available for each position

Medical billing is the preparation of invoices for procedures rendered, and these are given to patients and insurance companies. Medical billers act as the financial way-point between patients, providers, and payers. Without billers, healthcare providers couldn’t be reimbursed for the procedures they perform. The training videos in this section cover the key concepts and guidelines that underpin the billing process.


Medical coding is the translation of medical reports into a short code used within the healthcare industry. This helps summarize otherwise cumbersome medical reports into efficient, data-friendly codes. While complex and detail-driven, medical coding really comes down to knowing how to navigate the three main code sets: CPT, ICD, and HCPCS. These code sets help coders document the condition of a patient and describe the medical procedure performed on that patient in response to their condition.

The United States healthcare system is trillion-dollar industry, which includes pharmacies, pharmaceutical companies, medical equipment manufacturers, and medical care facilities. The complex infrastructure that keeps this industry, which is responsible for the well-being of millions of Americans, running on a day-to-day basis relies on specialized professionals tasked with overseeing these operations. One such system is the medical claims process. The claims process can be summarized as a dual interaction between two of the largest and most important pieces of the healthcare system: healthcare providers and medical insurance companies.

Key Players in the Medical Claims Process:

The relationship between policyholders, healthcare providers, and insurance companies is essential to understand before tackling the details of the medical billing and coding process.


Healthcare providers: A healthcare provider is any facility or practice where you receive and are billed for a product or service related to your personal health. Healthcare providers include hospitals, private clinics, and pharmacies as well as specialized care providers like nursing homes, in-home caretakers, and chiropractors.

Insurance companies

Health insurance companies subsidize medical care for qualifying patients, called policyholders. Health insurance is not mandatory in the U.S., but many Americans have insurance coverage, whether they purchased it privately or obtained it from their employer or the government. Insurance policies vary, but they all operate under the same business model: policyholders pay a certain amount of money each month or year to the insurance company, which is called a premium. If policyholders need procedures for which they qualify, the insurance company pays for that procedure, either in full or in part.

Policyholders: A policyholder is any individual who has purchased health insurance. For example, a young adult looking for a basic insurance plan may purchase a policy where the insurance provider will pay for all medical bills that cost more than the deductible, which is a pre-arranged amount that the policyholder must pay out-of-pocket before insurance coverage kicks in.


How Medical Claims Work

The medical claims process is initiated when a policyholder goes to a healthcare provider for a medical service, which can be anything from obtaining a monthly prescription to major surgery. After the policyholder receives the service, they are usually financially responsible for a deductible, which is the amount of money that the policyholder agrees to pay before their insurance starts. The policyholder gives their insurance information to their healthcare provider, and the transaction between the policyholder and healthcare provider is complete.

Behind the scenes, the transaction between healthcare provider and insurance company begins. The healthcare provider records all the medical services and their costs offered to the policyholder. This record is known the medical claim, or bill. While working for healthcare providers, medical billers and coders are responsible for creating this record and sending the claims out to the policyholder’s insurance company, which has three options: 

1. Accept all expenditures and pay the bill in full

2. Deny the claim on account of a billing error (like incorrect patient information). The bill is then returned to the healthcare provider to be corrected.

3. Reject the claim outright, usually on account of the services not being covered within the health plan. The policyholder then pays for the service out of pocket. 

Working with Insurance Providers

The two major types of insurance providers are managed care plans and public insurance. Learn how to handle both types of coverage below.

Managed care

A large portion of insured Americans receive coverage through their employer, usually through managed care plans. These insurance plans work with a specific group of doctors, hospitals, pharmacies, labs, equipment vendors, and other care providers. Individuals insured under managed care plans seek medical services within this managed care network. The three main components of managed care are preferred provider organizations, health maintenance organizations, and point of service plans.

HMOs require their policyholders to receive most or all of their medical care under the insurance provider’s managed care network. They also require policyholders to select a primary care physician. If HMO policyholders see a specialist without a referral from their primary care physician, or seek treatment outside of the managed care network, they will most likely have to pay medical bills out of pocket.

PPOs also have a network of preferred healthcare providers they request their policyholders to seek treatment from. However, unlike HMOs, individuals do not need to select a primary care provider. Also unlike HMOs, if an individual seeks treatment outside of the managed care network, they can pay the out-of-network healthcare provider directly and possibly get reimbursed for their medical expenses.

Point-of-service Plans: Point-of-service plans form a hybrid between PPOs and HMOs. As with HMOs, point-of-service plans allow you to select physicians and services from within a dedicated network of providers. Unlike HMOs, patients can receive care from out-of-network providers, but they will likely have to pay a deductible.

HMOs and PPOs differ in the insurance claim process. All healthcare providers within a managed care network must file a claim with the HMO. So long as services are rendered in-network, policyholders are not required to file anything themselves, and healthcare providers may not bill the policyholder directly. In the case of PPOs, policyholders may have to file a claim to their insurance provider if seeking treatment outside of the managed care network. Filing claims to insurance providers isn’t necessary for POS plans.

Public insurance coverage

The government is also a major provider of insurance coverage in America, through public programs called Medicaid and Medicare.

Medicaid is a health service program designed for low-income individuals and families. Medicaid recipients receive health coverage decided by the state in which they reside, though some coverage is federally mandated, such as inpatient and outpatient hospital care. Within this system, states make payments on a fee-for-service system or through arrangements with HMOs.

Medicare is another government-funded insurance program for the elderly. Like Medicaid, certain medical services must be covered for Medicare recipients, such as hospital stays and nursing care. This basic coverage is called Medicare Part A. Recipients may also receive coverage in Medicare Part B, also called Supplementary Medicare, for services such as medical equipment, x-rays and labs, and outpatient hospital visits. Recipients of Medicare Part B must pay a monthly premium and pay an annual deductible. There are also Medicare Advantage plans where users can create custom plans that meet their specific needs.

Required Assignments:
Please view the videos below:

Optional reading assignment:

(Understanding Health Insurance, by Green and Rowell. 10th Edition)

"Health Insurance Overview" pages 2-3.

"Job Responsibilities" pages 6-7.   

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